The growth of small businesses is being stunted by the pressures and fears they face over financial complexities, a new study has found.
Research released this week by KashFlow found that nearly a quarter (24.7 per cent) of small business owners are quite literally kept awake at night because of financial concerns. More worryingly, a slightly higher percentage (25.8 per cent) of the 500 small businesses questioned revealed they are reluctant to hire new staff because it would upset the existing payroll.
Despite all the positive news about Britain’s economic recovery, it appears that there are still deeper reasons that are holding businesses back. Nearly a third (31.2 per cent) of SMEs said they struggle to keep track of their money, while the exact same number claimed that if banks called in their loans tomorrow, they would no idea where to get the money to pay them.
When it comes to growth, concerns about long-term prosperity are seemingly secondary to the fact that the UK’s small businesses lack rudimentary accounting skills. This is certainly not a simple task, but it ought to be a concern for the government if companies are restricted by financial complications and red tape, particularly when it comes to taking on extra staff.
It is clear that in spite of all the praise David Cameron, George Osborne et al have for the work small companies are doing to drag Britain out of the recession, support is still not in place to help them. Instead, business owners and other employees, who are being left to worry about doing the accounts around their other responsibilities, are enduring restlessness nights as they worry about finances – 16.1 per cent of owners believe that one accounting slip up could cost them their business, so it is clearly an issue worthy of losing a few of their 40 winks over.
The 19th century New York writer Christian Nestell Bovee remarked, “we fear things in proportion to our ignorance of them”. That certainly seems to be the case here as the lack of knowledge around accounting is striking fear into small businesses, crippling their growth in the process. The government must now take strides to address the issue and provide a support infrastructure that supports and enables expansion. 
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