Why knowing your numbers is key to UK small business growth

Today is an important day for Xero, as we launch our new social impact initiative: Know Your Numbers. 

This programme aims to tackle a fundamental challenge that I encounter frequently across the UK: the deep-seated financial skills gap, something that’s important to me personally and also the reason I became an accountant. 

I grew up watching the hard graft and resilience of entrepreneurs. My own father left school at 14 to become a carpenter, eventually working nights to balance work and childcare once my brother and I arrived on the scene. I’ve seen firsthand the determination it takes to be self-employed and run a business but also the anxiety induced by managing the financial side of it.

Culturally, there is a stigma around not knowing our numbers, with many worried that they should inherently know more than they do. There’s no shame in this, but small businesses deserve more.

The financial confidence gap: it’s not just about data

The smallest firms – the 5.3 million sole traders and businesses employing up to nine staff – are the champions of our economy. Together, they generate £680 billion for the economy yet they often lack exposure to the financial knowledge they need.

Our research indicates that nearly two in five small business owners (38%) are unaware if they were profitable last month, and over half (55%) struggle specifically with cash flow management.

This uncertainty leads to avoidance and fear, which is where the personal struggle truly manifests:

• More than half (55%) avoid finances primarily due to anxiety, lack of enjoyment, or simply being busy.
• A quarter (28%) admit they don’t think of themselves as ‘a numbers person’.

This cultural resistance fosters detrimental financial habits. More than half (51%) of businesses are caught off guard by unexpected costs (with 44% caught short by unexpected expenses), a quarter (26%) fail to set aside enough money for tax, and more than half of sole traders (59%) operate without a separate business bank account.

Supporting advisors and entrepreneurs against financial misinformation

This financial skills gap explains why accountants and bookkeepers are so trusted by small businesses. They are the hands-on advisors that business owners desperately need.

But those same advisors fear they are battling against financial misinformation: nearly half (45%) of accountants and bookkeepers we surveyed blame ill-informed conversations in places like the pub for the spread of financial “folklore”. Half (50%) have worked with small businesses who incorrectly assume the government will reimburse their expenses, and a third (33%) have met business owners who didn’t realise dividends were taxable.

Introducing the Know Your Numbers programme

To support the need for improved financial literacy, we are launching Know Your Numbers. This free programme offers tools, training and educational resources designed to be accessible and fit within busy schedules. The content is offered via easy-to-digest videos and guides that can be absorbed in less than five minutes, focusing on tackling the “seven big problems” that small businesses struggle with most.

Crucially, we understand that mentoring is key. Through the programme, we are launching the Xero for Good Ambassador Programme, which connects small business owners with volunteer accountants and bookkeepers for up to a year of free mentoring. This is a commitment to helping people apply their newfound knowledge and supercharge their businesses.

A collective effort for economic stability

But more needs to be done. Plugging this financial skills gap is crucial for productivity gains, enabling businesses to make more informed decisions, and access capital for growth.

A solution requires collaboration across industries, sectors, and especially from the UK government. We are calling for financial education to become better embedded within UK culture, starting with the school curriculum.

To help drive this, Xero is forming a Financial Confidence Taskforce – made up of accountants, bookkeepers, academics, small business champions and social enterprises to campaign for more support to boost the nation’s financial literacy. 

We are also proud to support government-backed initiatives like The Maple Review, and we continue our partnership with Small Business Britain for the successful Small & Mighty Programme, which has helped 4,000 micro businesses to scale. Xero has also recently become a patron of the King’s Trust, a multi-year programme focused on helping disadvantaged young people start their own businesses.

My personal mission is to help people in small business thrive. I urge every entrepreneur reading this to explore the free resources offered by Know Your Numbers and take that first step toward greater financial fluency. Numbers are only scary if you ignore them; there’s no need to suffer in silence.

By working together – advisors, entrepreneurs, industry, and governments – we can inspire entrepreneurs to dive in and help build a more resilient and financially fluent nation.

Learn more about the research in Xero’s report: Know Your Numbers: Empowering financial confidence for small business growth.