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

Sponsored by

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 far so good: 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 1,000 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.

SMB Survey 2018 - Accounting capabilities

Much less in demand were 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.”

Joining responsiveness as a key quality in an accountant or CPA was clarity; as many of the small-business leaders noted, they’re not accountants, and often don’t understand – or want to understand – accounting.

“A CPA needs to understand that office managers are not CPAs,” said a respondent from an architecture firm. “It’s important to explain things so we can understand you. I love that our CPA is only an email or phone call away for any questions I have, big or small!”

Finally, two vocal groups expressed less than flattering opinions about different aspects of the profession. The milder of the two was concerned what accountants charge; whatever that might be, they felt, it was too much. “Be fair with pricing,” complained a buyer and seller of key fobs, echoing a sentiment expressed by many. “You are not worth more than $40 per hour.”

A smaller group opined that what they needed most from their accountant was honesty -- or worse yet, that they didn’t trust accountants at all, having encountered dishonesty in the profession before. “Be honest and straightforward,” demanded one respondent who provides supplies to ministries. “No lies.”

For reprint and licensing requests for this article, click here.
MORE FROM ACCOUNTING TODAY