The Administrative Burden Facing Small Businesses

Setting up and running a business takes a lot of time. You may think that your time will be spent on growing the business, managing sales and marketing, and developing your services and products but in reality, running a small business can often turn out to be more admin heavy and less exciting than you might think. This is where SME outsourcing can play a crucial role in streamlining operations.

Owners are often surprised at the number of hours they can clock up doing quite simple tasks. This then takes away from the time they have to grow the business. It is a vicious circle that can be hard to break. According to research from Sage, small businesses are spending an average of 120 working hours a year on administrative tasks. That is the equivalent of an average of 5.6% of staff time in each UK-based small business. This is time that could be spent on the business itself.

Regular statutory tasks such as running a payroll, sorting out a pension, ensuring employment contracts are in place and getting your data privacy policies in order are all obligatory but time consuming. Then there’s making sure your terms and conditions work for you and that your supplier agreements don’t leave you high and dry. These are all crucial but not necessarily tasks that an SME needs to do alone. An SME might not want to spend the money but think of what could be done in the time that is saved? Or look at it another way, think how much you could lose if these tasks aren’t done properly?

The Hidden Cost of Financial Administration

Financial tasks take up the most time. The average micro-business spends 15 hours per week or 19% of their time in total doing financial admin tasks, according to a report issued by Starling Bank.

Keeping accurate accounts can be time consuming, however there are many great software programmes on the market to help you with this. The days of pen and paper bookkeeping are far behind us. Do remember though that you do need an accountant to verify your accounts and prepare documents for the calculation of corporation tax and for submitting to HMRC at the end of your financial year. This is a task that is clearly best outsourced where possible.

If you have employees, running an accurate payroll for a small number of employees may take a whole day of your precious time. Then consider if you have employees eligible for a workplace pension, by law you have to enrol them into an appropriate scheme. Calculations need to be made to establish the contribution on a monthly basis as well as pay the money into the fund and ensuring it appears on each payslip. This can be done by your accountant but quite often it is cheaper to use a payroll provider who can deal with that task efficiently.

Whilst financial tasks take priority when it comes to the key administration tasks that SMEs face, the importance of dealing with legal contracts and ensuring rights are enforceable must not be overlooked. However, here comes the warning! Be wary of doing it yourself.

Research from the Legal Services Board found that more than half (52%) of respondents opted to handle legal problems on their own and 43% of entrepreneurs used the internet and templates found online, especially in the area of regulation and intellectual property, to cover their needs. But, over a 12-month period, 38% of all small businesses experienced a significant legal problem. And while these problems affect small businesses in a variety of ways, 45% of them left a negative financial impact with the average cost of each problem being over £7,000. The most common of these related to non-payment, disputes over quality and a supplier becoming insolvent. So even if you use templates, it is advisable to get a lawyer to review them to make sure that they are fit for purpose. It will save you money in the long run.

It is essential to ensure you have robust contracts which look after your workforce, clarify your rights and obligations with clients and safeguard your supplier agreements so you aren’t left stranded. Oh and they have to cover all the relevant and up to date legislation as well so best to get them checked every two years at least to make sure they are accurate and fit your business as it has grown.

Why Delegation Is Essential for Business Growth

Delegation is a key part of growing a business, and SME outsourcing can be a great solution for this. Understanding how valuable our time is and what you should or should not do in that time is a vital skill for any entrepreneur. It may seem to you that you are saving time and money by undertaking these administrative tasks yourself but it is worth thinking of how your time could be spent more productively through the use of software and outsourcing to experts who can take the burden away from you.