UK micro-businesses are wasting millions of extra days every month on their accounting reveals new research.
In a poll conducted by YouGov on behalf of FreeAgent, who provide a multi-award winning cloud accounting system for micro-businesses and freelancers, almost a quarter of respondents said that they personally spent more than one full working day per month on financial administration and managing their accounts, while 8 per cent said they spent 3 or more working days doing this.
FreeAgent believes that, with the right tools in place to help them, a typical micro-business should need to spend no more than eight hours (i.e. one working day) every month to manage their accounts, including all of their general bookkeeping, expenses, invoices and reconciling their bank transactions.
By projecting the data across the UK’s 5 million-strong micro-business sector, the research suggests that approximately 1.4 million micro-business owners are currently spending more time than they need to on their accounts – and that extra time equates to a total of around 2.4 million unnecessary days during an average month.
In addition, the poll – which surveyed more than 500 micro-businesses and sole traders and was commissioned to mark the launch of FreeAgent’s £1m crowdfunding drive through Seedrs – found that more than half of respondents use either pen and paper or a spreadsheet as the main method to manage their accounts, rather than specialist software or using an external accountant or bookkeeper.
Ed Molyneux, CEO and co-founder of FreeAgent, said: “Accounting may not be the most enjoyable part of running a small business, but it shouldn’t have to be difficult. We firmly believe that, for a typical micro-business, all of your important accounting tasks can be completed in an hour or two per week, and with the right tools in place, you may find it takes even less.
“But the research suggests that many small business owners actually find it very time-consuming to keep on top of their accounts. Almost a quarter of them spend more than one working day per month on accounting, while some even spend 6 days or more and that’s time that all adds up. Across the whole of the UK, this means that millions of days are effectively being wasted on accounts every month.”
FreeAgent believes that the results demonstrate the need for its multi award-winning cloud accounting system among the UK micro-business sector – and the value of the business to investors interested in its crowdfunding drive.
Ed continues: “We reckon that the biggest reason for why micro-business owners waste time on their accounting is because they use ineffective accounting systems that aren’t right for them – and our poll appears to reflect this. We found that more than half of respondents used a spreadsheet or pen and paper as the main method for their accounting; and while these methods are cheaper to use, they generally tend to be far more fiddly and time-consuming.
“So instead of struggling with a spreadsheet or ledger and getting tangled up with manual data entry, we recommend micro-business owners invest in a system designed to meet their specific requirements and make their accounting easier. That way, their basic admin will be quicker to do, they’ll take better control of their business finances and they will also have more time to spend more effectively on other parts of running their business.”
More information about FreeAgent’s crowdfunding campaign can be found here: https://www.seedrs.com/startups/freeagent