A micro-business is generally understood to be a company with ten employees or fewer and some staggering statistics about these businesses was recently revealed by a YouGov poll of 500 micro-business owners. The research calculated that these companies are missing out on over £11bn / year through unbilled hour, which is an astonishing £280m per week.

One of the main reasons for these unbilled hours is the fact that small business owners feel overwhelmed when it comes to their accounting commitments. In fact, the research revealed that 34 per cent of respondents feel this way, with everything from payroll to invoicing to financial reporting leaving them confused and out of their depth. This highlights why it is so important to use the services of an  accountant whatever the size of your business. Whilst clearly there is a cost involved in employing an accountant it will clearly save you a considerable amount of money in the long run, by enabling you to focus on the core products or services provided by your business. And, not least, by ensuring you actually bill for the hours you put in.

Micro-businesses are typically new startups so another problem is feeling confident enough to value each and every piece of work you do for a client. How often have you just agreed to do a small extra piece of work that turned into a whole day’s effort (or more) and failed to invoice accordingly? If you don’t value what you provide to clinets how can you expect them to value your work?

The YouGov survey also found that a mere 8 per cent of respondents stated they track all of their time while a huge 63 per cent of business owners confessed that they don’t actually track or record any of their time at all. This means that almost two-thirds of small businesses are missing out on money for the sheer reason that they do not time track.

The details of the research suggested that micro-businesses are working more hours than they are billing for and concluded that, on average, these small companies will work for an additional thirty minutes of time for every hour they invoice. Essentially, this means that most small businesses are invoicing for an hour’s work for every hour and a half’s worth of work. Obviously this is no way to run a successful business, especially considering that the hourly rates of smaller businesses are often low anyway compared to larger, more well-established companies.

A balance needs to be struck between under-cutting the larger companies by enough to get the work in the first place but ensuring you are valuing what you do and being paid accordingly.

Further findings from the survey highlight the importance of using the services of a chartered accountant, as 8 per cent of business owners revealed that they spend a minimum of three full days working on their business’s accounting commitments each month, while 23 per cent spend more than one full working day per month. This suggests productivity levels are not being maximised. It is, however, understandable that many small business owners a concerned about high costs involved in hiring a professional accountant but recent trends show that more and more accounting firms, and particularly accountants in London, offer a range of fixed-fee accounting services that can be set in advance to match your budget. This removes the uncertainty of a large bill but allows smaller companies to benefit from the skills of a professional for their financial affairs.

All things considered, the survey shows how micro-businesses are clearly struggling when it comes their accounting commitments. A lot of business owners are spending their time on tasks that they don’t get paid for, which is affects efficiency levels and can also make it difficult for such companies to grow. Business owners should really take a look at this area of their company to see whether it would be more efficient and profitable to take another approach or seek outside assistance.