We’ve been doing our sums again – and the results make for alarming reading. We asked OnePoll to survey 500 small business (SMB) owners. And the results have revealed that, despite growing interest in Xero from the UK’s vast SMB community, over half of owners still rely on manual accounting methods. In all, 26% of SMBs use spreadsheets and 25% use on paper-based records. This means that 51% of SMB owners are entirely reliant on error-prone methods for the day-to-day running of their businesses. According to the Federation of Small Businesses, British SMBs contribute half of the UK’s total GDP, currently standing at £1.5 trillion. Of course we’ll never know exactly but if the individual contributions to the UK’s GDP from small businesses were uniform, based upon the just the incidence reported in our survey, a quick calculation says that potentially up to £370 billion could be managed on spreadsheets and paper.
Experience shows that manual, paper-based working is incredibly inefficient and impairs SMB productivity. Likewise, prior studies have found that 88% of all spreadsheets also contain errors of some kind. This means billions of pounds inside the UK economy are at risk because of a failure to embrace technology, and it’s potentially limiting the UK’s ability to sustain the current economic recovery. As someone who’s always embraced technology in my personal and working life, this makes very little sense. Modern apps, smartphones and tablets are the future of business – not dusty filing cabinets and receipts in shoeboxes!
Here’s another quick calculation for you: if SMBs welcomed modern technology and abandoned manual accounting methods like spreadsheets and paper, a productivity improvement of just 5% would boost the UK economy by as much as £18 billion per annum. The enormous contribution the UK’s 4.5 million small firms make to our economy should never be understated. But to get ahead they need to move beyond Bob Cratchit-style financial processes that should have gone out with candles and paper ledgers.
By the numbers:
- Every month more than 40,000 new companies join the ranks of Britain’s 4.5 million SMBs.
- Despite the lack of visibility offered by spreadsheets and paper records, more than half (54%) of SMBs are worried about their cashflow.
- Nearly one in three (31%) said generating sufficient cashflow was a major barrier to getting the business up and running in its earlier days.
- Another 20% said having to invest or reinvest in their business had left a big impact on their cash flow.