The UK’s biggest businesses (6%) produce 65% of GDP, employing 50% of the workforce, whilst our smallest businesses (94%) produce 35% of GDP from the other half of the workforce.
The government commission that investigated the small business productivity problem in 2018 quickly concluded that lack of business systems was the single biggest cause of this wide gap.
Oddly, they did not propose a strategy to make that happen, but they might have suggested that the government fund the purchase, installation, and training of a full *ERP system for every small business with tax incentives to ensure daily usage. A small objection, though, would be the likely £100bn bill fundable only by a guaranteed surge in GDP of £1tn to pay for it.
But businesses could do this themselves by taking a steady, piecemeal approach and at a fraction of the above costs by using apps. So why don’t they do the obvious and buy and use more systems?
The following are collectively the reason:
- Natural resistance to change
- Clinging to the easiness of familiar manual methods
- Perceived cost
- Fear of complexity
- The apparent loss of control
- Distrust of suppliers
- Bad experiences
- Data security
- Lack of self-confidence in matters digitalThese attitudes will fade as digital natives (currently aged under 35) start their businesses at the age of 40.
But with the average age of business owners today at 50 and their retirement age at 70, we are 15 years away from 50% of the business owner population automatically thinking systems as the foundation of an efficient and productive business.
And even then, that 50% will still be producing less GDP than the mature 50%.
Therefore, an evolutionary turnaround in productivity is a long time coming, and without a strategy to accelerate it, the UK will be left behind on its post Brexit, post-COVID island.
How can that be avoided?
The solution can realistically only lie with accountants as they are solely the agents with trusted access to most of the UK’s small businesses and the credibility to influence them.
We already know from accountants partnered with Runagood® exactly which systems are lacking because of their daily online assessments of all types of small businesses. These are the answers they are obtaining (with proportions in brackets):
Marketing systems in use
- Estimating/ Quoting (20%)
- Contact Database (10%)
- Social media management (10%)
- Ecommerce (5%)
- Interactive Website (20%)
Operations systems in use
- Project management (10%)
- Stock Control (5%)
People systems in use
- HR management (5%)
Finance systems in use
- Online Accounting (45%)
- Management accounts (5%)
Business systems in use
- Cloud Backup (50%)
- Microsoft office/equivalent (90%)
- Business performance reporting (10%)
Given that the average system compared to a manual method performs at twice the speed and accuracy, there is a huge gain to be had here simply based on these typical businesses.
Bought as online apps and installed personally (rather than from a high-cost IT consultant), all these together cost around £40o per month. A lot for a small business but not when compared to the saving of one salary/contractor fee through the huge resulting boost to efficiency, easily providing payback in the first year.
So how will accountants persuade their business clients to adopt business systems as a strategy?
If every accountant were to collect the above data from every one of its clients the very next time they meet (it takes 10 minutes) and then calculated the efficiency to be gained in bottom-line terms from installing all the above systems that are missing, it would show a huge potential payback.
But realistically, implementing everything over 3 years would sensibly ensure good use of time and no diversion from core business activities. Through gradual purchase and installation of systems, gradual benefits will accrue, making the project cost-free, ongoing.
Not only can a go-ahead accountant help a business owner to identify the right systems and suppliers, but through their own high familiarity of installing and using systems in their practice, they can help implementation.
So, a Runagood® Business accountant is already equipped to carry out a free online assessment of any business’s productivity potential and identify the systems that will deliver it. Book an appointment here
And it’s well worth remembering that every £ of increased productivity goes directly to the bottom line as free net profit.
*Enterprise Resource Planning. The core processes needed to run a company: finance, HR, manufacturing, supply chain, services, procurement, integrated into a single system.