They need you, they’re just not al­ways sure what for

The 2018 Small Busi­ness Ac­count­ing In­sights study un­cov­ers ac­coun­tants’ clients’ biggest needs

Accounting Today - - Spotlight - By Daniel Hood See IN­SIGHTS on 39

Just as small busi­nesses make up the back­bone of the Amer­i­can econ­omy, they also make up the back­bone of many an ac­coun­tant’s book of busi­ness — so un­der­stand­ing their needs and at­ti­tudes is a para­mount con­cern for the ac­count­ing pro­fes­sion.

With that in mind, Ac­count­ing To­day sur­veyed over a thou­sand small busi­nesses in its in­au­gu­ral “Small Busi­ness Ac­count­ing In­sights” study, in or­der to find out what small-busi­ness own­ers and ex­ec­u­tives re­ally look for in their re­la­tion­ship with their ac­coun­tant (if they have one in the first place), what it means for them, how the ac­count­ing pro­fes­sion can bet­ter serve them, and how they can get more from their most trusted ad­vi­sor.

The re­sults of­fer some happy con­fir­ma­tion of longheld be­liefs, and un­cover some ar­eas of op­por­tu­nity that ac­coun­tants will want to ex­plore — but they also re­veal some sober­ing facts about the way small busi­nesses per­ceive ac­coun­tants, whether they work reg­u­larly with them or not.

The good news

Let’s start with the up­side: Small busi­nesses are gen­er­ally prof­itable, and those that work most closely with ac­coun­tants are more prof­itable than those that don’t.

Over two-thirds (69 per­cent) of the small busi­nesses sur­veyed re­ported that they were prof­itable in the past 12 months, while a fur­ther 18 per­cent re­ported that they broke even. Only 6 per­cent re­ported los­ing money. (The re­main­ing 7 per­cent were un­sure, which surely in­di­cates a need for the ser­vices of a qual­i­fied ac­coun­tant.)

What’s more, those small busi­nesses that work with ac­coun­tants are gen­er­ally more prof­itable, and ex­pect to grow more than those that don’t. In the pre­vi­ous year, 60 per­cent of small busi­nesses who had a “high affin­ity” for ac­coun­tants (mea­sured as those who bought at least one ser­vice from them, with the de­gree of affin­ity ris­ing with the num­ber of ser­vices) grew their prof­its, ver­sus 49 per­cent of those who don’t work with an ac­coun­tant. A sim­i­lar dis­crep­ancy ex­ists in rev­enue growth (58 per­cent for high-affin­ity busi­nesses ver­sus 44 per­cent for low), and it projects into the fu­ture, as well: 74 per­cent of small busi­nesses with out­side ac­coun­tants ex­pect to grow their profit in 2019, against 65 per­cent of those with­out.

Cor­re­la­tion, it should be noted, is not causal­ity, and that growth and prof­itabil­ity is not nec­es­sar­ily the re­sult of hav­ing hired an ac­coun­tant or CPA, but the lead­ers and own­ers of many small busi­nesses nonethe­less re­ported be­ing happy with hav­ing done so; 71 per­cent said they were “very sat­is­fied” with the ser­vices they had re­ceived, and another 16 per­cent were “some­what sat­is­fied.” And two-thirds said that they were “not at all likely” or “not very likely” to switch to another ac­coun­tant in 2019.

So small busi­nesses are do­ing well, and those that work with ac­coun­tants are do­ing bet­ter than most. They value their re­la­tion­ships with their trusted ad­vi­sors, and ex­pect to con­tinue them.

What about the down­side?

What they re­ally want

While over half (549) of the thou­sand small busi­nesses sur­veyed have an affin­ity for ac­coun­tants, over two-fifths (468) don’t buy any ser­vices from the pro­fes­sion at all.

Fur­ther­more, those that work with ac­coun­tants al­ready aren’t look­ing to buy new ser­vices — the tra­di­tional of­fer­ings they’ve mostly been buy­ing (tax ser­vices, book­keep­ing, pay­roll, and so on) are the same ones they in­tend to buy in 2019. Very few of them are in­ter­ested in the new value-added ser­vices that firms are be­ing told will dif­fer­en­ti­ate them in the fu­ture, like CFO ser­vices, suc­ces­sion plan­ning and ad­vi­sory ser­vices, or fraud ser­vices and foren­sic ac­count­ing.

In fact, they have rel­a­tively nar­row ideas about what ac­coun­tants can do: When asked specif­i­cally what they ex­pect from an out­side ac­cou­tant, by far the most com­mon an­swer was tax savings, fol­lowed closely by iden­ti­fy­ing ar­eas where busi­nesses could cut costs. Com­pli­ance with what­ever laws were ap­pro­pri­ate — and mak­ing sure that the client never faced an au­dit or an un­ex­pected tax bill — were also high on the list of ex­pec­ta­tions.

And many sim­ply want to be re­lieved of time-con­sum­ing tasks they don’t en­joy. “They should give me one less thing to worry about,” wrote a provider of vo­ca­tional em­ploy­ment train­ing ser­vices. Sim­i­larly, an op­er­a­tor of a snow sports academy and snow and ath­letic camps sim­ply wanted their ac­coun­tant to “take care of the fi­nan­cial side so I can fo­cus on run­ning the busi­ness.”

Much less in de­mand was the sort of high-value ad­vice that ac­coun­tants are so good at, though there were re­spon­dents who rec­og­nized the po­ten­tial there.

“An ac­count­ing firm should as­sist in de­ter­min­ing ar­eas for growth po­ten­tial by pro­vid­ing in­for­ma­tion on cash flow pat­terns, as well as pric­ing, po­ten­tial sources for busi­ness fi­nanc­ing, and man­age­ment of our in­ven­tory,” re­sponded a book­seller.

And one provider of soft­ware sup­port for prop­erty man­agers said that ac­coun­tants should “put you on the path to suc­cess by an­a­lyz­ing your cur­rent busi­ness model and giv­ing you point­ers on what you can do to change.”

An im­por­tant part of that kind of ser­vice is be­ing knowl­edge­able — and avail­able.

A num­ber of re­spon­dents agreed with this sug­ges­tion of a man­ager of a small-town li­brary: “Tai­lor the ser­vice to my busi­ness, and pro­vide spe­cific ideas/ con­cepts that can help my busi­ness run more smoothly and in­crease profit.”

In-depth un­der­stand­ing of both the in­di­vid­ual client and their broader in­dus­try mat­tered, but even more im­por­tant were be­ing at­ten­tive and re­spond­ing quickly.

“Be­ing able to un­der­stand the chal­lenges we face as an in­dus­try would be help­ful,” re­sponded a church man­ager. “Also, be­ing avail­able when we need them is help­ful.”

A home builder and re­mod­eler was more blunt: “Be avail­able when I have ques­tions,” they de­manded, while a firearms re­tailer also wanted speed: “They should be re­spon­sive, quick to find and pro­vide so­lu­tions, and to do their job ef­fec­tively.”

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