Sole traders and those running the smallest businesses spend less than half of their working week doing what they are supposed to.
In fact, many businesses with under nine staff aren’t actually getting to grips with their primary responsibilities until 2:36pm on Wednesday because they’re juggling non-core roles such as IT, legal, admin, finance and cleaning.
As a result, many estimate they missed out on an average of £61,000 in additional revenue – equivalent to 12.5 per cent of income each year.
A survey of 1,000 small and medium-sized business leaders found that almost half have experienced burnout and stress because they are taking on too many roles at work. On top of this, almost a third say they can’t take on new staff or grow their business because they are too distracted by operational duties.
Kate Hayward, UK Country Manager of the survey’s authors, Xero, said: “The smallest firms are missing out on so much. Losing half of their working week juggling so many support roles is not only costing them revenue, but costing our economy much needed jobs and productivity gains.
“We need to stop grouping all SMEs together, and give the smallest businesses more tailored support to free up more time for them to focus on growth.”
They found that such challenges are not restricted to the smallest businesses – medium and large SMEs experience similar time pressures. But they have the resources to employ people across non-core business functions.
For example, 93% of medium and large SMEs (50-250 employees) employ a finance or accounting specialist, but just 37% of the smallest businesses have invested in one. This gap in resources is costing the smallest and sole trader businesses (0-9 employees) twice the productivity gains of larger SMEs – 12.5% extra turnover annually compared to 6.39%.
The research also reveals a slower adoption of technology among the smallest firms with just 58% using finance and accounting software, compared with 84% in medium and large SMEs . But when they do, they find it effective; 85% who use finance software, 84% who use sales and marketing software, and 80% who use HR platforms.
