Most SMEs don’t have a funding problem – they have a capacity problem

The question I hear most often from founders isn’t “How do I find another customer?” It’s “How do I find another hour?”

Andy Burnham is right to put small businesses at the centre of the UK’s growth agenda. SMEs account for the vast majority of UK businesses and employ millions of people. If we want stronger local economies, better jobs, and sustainable growth, helping those businesses succeed is the obvious place to start.

But while government policy matters, it is only one part of the equation. Most of the founders I work with across EMEA aren’t short of ambition or customers. They’re short of time. And the thing quietly eating their time isn’t the work itself. It’s the administration around it.

Growth exposes what you were already ignoring

Growth has a habit of exposing whatever your business was already ignoring. The systems that worked perfectly well with 10 employees suddenly become painful at 50. The spreadsheet that tracked annual leave becomes a compliance risk. Payroll lives in one system, HR in another, finance somewhere else entirely.

Nobody sets out to build that kind of business. It happens gradually, one good decision at a time. Before long, founders are spending less time growing the company and more time keeping it running.

I came across recent research from American Express that showed small business owners spend nearly twice as much time on administration as they do on strategic planning for growth. That should concern anyone interested in improving UK productivity.

Every hour spent chasing approvals, correcting payroll errors, or updating multiple systems is an hour not spent winning customers, developing products, or supporting employees.

The hidden cost of “just five minutes”

The challenge is that administrative work rarely arrives as an obvious problem. It appears as hundreds of small interruptions. A payroll query here. An onboarding task there.

A compliance reminder. An employee updating their address in one system but not another.

Five minutes disappears. Then another five. By Friday afternoon, the week has gone.

Individually, these tasks seem insignificant. Collectively, they become one of the biggest constraints on growth. This is particularly true as businesses scale.

Many founders build what I think of as an operational patchwork. A payroll platform that doesn’t communicate with HR. Recruitment software that doesn’t update employee records. Finance maintains its own spreadsheets because it doesn’t quite trust the numbers elsewhere.

None of these systems are necessarily broken. They simply weren’t designed to work together.

The result is that every process requires manual intervention somewhere along the line. Someone checks the data. Someone re-enters it. Someone reconciles two reports that should already match. It is difficult to grow efficiently when every new employee adds another layer of administration.

Productivity isn’t just about doing more

This is why we need to broaden the conversation about productivity. For years, we’ve measured productivity largely in terms of output per worker. That remains important, but we should also be asking how much productive capacity businesses are quietly losing to unnecessary administration.

Capacity is often the missing ingredient. When founders recover time, they rarely spend it doing less. They spend it where it creates the greatest value: meeting customers, coaching managers, improving products, building partnerships, and thinking about the next stage of the business rather than simply surviving this week’s to-do list.

That shift matters because growth rarely comes from becoming busier. It comes from making better decisions.

AI won’t fix an operational mess

AI has understandably become part of this conversation. According to McKinsey, AI adoption continues to accelerate across organisations worldwide.

But AI is not a shortcut around operational complexity. In fact, it often exposes it. If your employee information exists in five different places, AI cannot tell you which version is correct. If payroll, HR and finance all tell different stories, the technology will simply produce answers based on inconsistent information.

It may be fast. Its answers may even sound convincing. That does not make it reliable. The businesses seeing the greatest benefit from AI are not necessarily those adopting it first. They are the ones building solid operational foundations first.

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That means connected information, clear processes and confidence in the underlying data before asking technology to generate insights from it.

The founder’s job is to remove friction

For founders, this isn’t really a technology conversation at all. It’s a leadership one. One of the biggest mistakes growing businesses make is assuming that administration is simply the price of success. It isn’t. Much of it exists because processes evolve faster than organisations stop to redesign them.

The best founders I meet are remarkably disciplined about asking a simple question: if we were starting this business today, would we build it this way?

Often the answer is no. They simplify before complexity becomes embedded. They remove duplicate work before it becomes someone’s full-time job. They invest in systems and processes that reduce friction rather than simply adding another layer.

That creates something every growing business needs more of: capacity.

Growth needs more than good policy

As the conversation around supporting SMEs continues, I hope we spend as much time talking about how businesses create capacity as we do discussing policy interventions.

The government can create the conditions for growth. Lower costs, targeted investment and greater certainty all matter.

But I keep coming back to that question founders ask me. They rarely need help finding the next opportunity. They need to stop losing Friday afternoons to problems that shouldn’t exist in the first place.