Imagine having the freedom to spend more valuable face-time with customers or—more importantly—catching up with friends and family. Imagine having six extra hours of time to put toward fulfilling your New Year’s resolutions! Giving precious time back to business builders should be a priority for the Canadian government and big businesses. And yet we know that over 20 per cent of entrepreneurs globally work more than 70 hours per week. They work long after the rest of us have gone home, even sacrificing time off, with more than a third (33 per cent) taking fewer than five days of holiday per year.
Canadian SMBs—who comprise an impressive 99.7 per cent of the total number of businesses in Canada, and contribute 30 per cent to the total GDP of their province—are also guilty of overextending themselves when it comes to work. In fact, according to a BMO survey on the psychology of small business owners, the average entrepreneur grinds approximately 51 hours per week. In the study, one in seven business owners admitted they would like to scale back their work hours to spend more time with loved ones. But what exactly are business owners spending so much time doing, and how is it impacting their productivity?
According to a recent Sage report, Sweating the Small Stuff: The Impact of the Bureaucracy Burden, Canadian businesses lose approximately 1.7 per cent of valuable time due to administrative work, costing them an average of CDN$17.7 billion per year in lost productivity. Of all the administrative tasks, accounting is the most expensive, comprising over 20 per cent of administrative time in Canada and worldwide. The admin tasks that follow closely behind accounting are invoice generation and taxation.
While not bearing sole responsibility, it is important to note that a significant amount of administrative costs are due to regulatory requirements—with just under half of costs being incurred through purely operational administration (e.g. processing invoices received, talent acquisition, HR, payroll and chasing late payments). Regardless, it’s pretty shocking that despite the incredible technological advancements of the 21st century, business builders all over the world are still burdened by needless admin. Even more surprising? The problem is getting worse. The IMF estimates that productivity growth has slowed so much since 2008, that GDP in advanced economies should be five per cent higher than they are today.
As of February 1st, our recently launched live productivity tracker shows that lost productivity caused by unnecessary admin has already costed SMBs around the world CDN$1.5 billion dollars in 2018. This equates to businesses losing six working hours per week on average. Even though this is a global problem, business owners must feel empowered to take action at the local level. They can call on the government to support institutionalized digitization, and to provide the training businesses need to optimize menial admin tasks while still fulfilling regulatory requirements. AI, machine learning, collective intelligence and open data sets are just a few examples of how emerging technologies are exploding across industries and delivering improved business efficiencies.
So what can be done? Business owners should write emails, pen letters and make calls to Premiers, Ministers, Members of Parliament (MPs), Members of Provincial Parliament (MPPs) and city councillors, telling them how important it is that digitization be mandatory for Canadian businesses to stay productive and ahead of competitors in today’s increasingly digital global landscape.
The aforementioned Sage report found that only 50 per cent of SMBs currently use digitization tools to perform admin work, which means a large amount of businesses are not operating as efficiently as they could be. By being a part of the solution and advocating for widespread industry regulation, business owners can help minimize the 120 days per year spent needlessly doing manual tax returns, chasing payments and generating invoices. The benefits of doing so are endless. Along with time and money gained, SMBs will reap the benefits of a more efficient global economy, better pay prospects, a reduction in government deficits and an improved work-life balance.
In fact, according to Danielle Goldfarb, associate director of the Conference Board of Canada’s Global Commerce Centre, companies can reap large efficiency gains by using digital technologies that, in turn, will help them to sell into global markets. Need even more justification? A survey by the Organisation for Economic Co-operation and Development (OECD) found that, overall, digital technologies strongly boost productivity.
I sincerely hope this year will provide SMB ownerswith more time to do what they love—and with those dearest to them. Business builders are key drivers of the economy, and when they soar high and feel empowered, everyone benefits.
By Paul Struthers, Executive Vice President & Managing Director, Sage Canada.
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