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Business owners are sometimes in a position to offer professional help to their friends and family. Being a specialist in a particular area means they may be asked to give free advice, work at a discounted rate and even carry out work for free. However, when it comes to running a small business, every minute and penny counts towards its success.
To look deeper into the topic, we carried out a survey of 250 business owners across 15 industries in the UK to uncover what it’s costing them to do favours for loved ones. Our research revealed that over two-fifths (45%) of UK business owners work for free and are asked to do work at discounted rates an average of 75 times a year. Additionally, Alex Miles COO here at Capital on Tap provided advice on how to tackle a sometimes difficult conversation to ensure friends and family members pay.
Industries most likely to offer ‘mates rates’
When we talk about ‘mates rates’, we’re referring to the discounts on products or services offered to family and friends by business owners. Our survey revealed the industries most likely to give mates rates, free advice and do work for free for friends and family:
|
Industry |
% who do work for free for friends and family |
% who offer ‘mates rates’ |
% who give free advice |
|
Restaurants & Food |
60% |
0% |
40% |
|
Healthcare |
58% |
58% |
58% |
|
Automotive |
56% |
56% |
44% |
|
Business Equipment & Services |
38% |
46% |
38% |
|
Property Management & Development |
25% |
63% |
50% |
Restaurant and food industry
While almost two-thirds (60%) of the business owners in restaurants and food are most likely to offer work for free, such as offering free food or meals, none of the business owners (0%) that we surveyed admit to giving their friends and family discounted rates. Despite this, our survey revealed they’re asked to work for free five times a month and are asked to work at discounted rates twice a month.
The healthcare industry
Healthcare business owners, such as those that run dentists, salons and chiropractors, are most likely to help out friends and family according to our survey. While more than a quarter (27%) admitted to hating it when their loved ones request discounts, these business owners still offer ‘mates rates’ eight times per month.
They’re also offering an average discount rate of £428.80, meaning they could expect to lose a staggering £42,005.91 every year.
Automotive industry
Also quick to offer friends and family support are business owners in the automotive industry, who confessed in our survey to offering them discounted rates once a week.
Despite over one in five (22%) admitting to avoiding ‘mates rates’, a third (33%) will try to offer friends and family these rates when offering a new service.
They also revealed that they’re asked to do discounted work five times a month, costing them on average just under £1,000 (£935.03) per month.
Business equipment and services industry
The surveyed participants from the business and services sector (businesses including locksmiths and maintenance) admitted to doing work for friends and family for free once a week. While one in every six (15%) admit to always offering ‘mates rates’, almost two in five (38%) do so to build a client base.
With the surveyed business owners giving family and friends an average discount rate of £350.50, they are set to lose £21,566.53 a year.
Property management and development industry
In property management and development, survey respondents revealed that they do discounted work three times a month, while also giving free advice an average of once a week.
Building a reputation of reliability in a competitive market, such as this one, is important and could explain why almost two in five (38%) small business owners admitted to offering ‘mates rates’ to help build their confidence. However, two in five (38%) admitted to hating it when they’re asked for ‘mates rates’, and a quarter (25%) said they would never offer them.
On average, the surveyed business owners in the property management and development industry give discounts worth an average of £315.40 and can expect to lose out on £11,504.22 a year in revenue.
Locations most and least likely to offer ‘mates rates’
The survey results also allowed us to look into where the most generous business owners are located in the UK.
Manchester
While almost two-thirds (63%) of the surveyed business owners in Manchester are likely to work for free and half (50%) are likely to work at a discounted rate, the city has the highest percentage of business owners (25%) who never offer ‘mates rates’.
Almost two in five (38%) admitted to offering family and friends ‘mates rates’ with the goal of starting word-of-mouth advertising.
Leeds
Almost two-thirds (60%) of small business owners in Leeds are likely to do work for free and give friends and family discounts. They admitted to working at discounted rates six times per month with the main goal of helping them grow their businesses.
Almost two-thirds (60%) explained that they will give ‘mates rates’ to help build up their client base, and two in five (40%) as a way of starting word-of-mouth advertising.
