We recently surveyed more than 1,200 small business owners in the United States to understand what’s keeping small business owners up at night, where they’re investing, and how they’re performing.
As accountants increasingly find themselves working directly with small business owners, on a single ledger in the cloud, it’s important advisors understand what matters to the modern small business owner.
Here are a few of the findings:
1. The move to the cloud is real
The results showed 71% of respondents have at least one quarter of their business running in the cloud, a significant increase from only 23.5% reported in a survey conducted 18 months ago.
Small businesses running in the cloud are more likely to work with an accountant with 80% of responders who run their operations in the cloud, reporting they work with an advisor.
2. They’re investing in technology
With more small business owners making select investments for growth, the survey found that two thirds still plan to invest in new technology this year, with 32% planning to invest in devices. This is not surprising as we see an uptick in the amount of small business owners running their business from mobile devices and apps being used for direct customer communication.
3. Focus on organic growth
When trying to grow your business you have some options. You can seek investment to quickly infuse cash into your business to take you to the next level, or you can build your business with your profits. When we asked our small business owners, 52% of them believe they will grow organically, compared to the 12% who plan to aggressively invest, or the 24% that will make select investments.
When focusing on organic growth, cash flow is key. You’ll want to make sure you’ve optimized your invoicing, and that you have strategies in place to manage your debtors.
4. The economy is a concern
While the economy has been on the upswing, it still represents a major concern for small business owners. We had 31% of small business owners identify that the economy was their biggest challenge in 2016 compared to only 23% surveyed in March of 2016.
The economy was also identified as a concern for potential growth with 40% of respondents worried about the US economy, 33% concerned with their local economy and 31% worried about increased costs.
But it appears these concerns haven’t stopped many small business owners from paying their employees competitively. Over half of those surveyed (53%) said they won’t be impacted by mandated minimum wage increases because they already pay above it.
5. Using all channels to communicate
Small businesses aren’t just taking advantage of cloud technology. They’re also using multiple communication channels like social media, text, mobile messaging or online chat to communicate with their customers. Not only did 83% of respondents say they used these channels, 80% of those said they used those tools weekly, and 45% use them daily.
It’s not just small business owners taking advantage of modern communication More than half of respondents said they have communicated with an accountant or bookkeeper through one of these mediums, the most prevalent (43%) using text message to stay in touch.
6. Optimistic about growth
Despite concerns over the economy, many small business owners are optimistic about their growth. Changes in the market like increased demand and weak competition are benefiting many small business owners. In fact, 88% of the survey respondents say they are currently optimistic about growth. However, 52% were clear to state that they are cautiously optimistic compared to the 36% of respondents that are very optimistic.
We found that larger companies were more optimistic than small ones, with companies that had 6-20 employees being the most optimistic. But it’s not just size that matters, 60% of our respondents cited their loyal customers as a reason they’re optimistic about future growth. Rounding out the top three reasons were increasing revenue (47%) and new marketing efforts ramping up (41%).
For an accountant, understanding what the modern small business owner is concerned about can help you tailor your advice so you can be the pro these entrepreneurs are searching for.