Small Business Accounting - a Giant Market
In every country exists many, many small business – the backbone of the economies. And all of them have a need to focus on their business and develop more business. Accounting firms over the world try to sync their market offer to this giant market. Accounting software companies tries to fit their product to the market need. So far, as I know, no one have combined the two to a new business model.
My thesis is that the market for small business accounting services can expand with a new business model.
As I see it, two main tracks within the accounting software has evolved. One track with high-performance software with highly integrated functions, often called ERP, with vendors like #IFS, #SAP and #Oracle. The target is large enterprises.
The second track is accounting software for small businesses and in this group we find #xero, #FreshBooks, #QuickBooks and in the Nordic countries there are software vendors such #Wisma, #Fortnox. So, what has happened?
If we look at software for small business, the vendors have focused on technology like cloud services and mobile interfaces. They market benefits such as that backup is included in the service and that it is easier for client and the accounting firm to work together. Some of the vendors have integrated with bank systems. They all work well but haven’t evolved within the accounting area.
I say “Same, same but in the cloud”
If we instead change view and look how the development has been for accounting firms we understand why small business accounting software hasn’t evolved. Almost every accounting firm has more or less a slogan where they say “With us you can use your time for your business and sell more”. That’s true – of course you get more time for business if you buy the accounting service. But how effective are the accounting service the customer buy? Well, if you do some research you find that accounting firms still use approximate the same hours to do the job - as they always have done (except for backup and collaboration with customer). And, almost everyone still base their work on manual paper based process.
As an accounting firm said to a customer “Don’t send scanned documents to us. It takes more time and cost money”
We have found that there are five key stones for the foundation to create the ultimate small business accounting firm with possibility to work global.
- Ability to specialize
- An efficient process
- Global use
- Simplicity for the customer
- Customer Control
Of course there are many details like rule based accounting, self-learning and a lot of more.
We have been working for several years on how to get the job done more effective in an accounting service firm and how to give the customer more value. Today we estimate that we have increased the efficiency by 50% with our process - backed up with our 100% digital production system. Well, at the same time, we have created a foundation for the development for a global accounting firm that have the ability to deliver more with fewer resources in a larger market.
Many small business have their bookkeeping in-house
My market research shows that in Sweden there are about 1 million small businesses and about 30% of them hire an accountant firm – another way to say that about 700k small businesses do not use an accountant firm.
In US there are about 28 million small businesses and about 50% use an accounting firm – 14 million do not (my estimation).
Back to the heading – Giant Market – the market for accounting service have a great opportunity to expand. The key is a new business model that gives higher value and better control to customer and higher efficiency of accounting services!