Small firms spend four days per month battling red tape
FSB Press Release
Embargoed until 00:01 Thursday 19th May 2016
Small firms spend four days per month battling red tape
Over half of smaller business owners (55 per cent) say their company’s growth is being held back by the amount of time they have to dedicate to business administration, according to new research1 from the Federation of Small Businesses (FSB).
The findings show that a small business owner spends over 33 hours every month on internal business administration – that represents almost a quarter of an individual’s working hours2. In addition, the average small business sees around 70 hours of employee time tied up in business admin alone.
Two-thirds of smaller businesses (67 per cent) say the administrative burden is preventing them from focusing on their business’ primary purpose. The study reveals that three-quarters of business owners (76 per cent) spend more time than they would like on business compliance, tackling issues ranging from tax, employment law issues and insurance to dealing with workplace pensions, accounting tasks or health and safety issues.
Dave Stallon, Commercial Director at FSB, commented:
“The Government has pledged to remove £10 billion worth of red tape over the course of this Parliament. FSB welcomes this focus on deregulation, which should free up small business owners to spend more time doing business and creating economic growth.
“Initiatives like The Red Tape challenge, the ‘one-in-two-out’ approach to new regulations, and steps to boost the regulatory Policy Committee are all moves in the right direction.”
Business administration is not just a burden on time, it can also have major cost implications. FSB members spend an average of £3,600 on help and advice with tax compliance3. Small business owners’ time and money will be stretched even further by Government plans around tax reporting, announced in the 2015 Autumn Statement. This will require small businesses and the self-employed to keep digital tax records and report, on a mandatory basis, electronically every quarter.
Owners say they could use the time spent on business administration more productively, with 61 per cent claiming they would spend more time on sales or sales development. Indeed, the average smaller business owner claims to only spend 8 hours 50 minutes per month on new business development, just a quarter (25 per cent) of the time they spend on business administration.
Dave continues: “It is a common frustration amongst owners of smaller companies that they are unable to find the time to work on their real business activities, because they are too busy completing administrative tasks, however essential they are. These businesses need expert support they can trust in order to minimise time dedicated to business administration. If they do this, they can maximise the time spent making their businesses bigger, better and more profitable.”
Nearly half of respondents to the survey (46 per cent) said they would hire external advisors to help them with these tasks if they could afford to. However, it does come with a cost. The average smaller business that outsources these services spends almost £14,000 a year doing so.
Established over 40 years ago to help its members succeed in business, FSB is a non-profit making organisation that’s run by members, for members.
Ends
Note to Editors
1) FSB surveyed 1,685 smaller business owners online between 17th-28th February 2016. 69% had 0-4 employees; 16% had 5-9 employees; 9% had 10-19 employees; and 5% had 20 or more employees.
2) Based on a 227 working days per year and a 40-hour working week.
3) FSB Voice of Small Business Index Q3 2013 p25
About FSB
As experts in business, FSB offers its members a wide range of vital business services including advice, financial expertise, support and a powerful voice in government. Its mission is to help smaller businesses achieve their ambitions. More information is available at www.fsb.org.uk. You can follow us on twitter @fsb_policy
Media contacts:
Citigate Dewe Rogerson: fsb@citigatedr.co.uk
Ian Morris: 0161 932 1618
Charlotte Pascal: 0207 282 1021
David Sells: 0207 282 2863
For regional FSB contacts please go to www.fsb.org.uk/regions
Average number of hours spent on business administration tasks per month by small business owners and their employees
Task Average number of hours spent on this by the business owner Average number of hours spent on this by other staff Total
Tax 3h 3m 3h 35m 6h 38m
Insurance 1h 3m 54m 1h 57m
Employment law issues 1h 8m 1h 16m 2h 25m
Pensions 56m 1h 2m 1h 58m
Health & safety 2h 20m 2h 45m 5h 6m
Business banking 5h 3m 4h 15m 9h 19m
Employee care / HR issues 2h 15m 2h 58m 5h 14m
Accounting tasks e.g. paying suppliers 6h 42m 8h 3m 14h 45m
Other 11h 13m 11h 9m 22h 23m
Total 33h 46m 36h 1m 69h 45m
Source: Federation of Small Businesses
Average annual amount spent by smaller businesses that outsource business administration tasks to external parties
Task Average annual spend by small businesses
Accounting tasks e.g. paying suppliers £2,565
Tax £1,845
Insurance £1,593
Health & safety £1,184
Pensions £1,096
Employee care / HR issues £1,075
Business banking £1,029
Employment law issues £1,028
Other £2,482
Total £13,896
Source: Federation of Small Businesses