Owners of micro business and sole traders are either woefully underestimating the time they take each month to conduct financial tasks, or are failing to carry out crucial financial and administrative objectives, new research has concluded.
A study from management software firm Kashflow has found that Britain’s 5.3m micro company owners and one-man bands collectively spend 2.5m working days each month completing financial management tasks – the equivalent of 3.6 hours per business owner.
The research considered the number and scale of the financial tasks micro owners and sole traders would need to complete, with the extensive list seemingly impossible to complete in such a short time.
In less than a day each month, micro business owners and sole traders claimed to be fitting in financial tasks as different and as complicated as creating and issuing customer invoices, chasing late payments, recording income and expenditure, reviewing corporation tax liabilities, paying salaries, profit and cash flow forecasting, reviewing supplier costs, reviewing capital investment and growth opportunities, and many more.
The study revealed some surprising findings about the perceived capabilities of the owners at some of the UK’s smallest firms, when it comes to management and financial tasks.
Of the hundreds of micro business owners and sole traders surveyed, almost a third admitted that managing their company finances left them feeling stressed, yet only six per cent rated their ability to manage finances as “not good”.
As many as 87 per cent of rated themselves either as “really good” or “not bad” at carrying out financial tasks like keeping cash flow in check, managing payments and remaining compliant with financial regulation.
Commenting on the findings, CEO of KashFlow, Oliver Shaw, said owners at micro companies and sole traders needed to be realistic about what was needed to stay in control of their business finances. He said: “Staying on top of their finances is vital for them to be compliant and ultimately, stay afloat.
“Many could be underestimating how long they actually spend each month [on financial management], or are perhaps overlooking important financial tasks which will help them stay in better control of their business long-term.”
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