This month Accounting Today released the results of its inaugural Small Business Accounting Insights Survey. This survey of more than 1,000 small business owners includes some positive news and some positively startling observations on what small business owners want from accountants.
If, like most of us here at Smansha , suspense just isn’t your thing, let’s start with the most shocking observation:
Nearly half of the small businesses surveyed don’t work with an accountant
We’ll give you a second to pick yourself up off the floor. It’s true, 468 of the 1,000 respondents said they hadn’t worked with an accountant in the previous year and were not likely to do so in the coming year. A direct quote from Accounting Today Editor in Chief Daniel Hood, “They literally can’t imagine how an accountant can help them.”
While you ponder this, here’s a bit of good news:
The small businesses that used accountants, loved their accountants
The 549 businesses that worked with accountants were quite happy with their accounting partners. Plus, the more services they were using, the higher the approval rating. The businesses that collaborated with accountants were also more profitable and experienced higher growth. In total 72% of the businesses who worked with accountants were very satisfied.
The opportunity — in terms of what small business owners want from accountants:
Accountants need to give small businesses more reasons “why”
I want my accountant to “take care of the financial side so I can focus on running the business.”
—Actual small business respondent
The biggest obstacle is that small business owners don’t know what they don’t know. It’s not their fault. Turns out that when you get the keys to a business, neither an MBA or CPA is automatically included. This means it’s up to accountants to give them the reasons why.
Small business owners need to be awakened to what a skilled small business accountant can really do for them. The narrow, limited understanding of what an accountant can actually do is the knowledge gap that needs to be leapt. Eyes need to be opened to the fact that accountants can do more than help you file your taxes.
The opening quote is true. Working with an accountant should make a business owner feel more confident. It should also make the business owner understand how fundamental this financial knowledge is to running their small business.
What do small businesses want from their accountants?
Most small businesses, 78%, want a trusted advisor. Someone who responds quickly, understands their industry, offers clear, reasonable pricing and uses plain language instead of accounting lingo. Trust me, the first time anyone sees the acronym “EBDIT” — they’re going to think you misspelled Fitbit. (Or maybe that’s just me.)
What financial problems do most small businesses face?
Not surprisingly, the top challenge was cash flow problems. Other problems faced by small businesses included low profitability, the loss of a major client, the need for capital and too much debt. We know we’re “preaching to the choir” when we say that a majority of these things all tie back to cash flow.
For instance, if a business can’t fund its own operations well enough to meet the needs of a major client. Not to mention what the blow losing a client can deal to a small business’ bottom line. Or if cash flow isn’t managed properly, then debt will most certainly become a problem.
Notice how little these common financial issues have to do with filing taxes and looking for deductions?
The real opportunities lie in the kinds of advice only an accountant can give
The responses of trusted service and advice were a given. What was less than a given was an awareness of what kind of an advisor an accountant can really be.
Most respondents were unaware of value-added services like cash flow consulting that help a business understand the money it earns moves in and out of the business. Only 21%, a little less than 1/5 of respondents, turned to accountants for value-added services like business planning, which can include cash flow forecasting.
With small business survival rates being what they are, consider that those small businesses who forecast cash flow on a monthly basis have an 80% survival rate.
Everyone understands the concept of making money. What they often fail to comprehend is the timing of it all. That your accounts receivables need be in synch with your accounts payable. Or, even that accounts receivable and accounts payable are two different things.
Cash flow consulting that includes analysis and forecasting helps businesses make better short- and long-term decisions. It helps them know if they can afford to hire new employees or invest in other growth opportunities. Routine analysis can also help pinpoint opportunities to cut costs or improve income.
Automation helps, but only accountants can advise
With cloud-based accounting software, like QuickBooks Online and its diverse ecosystem of apps, you can automate many of the manual, data-entry functions that no one — not you or nor business owners — even like to do.
With simpler solutions for expense management, invoicing and other previously time-consuming tasks, now there’s more time to focus on advocacy and building deeper relationships with business owners through services like cash flow consulting.
Get easy, insightful cash flow analytics
Another plus for accountants and the small businesses they serve is that more and more advanced analytics solutions are being developed to take the data within the business’ accounting software and make it more usable and meaningful.
This is exactly what Smansha’s analytics do. Once you connect a business’ QuickBooks Online account, our proprietary algorithms comb through the data to create a cash flow analysis that includes monthly and daily cash flow projections and detailed breakdowns of receivables, payables, income and expenses.
Make your small business clients’ cash flow data easy to present, understand and discuss. Try Smansha today.
The information in this article is not financial advice. This content is general while every financial situation is unique. It does not replace the expertise that comes from working with an accountant, bookkeeper or financial professional.
Stock image via Pexels. Survey results via Accounting Today.