London
Over two-fifths of the surveyed London business owners are likely to offer discounts (43%) and do work for free (42%), offering ‘mates rates’ to family and friends an average of six times per month.
In London, entrepreneurs can expect to pay the high operating costs and compete with numerous businesses at different levels. This could explain why nearly a quarter (24%) of the surveyed business owners do work for family and friends at a discounted rate in order to help with their confidence.
Newcastle
Small business owners in Newcastle won’t allow personal feelings to get in the way of their work. Two in five (40%) are unlikely to do work for free, offer ‘mates rates’, or provide free advice.
The business owners we surveyed confessed to working for free once a month, one of the lowest of all locations. Two in five (40%) actually admitted that they try to avoid offering ‘mates rates’. However, the Newcastle participants won’t turn away from loved ones facing difficulties, as two in five (40%) of the business owners also admitted to helping out a friend or family member if they were ever in need.
Why businesses offer ‘mates rates’
The survey revealed that small businesses with lower turnovers tend to give more discounts than those with higher turnovers, with small businesses with an average turnover of between £100,001-£200,000 set to lose out on over £43,000 a year if they say yes to all the mates rates requests they receive.
|
Business size, by turnover |
Average times a year asked |
Average discount given |
Average potential business losses |
|
£100,001-£200,000 |
91 |
£471.89 |
£43,009.31 |
|
£200,001-£300,000 |
67 |
£423.08 |
£28,555.94 |
|
£300,001-£400,000 |
74 |
£382.85 |
£28,419.35 |
Looking at all the business owners we surveyed, one of the reasons they gave mates rates was to help grow their business. Almost one in five (19%) offer these rates to start word-of-mouth advertising, and one in six (15%) offer them to help build a client base. This would also help explain why businesses with lower turnovers are more likely to offer ‘mates rates’.
Almost one in five (19%) of these business owners say they give friends and family members ‘mates rates’ in exchange for something else. While they may be losing out on revenue, they are still gaining something from the interaction that could help them and potentially their business. Some business owners just find it difficult to turn away a loved one, with over one in six (16%) providing ‘mates rates’ to friends and family in need.
How to ask for payment from friends and family favours
Asking for money and chasing up invoices won’t be anything new to small business owners, but it’s not always easy when it comes to friends and family. Our research revealed that over one in six (16%) of the surveyed business owners offer ‘mates rates’ as they find it awkward saying no to family and friends. With this in mind, Alex Miles, COO and UK Managing Director from Capital On Tap has shared some tips to tackle the potentially difficult conversation:
1) Set clear expectations from the start
Make sure that your friends and family understand the terms of your services from the moment you agree to do work for them. Sometimes, things can get lost in translation. However, if your loved ones understand that you can’t do the work for free, then there shouldn’t be any unpleasant surprises when you come to ask them for payment.
2) Don’t mix business with personal matters
It might help to treat your friend or family member like you would any other customer or client. Make sure you keep records of communication and professional invoices so that they understand that this is a business transaction.
If you’re providing ‘mates rates’ to start word-of-mouth advertising, it might seem like your friends and family are doing you the favour. Should this be the case, it might help to keep in mind that you’re helping them by providing a discounted rate. Remember that your business depends more on revenue than it does on marketing efforts.
3) Chase them up politely
Make sure that you’ve given your friend or family member enough time to pay you before reaching out. If you’ve been clear and upfront about the payment from the start, then you shouldn’t hesitate to give them a friendly nudge. There’s a chance that they’ve honestly forgotten and just need a reminder - it happens. Reminding them can help make sure that you’re both on the same page.
4) Think about offering a payment plan
Your friend or family member could be experiencing financial difficulties, which may be why they asked for a discount in the first place. If they’ve started to avoid you and reduce your social interactions, it might be a sign that they’re embarrassed about their money situation. This may not only impact your business, but also your personal relationship.
If you think this could be the issue, don’t hesitate to reach out and reassure your friend or family member. You can sit down and set up a payment plan that suits you both. You’ll be alleviating their financial stresses as well as the tension that may have built up in the relationship.
Sources & Methodology
Capital on Tap surveyed 250 small business owners in the UK. The survey was conducted in September 2023. Industries with a small number of respondents have been removed.
