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SMEs Profit from Employing Bookkeepers

Software giant XERO’s ‘Make or Break?’ report revealed that a bookkeeper is an invaluable asset to any small business.

It’s a tough job managing a fledgling enterprise. According to figures from the Office for National Statistics, just 41% of UK small businesses make it to their fifth birthday. To understand why this is the case, XERO asked 2,000 current and former owners of businesses with 20 or fewer employees in the U.S. and U.K. Their results will make an interesting read for the owners of UK SMEs, although they will probably come as no surprise to UK bookkeepers.

Amongst owners who cited a business, rather than a personal issue, as the reason for their enterprise’s failure; an incredible 65% asserted that it was a financial issue that sunk them. Issues such as cashflow visibility and access to capital, the most common financial complaints amongst the owners of these failed SMEs, are of exactly the type that bookkeepers excel in rectifying.

Indeed, there was a significant correlation between success and collaboration with an accounting professional. 42% of businesses that survived beyond their fifth year described an ‘excellent’ relationship with an accountant or bookkeeper; compared to just 27% of companies that failed.

The study’s authors concluded that a “strong relationship” with a bookkeeper was a key factor in separating “effective entrepreneurs” from their less successful counterparts. This echoes advice which the ICB has given for years. Far too many SME owners assume that they can simultaneously deal with the strains of both developing their business and keeping track of their finances.

Extract from a report published by The Institute of Certified Bookkeepers & Xero.  See the full report here: https://www.xero.com/content/dam/xero/pdf/Xero-Make-or-break-report.pdf

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