by Roger Russell
The Enron/Andersen fiasco has not soured the way small business owners see their accounting firms, according to a recent survey of small businesses across America.
The survey of 100 small business owners and 100 accounting firms with less than 100 employees found that, despite Enron, small business owners tend to have a high degree of trust in their accountant or accounting firm. Eighty-eight percent of small business owners stated they trust their accountant "a great deal," while an additional 9 percent trust their accountant "somewhat."
This doesn’t square, however, with accountants’ own perception of the damage done by the scandal.
While the majority of accountants, 55 percent, felt that Enron has damaged only large corporate accounting firms, slightly more than one-third, or 35 percent, said that the scandal has damaged both small and large accounting practices. Only 6 percent believe that the scandal damaged Andersen exclusively, while 4 percent don’t feel the accounting community has been damaged at all.
The survey also found that despite a soft economy and big-business scandals, small business owners are optimistic about their industries and the growth of their businesses. Ninety-one percent have an optimistic outlook about the growth potential of their industries, and 93 percent feel the same way about their own businesses.
"This is one of the first surveys to ask similar questions of both small business owners and accountants to get their views on issues," said Rich Walker, director of Professional Partner Programs at Mountain View, Calif.-based Intuit, which commissioned the survey. "It’s interesting to see where they agree or have differences on the same issues."
The optimistic outlook on their business and industry shows small business owners "are still pursuing the great American dream," said Walker. "They’re entrepreneurs - they’ll look for any sign of an upturn and act on that."
For Walker, the most gratifying part of the survey was that both small business owners and accountants were looking to have accountants provide more services. "Fifty-nine percent of small business owners felt there was more their accountant could do, and 49 percent of accountants said that there were services they would like to offer," he said. "The good news is that there is a business need, but the converse is that accountants need to be talking more to their clients about their business needs."
Walker found a cautionary lesson in the disparity between accountants’ perception of their clients’ satisfaction for their services and the actual level of satisfaction among small business owners. Ninety-three percent of accountants believe that their small business clients are very satisfied with the client service they receive, while only 68 percent of clients feel the same way. "That’s a discrepancy in Ôtop one’ box satisfaction," said Walker. It comes down to talking to clients about your performance."
The reasons given for lack of satisfaction, according to Walker, are curable by greater communication. "They said that accountants have 'little knowledge of my industry, the staff is unavailable, they’re not keeping up with the new laws, they’re not being proactive in servicing my account. These are all rectifiable if the accountant asks them, 'How am I doing?’"
Walker recommended scheduling a formal performance evaluation at least once each year. "HR does this in most companies with their employees, so why can’t accountants do it with their clients? It’s another means of establishing the relationship of trusted advisor."
Barbara Leflein, whose Fort. Lee, N.J.-based Leflein Associates conducted the survey, agreed. "The small business owner doesn’t have a solid understanding of accounting practices and he needs more communication and handholding than the accountant is giving them. While the accountants didn’t lose a beat in terms of trust, they don’t get high marks as they thought they would in terms of satisfaction for services."
Leflein was surprised by the survey showing of "a disconnect between what the accountant is offering and the under-utilization of services on the part of the small business owner. Part of this, she said, "stems from the fact that the small business owner needs more help than the accountant realizes, and might not be able to articulate what those needs are. There is an opportunity for the accountant to increase his share of the wallet of the small business owner - the client he already has - in areas like consulting, financial planning, retirement, human resources and payroll."
Leflein sees small business as vital to the future growth of the economy. "Growth will come from the small business up, not as a trickle down from large businesses," she said. "These are the people who are doing the hiring, and that’s why it’s gratifying that the study shows them overwhelmingly optimistic about the future."
The survey of 100 small business owners and 100 accounting firms was conducted in early May, with each firm interviewed having less than 100 employees. Quotas were set regionally, to ensure nationally representative results.
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