Micro businesses spend 15 hours a week on financial admin

The average micro-business spends 15 hours per week or 19% of their time in total doing financial admin tasks, according to a report issued by Starling Bank.

The Make Business Simple report was commissioned by Starling Bank to highlight the working practices of Britain’s 5.6 million micro firms, which account for 96% of the business population, and there is a clear opportunity for accountants to save micro-businesses a large amount of time.

“The importance of micro-businesses can’t be overstated. They make up the vast majority of enterprises in the UK, employ almost nine million of us and generate nearly a trillion pounds in revenue each year,” said Anne Boden, CEO and Founder of Starling Bank.

“What our findings unequivocally show is that micro businesses are spending a huge amount of time on financial admin work.”

The report studying more than 1,000 micro businesses, found that the smallest firms were disproportionately affected by this, with sole traders spending almost a third (31%) of their time on financial admin work, and companies with one to four employees devoting a quarter (25%) of their time to it.

Opportunities for accountants

A report by Xero found that nine out of ten SMEs also reported that technology had impacted on their business routines. Damon Anderson, Director of Operations at Xero, was keen to emphasise the opportunities that this represents for accountants.

“Accountants should keep updated on the latest technologies and developments in the cloud accountancy software sector so that they are best placed to expand their business offering and advise their clients. If an accountant successfully helps a small business to cut down on their financial admin time, they’ll keep their clients happy, satisfied and free to focus on other aspects of the business.”

“When cloud computing was first around, it was purely the system businesses could use to update older IT systems and traditional bookkeeping methods. These days it’s about so much more than that. It gives organisations the ability to easily access live data related to the state of their business.”

“For small business owners, working in the cloud gives them access to the most up-to-date versions, world-class security solutions, and enables them to connect all their services and workflows so that data flows freely between the various solutions they use every single day. Having all your data in one place also makes it easier to work from anywhere.”

Stresses and Strains of Financial Admin

The report also found that a third (32%) of micro business leaders saw accounting as the most stressful part of running their business and the most likely to eat into down time.

Starling Business Account customer and photographer Aina Gomez said: “I didn’t get into business to do finance-related admin, but without it, you are doomed. I’m still learning. I’ve purposely put myself through some training, but I can still say that this is the worst part of running a business. However, I realise how key of an issue it is and keep pushing to learn how to do it better.”

According to the report, Aina is not alone in considering it the “worst part” of running their business. One in ten firms (11%) reported that they had sleepless nights about financial admin work and 12% admitted that it negatively affected their holidays.

In a separate report by Xero, research showed that accountants now have an opportunity to take advantage. That is, by expanding their offering to include cloud-based accounting to save their clients time that could be used to grow their businesses.

“Xero’s research showed that successful small business owners considered stepping away from work as essential. And this is exactly what Xero enables them to do. As a result, 88% of Xero UK customers are still operating after five years, compared to an industry average of 41%,” said Anderson.