Accounting Insights from 750 Small Business Owners

Revenue and cash flow are the most important factors to a small business owner trying to survive the early years. Hence, it’s no surprise that a recent report by Cornerstone Advisors, New Revenue Opportunities From Embedded Accounting, which was based on their independent survey of small business owners across the U.S., showed that small business owners spend approximately 20 hours each week on accounting functions. These tasks are pretty evenly divided between bookkeeping, invoicing, expense tracking, financial reporting, and tax management.

Money Keeps a Business Alive

In business, money is the blood that keeps it alive and allows for growth, and accounting is the lifeline – the veins – that manage cash flow. Yet, too often, it’s an afterthought. In last month’s blog post, I noted that most small business owners are still using spreadsheets rather than software to manage their business accounting.

That may seem surprising in today’s digital world, but the Cornerstone Advisors study reinforced the fact, finding that 52% of small business owners are using spreadsheets for bookkeeping.

Businesses Need People – Who Need Money

And since I’m comparing money to blood here, I’ll go a step further and say that team members – whether one or 100 – are the oxygen a business needs to survive.

No business can thrive, or even survive, without people. And people require compensation. Even a sole proprietor needs money to survive, and managing the business’s cash flow takes time away from all the other things a small business owner needs to do.

Accounting Services Cost Money

It would be logical to think that paying a third-party accountant would save small business owners all that time or that doing all of their own accounting would save them money. But neither is true. Almost half of small businesses outsource accounting functions, and they still spend the same amount of time managing those functions as those that do everything themselves.

Using outside accounting services and CPAs comes at a cost of roughly $11,000 per year, or somewhere between 13% and 20% of a small business’s overall revenue.

Business owners put a lot of time, effort, and money into their accounting, whether they outsource the tasks or not.

Technology Is a Solution for Many

Nearly 40% of small business owners say they use specialized apps or accounting suites to support accounting functions – even if they still use spreadsheets for some functions. Between 14% and 23% of small business owners get their accounting technology directly from third-party services.

Of the business owners surveyed by Cornerstone Advisors, 43% said expense tracking was the most challenging accounting function they managed – a challenge that could easily be solved by embedding technology like Hurdlr’s.

Hurdlr Provides Everything in One Place

I’ve said it before, and I will say it again: Small business owners want everything in one place. They just don’t have the time or resources to be jumping from a spreadsheet to apps to special software and back to the spreadsheet.

At Hurdlr, our customers are small business-focused fintechs and vertical SaaS providers, and they come to us for our Embedded Accounting solution because their clients are asking them to bring all the accounting functions – bookkeeping, invoicing, expense management, financial reporting, and income tax services – together into one place. These fintech providers use Hurdlr’s API to build out customer-centric functions quickly and cost-effectively.

Hurdlr’s platform customers know that they will succeed if their customers succeed. It makes sense to bring together functions in vertical software that small business owners need. With a complete and cohesive software solution, they can manage their business and their accounting through one platform.

At the end of the day, most small business owners aren’t equipped with the knowledge and time that’s needed to choose the best accounting system for their needs. But they know their business and can intelligently select vertical software. With accounting functions embedded with Hurdlr’s API, it’s a perfect fit.

If you provide fintech software for one or more verticals, I encourage you to download this report for free (no registration required) and then reach out to me to start a conversation about Hurdlr’s white-labeled Embedded Accounting solution and how to give your small business customers everything they need from your platform.