In lean times, businesses need to be on top of their game, but when testing the financial fitness of 155 entrepreneurs recently, 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 research found that 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.
- Baffled by accounting speak. Entrepreneurs aren’t always financial experts and many find even basic accounting terms confusing. Almost half (47%) do not know the correct definition of gross profit and 31% do not know what turnover means. 19% of respondents do not know what margin means and 16% do not know the correct definition of cash flow.
- Confused by compliance. Only 61% 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, 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.”
How financially fit are you? Take the Intuit financial fitness test at http://app.snapapp.com/financialfitness