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23 November, LONDON: In lean times, businesses need to be on top of their game, but when testing the financial fitness of 155 entrepreneurs, Intuit, the makers of QuickBooks accounting software, found many in dire need of a workout.
Intuit tested entrepreneurs thinking about starting or already running a business and found many are:
- Without a plan. The golden rule of business is have a plan and yet 20% of aspiring entrepreneurs and 15% 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."
Over 400 small businesses owners attending this year’s Business Startup Show in London during Global Entrepreneurship Week were the first to benefit from the Intuit financial workshop sessions. The sessions provided hands-on practical training on the basics of good record keeping, explaining and demonstrating how to track and improve cash flow and how to save time on everyday tasks such as invoicing, tracking expenses and calculating and reporting VAT.
How fit are you? Anyone can take the Intuit financial fitness online now >
Additional statistics from the financial test posed to more than 150 entrepreneurs
- 61% of start-ups do not know that the UK VAT threshold is £73,000
- 23% do not know the correct definition of ‘VAT taxable turnover’
- Start-ups with business plans in place are the most financially fit (based on their ability to answer the most questions correctly)
- Start-ups using, or planning to use accounting software (46% of participants) are the most financially fit (based on their ability to answer the most questions correctly)
Understanding financial terms (including respondents who are yet to and have already started their business):
- 47% do not know the correct definition of ‘gross profit’
- 31% do not understand the correct definition of ‘turnover’
- 19% do not understand the correct definition of ‘margin’
- 16% do not understand the correct definition of ‘cash flow’
- 30% correctly understood all of the terms ‘gross profit’, ‘turnover’, ‘margin’ and ‘cash flow’
Of those thinking about setting up a business:
- 37% have a business plan
- 47% don’t have a business plan but plan to write one
- 16% don’t have a business plan and don’t plan to
Of those who have already started a business:
- 65% have a business plan
- 15% don’t have a business plan but plan to write one
- 20% don’t have a business plan and don’t plan to
About the research
The survey data was compiled by Intuit via an in-person survey at the Business Startup Show, at Earls Court in London on 17 November 2011 – part of Global Entrepreneurship Week. 155 attendees were polled, made up of established and budding entrepreneurs. The survey included 10 un-weighted questions.
About Intuit UK
Intuit is a leading provider of financial management solutions for small businesses and accounting professionals. Its flagship products and services, including QuickBooks® and QuickBooks Online, simplify small business management and payroll processing. Intuit UK is a subsidiary of Intuit Inc. For more information please visit: www.intuit.co.uk.
About QuickBooks
QuickBooks simplifies financial management, helping small business owners save time by organising their finances all in one place and making it easy to create invoices, track sales and expenses and automatically calculate and eFile VAT returns directly to HMRC. QuickBooks is the number one selling small business accounting software in the UK, according to GFK RT accounting software data for retail desktop units from September 2010 through August 2011. QuickBooks Pro and Premier are ICAEW accredited and QuickBooks Payroll is HMRC Payroll Standard accredited.
For more information please contact:
Nicola Koronka
Hotwire on behalf of Intuit UK
+44 (0) 20 7608 4673
intuit@hotwirepr.com
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