By Maximilian Clarke
Many entrepreneurs across the UK lack the financial expertise the get the most out of their business, a survey by accountancy and financial management firm, Intuit, suggests.
The survey of 155 of the UK’s entrepreneurs reveals widespread omissions, the most significant of which include those:
Without a plan. The golden rule of business is have a plan and yet 16% of aspiring entrepreneurs and 20% of existing business owners do not have a plan or expect to have one by the time they start their business. A plan helps a business stay focused; it is also necessary when applying for external funding.
Baffled by accounting speak. Entrepreneurs aren’t always financial experts and many find even basic accounting terms confusing. Almost half (47 per cent) do not know the correct definition of gross profit and 31 per cent do not know what turnover means. 19 per cent of respondents do not know what margin means and 16 per cent do not know the correct definition of cash flow.
Confused by compliance. Only 61 per cent are aware that the VAT threshold is £73,000 and more than one in five (23%) do not know the correct definition of VAT taxable turnover. Tracking, recording and reporting VAT is one of the biggest headaches for small businesses and getting it wrong can have a negative impact on cash flow and leave a business vulnerable to a penalty from the HMRC.
“We want to help Britain’s small businesses get fighting fit,” said Pernille Bruun-Jensen, managing director at Intuit UK. “Too many businesses run out of cash, manage it badly or just don’t have the time or the skills to help themselves out of financial difficulty. In addition to accounting software which can help business owners better manage their finances, entrepreneurs need practical advice and support to feel more confident and equipped to tackle the financial challenges of starting and running a business. Over the next year Intuit will be training more than 1,000 small businesses across the UK as part of a workshop initiative backed by the Department for Business, Innovation and Skills.”
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