A new report from Sage reveals small businesses spend up to 240 days annually working on administrative tasks, translating to 17 percent of their total manpower.
Suffice it to say, spending 17 percent of total manpower dedicated to a task outside the core function of a small business is counterproductive.
With so many automation solutions available in the marketplace, why aren’t small businesses using these technologies? And what can be done to lower the administrative burden for these companies?
In order to find out, Sage commissioned Plum, an independent consulting firm, to carry out a survey. More than 3,000 companies across 11 countries took part with the goal of finding out if technology can be used to get rid of this inefficiency.
What is Administrative Burden?
As defined by Sage, administration is divided into operational and regulatory. The regulatory portion doesn’t contribute to the running of the business, but it is mandated by governments with required compliances across industries. Small law firms, medical practices and accounting firms are but a few examples of the businesses needing to comply with such regulations. And it is the regulatory portion which is responsible for the lost man-hours and cost.
Making small companies efficient benefits the country as a whole. The survey found in the US a five percent rise in productivity can increase the GDP by $324.3 billion. And when it comes to total contribution to the country’s economy, these businesses provide more than 50 percent of the GDP and employment.
Findings About the Administrative Burden on Small Businesses
Eight types of administrative tasks were identified as being responsible for small business inefficiency. They are accounting, HR, payroll, tax-related tasks, chasing late payments, processing invoices received, generating invoices and processing payments, talent acquisition and training.
Many small companies are aware of the benefits of digitization, with 30 percent having fully digitized their accounting, the most time consuming of administrative tasks. However, 47 percent don’t have a software solution in place.
When it comes to HR — another time intensive administrative task — it has the lowest uptake of software followed by late payments.
What is the Reason for Not Digitizing Administration in the US?
The respondents to the survey had several reasons. The biggest one is actually “Nothing,” with close to 30 percent giving this reason. Another 20+ percent said it was time consuming, while an almost equal number gave implementation costs as their reason. Others pointed out complicated processes, incompatible legacy systems and lack of training.
Sage says convincing small companies of the benefits of using administrative software to save time and money must be a priority.
The CEO of Sage, Stephen Kelly, said in the report, “We believe that digitization is a critical enabler in reducing the burden of admin.”
Small businesses have many options when it comes to the automation solutions available to them in the market place. Whether you want to take on the task yourself or outsource the job, in today’s digital environment, the sky is the limit.
The most important thing is to ensure the product or service you choose is compliant with the regulations in your industry.
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Admin tasks will always be a part of the process. You really cannot have a business without it. You can outsource it but it is always better to have your own team to handle it.
I wouldn’t really view it as a burden. It is required and you really cannot do away with it.
Digitizing is great, but a problem I’ve found in my work is that many small businesses have ineffective processes for what they want to digitize- and digitizing ineffective process is like paving a cow path, you just move faster to get to nowhere.
You are right. A business first has to identify the task that is costing them man hours and money, and see if there is a solution in the market place for their specific needs. And before you commit, use a trial period to see if it delivers.
There are solutions out there, you just have to find the right one for you.