2018-10-26 08:08:28Operations & TechnologyEnglishSmall business owners are not making full use of operations technology according to this special report from QuickBooks Payroll based on an...https://quickbooks.intuit.com/r/us_qrc/uploads/2018/10/bus_ops.jpghttps://quickbooks.intuit.com/r/operations-technology/small-business-owners-dont-make-full-use-of-operations-technology/Small Business Operations Survey 2018

Small Business Owners Don’t Make Full Use of Operations Technology

6 min read

Few small business owners go into business thinking, “I can’t wait to handle all my own accounting!” Rather, it’s a job built on passion, where day-to-day operations are a constant work in progress with a steep learning curve.

But despite the fact operations often take business owners outside their wheelhouse, surprisingly few rely on technology to simplify their task lists. As a result, many business owners admit to spending too much time figuring out less exciting—albeit necessary—operations activities like bookkeeping and inventory.

In an effort to better understand what resources small business owners are employing to accomplish these tasks and what role technology plays in operations, QuickBooks surveyed 400 small business owners with 20 employees or fewer. Survey respondents were asked about everything from their level of automation to what role employees play in running business operations. Check out our summary below to see what they said.

Small Business Operations Survey 2018

Only 30% of business owners see their business as ‘highly automated’

Despite feeling they spend too much time on the operations side of the business, few small business owners have taken the leap to automation. Perhaps, as a result, respondents are spending too much time on accounting, administrative tasks, bookkeeping, inventory, and chasing payments. Inversely, small business owners say they don’t spend enough time on marketing, HR/recruitment, and IT.

How much time do you spend on the following?

Despite the fact they don’t spend enough time on it, business owners counted HR among their top three operational priorities, alongside accounting and administration. Asked “which of the following is most important to your business?” the survey respondents ranked these seven business functions in the following order (1 = most important):

  1. HR/recruitment
  2. Accounting
  3. Administration
  4. Inventory
  5. Payroll
  6. Bookkeeping
  7. Marketing

When asked what the optimum number of employees was for conducting business operations efficiently, respondents largely answered somewhere between two to four employees, though 14% answered 10, which would be half the workforce for a small business of 20 people.

What’s the optimum number of employees for efficient business operations in a company of your size?

While business owners seem to recognize the importance of these tasks, fewer than you’d think are using automation to achieve accurate results. In fact, small business owners are least likely to use software to help with HR/recruitment, administration, and chasing payments—three areas where automation can create the most efficiency and accuracy.

Do you use technology (e.g. apps or software) to help you with any of the following?

The above graph depicts some startling results. For instance, 70% of business owners aren’t using an app or other software to help with scheduling. While that might work for a business with just one employee, keeping track of even a few people can be a nightmare without help.

There are plenty of affordable resources available to help with scheduling, from the most basic Google Calendar app to the low-cost scheduling add-on inside TSheets by QuickBooks. And speaking of TSheets, according to these responses, 3 out of 4 small business owners aren’t using technology to help with time tracking. That means 75% are still using paper timesheets, which puts them at risk for things like lost profits due to time theft and inaccurate time cards.

More than 3 out of 5 respondents said they’re not using technology to help with payroll or accounting, which could put them at risk of violating the Fair Labor Standards Act, with violations like underpaying workers, failing to pay overtime, or not paying workers the minimum wage. Calculating payroll by hand and cross-referencing spreadsheets or Word documents is also an enormous time suck and a waste of money.

According to an infographic by Score.org, a nonprofit business mentoring service, even without making costly errors, 46% of small businesses spend $101-$500 per month on payroll costs, and nearly 1 in 3 spend between $500 and $5,000 on calculating payroll. As for time, nearly 50% of respondents who handled payroll in-house said it took them three hours per month to more than 10 hours per month. Understandably, 40% said bookkeeping and doing their own taxes was the worst part of being a small business owner. Considering 64% do their bookkeeping by hand, that’s not really a surprise.

Overall, 1 in 3 small business owners would describe their operations system as “highly automated.” Almost 1 in 5 (19%) said their systems were “not automated at all.”

How well automated are your business operations?

When asked why they weren’t automated, business owners cited reasons ranging from “no need, we’re too small” (36%) to “we tried, but it didn’t work” (7%).

Why do you not use more automation in your business operations?

One in 5 business owners felt they lacked the knowledge or expertise to automate their business’s systems, while 15% said automating was too expensive. What they may not realize is that today’s technology is often more intuitive and easy to use than most folks realize, and in the case of apps, especially, it’s cheaper than you think. Add in the time and money your company will save by automating a few key processes and, ultimately, these technologies pay for themselves, particularly once you understand what your time is worth.

Key Takeaways

Most small business owners know they don’t have all the necessary skills, or even the time, to take care of all the business operations on their own. Keeping track of things like accounting, business development, or even administration might be best left to a trusted employee—or an easy-to-use software tool.

But despite knowing these jobs are imperative and tough to get right without help, many small business owners aren’t investing in the technology solutions that could cut down on expenses and wasted time. As it turns out, the fears holding them back may be the very fears keeping them from achieving ultimate success.

Methodology
QuickBooks surveyed 400 U.S. business owners who employ 1 to 20 employees in June 2018 about their business operations and technology. The respondents were independently chosen and contacted by Pollfish. QuickBooks welcomes the re-use of this data under the terms of the Creative Commons Attribution License 4.0, which permits unrestricted use, distribution, and reproduction in any medium, provided the original source is cited with attribution to http://quickbooks.intuit.com

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Information may be abridged and therefore incomplete. This document/information does not constitute, and should not be considered a substitute for, legal or financial advice. Each financial situation is different, the advice provided is intended to be general. Please contact your financial or legal advisors for information specific to your situation.

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