A new survey by business credit card provider Capital on Tap reveals a striking trend among UK business owners: they are frequently asked for discounts by friends and family. On average, this happens 75 times per year, with nearly half (45%) providing their services for free. These practices could lead to losses exceeding £43,000 in 2024 alone.

How to say “no”

Around 1 in 6 business owners find it awkward to refuse discount requests from friends and family. To address this issue, Capital on Tap has partnered with Paul David Smith, a noted photographer and filmmaker and founder of Paul David Smith Photography. Smith shares his strategies for maintaining professional boundaries.

• Honesty and transparency. Smith stresses the importance of being honest and transparent, explaining to friends and family that his business has fixed rates and policies applicable to all clients.
• Firmness is essential. He advises expressing gratitude for their interest but firmly declining such requests, avoiding open-ended responses that can prolong discomfort.
• Encouraging empathy. Smith suggests encouraging friends and family to put themselves in the business owner’s shoes, comparing the situation to being asked to work for free.
• The impact of “mates rates”. Smith points out that offering services for free or at a discount not only affects the financial health of a business but also devalues the work.

Industry and regional insights

• Healthcare industry. Business owners in healthcare are the most frequently asked for “mates rates”, averaging 98 requests a year and risking over £42k in annual revenue loss.
• Newcastle’s business owners. They are the least likely to offer discounts, with 40% actively avoiding “mates rates”.
• Businesses with £100k–£200k annual revenue. This group is most affected financially by “mates rates”.

Expert insights from Capital on Tap

Alex Miles, UK managing director and small business expert at Capital on Tap, shares advice on handling payment requests from friends and family: “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. It’s no surprise that over 1 in 6 (16%) of the surveyed business owners find it awkward to say ‘no’ to them. Setting clear expectations from the start and making sure that friends and family understand the terms of your services from the moment you agree to do work for them can help make it easier.

“It might help to treat your friend or family member like you would any other customer or client. That means keeping records of communication and creating professional invoices. If you’re one of the nearly 1 in 5 (19%) looking to start word-of-mouth advertising, it might seem like they’re doing you a favour. Should this be the case, remember that you’ve provided them with a service and that your business depends more on revenue than it does on marketing efforts. If you do end up having to chase them, don’t hesitate to give them a friendly nudge. It just might be that they’ve forgotten or think the payment is due on another date.”