Financial management a burden for UK’s small firms
Britain’s network of small and microbusinesses collectively spend 2.5 million days every month on financial management practices, new research has found.
Equating to 19 million hours, 32% of the small firms surveyed reported that dealing with finances makes them stressed, while half reported a lack of confidence in dealing with financial matters.
One in four told the KashFlow survey that they turn to assistance from family, friends or professionals, although a third also said they were ‘in control’ of their finances’.
A slightly higher proportion also claimed to be confident in their own ability to manage their finances effectively.
However, 43% of those who reported a lack of skills and confidence said they were frustrated as a result while 54% revealed constant apprehension over whether they had made mistakes.
When asked about what they like and dislike about running their own businesses, 48% of those taking part said that ‘being their own boss’ and ‘not having to answer to anyone’ was a huge advantage.
Despite this, 20% said they struggle to switch off from work and 15% cited managing their finances as the most difficult challenge to overcome.
The vast majority of businesses owners said they wished they could spend less time on financial management and more on driving growth and developing ideas.
While spending half a day on financial management may seem reasonable, a third of people are constantly needing more time than that.
Managing finances are key for several reasons, not least as it means that all legal requirements are met such as VAT and PAYE requirements
Maintaining a healthy cash flow also requires constant management in order to limit the risk of insolvency or the need for alternative business recovery options.
At the same time, a business owner with a clear handle on finances will recognise opportunities for refinancing and for sourcing alternative finance options if needed.
All of these actions can help to ensure the longevity of a business which highlights why many small business owners are prepared to devote so much time to financial management.
By Phil Smith