Inflation and rising interest rates have pervaded the US economy in 2023, and findings from the Intuit QuickBooks Small Business Index Annual Report 2023 highlight just how vulnerable some small businesses are to these economic shifts. In the US, monthly small business credit card spending is currently 20% higher, on average, than before the pandemic — equivalent to an extra $3K per business each month. At the same time, monthly repayments on credit card balances are 29% higher, on average, than before the pandemic.
To meet these challenges, small businesses are increasingly employing accounting professionals in an advisory capacity for more resilient and successful operations. More than 3 in 5 accountants report that their clients have needed more support with financial management (67%), filing taxes (62%), managing staffing costs (62%), and financial forecasting (65%) over the past two years.
As more small businesses look for accounting professionals to expand their scope beyond compliance and provide more holistic support, understanding the vulnerabilities of the small business landscape at large is critical. Knowing what small business trends the Annual Report uncovers can keep accounting professionals informed and help them better advise small business clients as they navigate these challenging times.
Key findings from this year’s report reveal:
Small businesses play a critical role in the US, Canadian, and UK economies
- More than 98% of employers in the US, Canada, and the UK are small businesses.
- Small businesses provide 36% of US jobs, 47% of Canada’s jobs, and 44% of UK jobs.
Inflation and interest rates are creating unique challenges for small businesses
- The Intuit QuickBooks Small Business Index shows negative small business employment growth in the US, Canada, and the UK during the first half of 2023 following interest rate increases.
- Compared to pre-pandemic levels, average monthly credit card expenditure is up by an average of 20% — creating potential vulnerabilities.
- At the same time, monthly credit card payments made by small businesses are 29% higher, on average, than before the pandemic.
Funding is a persistent challenge for small businesses
- Roughly half of small business owners surveyed in the US, Canada, and the UK have self-funded their business (58% in the US, 51% in Canada, 48% in the UK) — often by working other jobs.
- Young businesses and businesses owned by women and underrepresented racial groups often face greater challenges getting funding. For example, small businesses owned by underrepresented racial groups in the US are twice as likely to say getting funding is currently their number-one challenge.
- Small businesses that applied for credit from banks that were well-financed before recent interest rate rises received more funding than those working with less well-financed banks.
Small businesses making more use of digital tools are more likely to be growing
- Detailed analysis of surveys commissioned by Intuit QuickBooks in the US, Canada, and the UK, reveals a correlation between higher use of digital tools and better business performance.
- For example, US small businesses managing 8 or more areas of their business with software/apps are almost twice as likely to report revenue growth and almost three times more likely to have expanded their workforce over the 12 months prior to April 2023 than small businesses managing up to 2 areas of their business with software/apps.
- This analysis is based on the full spectrum of digital tools used by small businesses including social media, e-commerce, accounting software, HR and payroll software, email marketing, payments, and sales platforms.
Here are three actionable small business insights for accounting professionals to keep in mind as they advise their clients on growth strategies designed to help them succeed.
1. Help clients make strategic financing decisions
As highlighted by this year’s Annual Report, securing funding is a persistent challenge for small businesses — especially for new businesses and those owned by women and underrepresented racial groups. One in 3 small businesses in the US say the cost and availability of financing has worsened over the past 12 months.
And while 3 in 10 small businesses have used credit cards as a top source of funding over the past 12 months, it may come at a cost. As credit card usage has trended upward, so have monthly repayments. In the US, monthly credit card payments by small businesses are 29% higher, on average, than before the pandemic. Whether it’s to get their operations off the ground, expand their workforce, or patch the gaps of strapped cash flow, small businesses often feel the pressure of needing access to capital and needing it fast. This sense of urgency can lead to rushed decisions — such as signing up for quick-pay loans with excessively high fees and APR.
Current headwinds open up an opportunity to advise clients on making informed financing decisions for the short- and long-term, becoming a more crucial area of expertise for accounting professionals.
2. Cash flow advisory is increasingly important
Maintaining a healthy cash flow is a lifecycle imperative for small businesses. Not securing enough of a cash buffer can put small businesses at risk of making decisions that can hurt more than help. This year’s findings reveal that cash-strapped businesses have been increasingly relying on credit to manage cash flow problems — jumping from 51% in September 2022 to 68% in April 2023. And with small businesses increasingly relying on credit cards, knowing how to manage cash flow and handle curveballs can be the key to longevity.
Whether advising clients on earmarking enough cash to cover overhead costs if payments are late or for emergencies, or helping them to identify what products and services are most profitable, accounting professionals can play an invaluable role in helping small businesses succeed in uncertain times.
As inflation and interest remain high, it’s easy to overestimate money coming in and underestimate money being spent. While working with your clients, pay close mind to these areas, in particular:
- Know fixed and variable costs.
- Monitor cash flow projections.
- Treat cash-flow savings as a fixed expense.
- Creating guidelines for tapping into cash reserves.
- Guide clients on whether and what to charge their customers interest on late payments.
- Clearly communicating all payment terms as part of invoicing processes.
The benefits of cash flow advisory extend beyond the present and into the future. Helping clients anticipate future expenses and how these expenses will impact their pricing structure is an increasingly important part of advising small businesses.
3. Leverage the power of digital technology
Now more than ever, digitization is critical for small business success — and small businesses are catching on. Seven in 10 small business owners agree that AI could help them compete with larger businesses. And despite higher interest rates and inflation, this year’s report found that an average of 1 in 2 small businesses using 8 or more apps to run operations report revenue growth — whereas only 3 in 10 businesses using up to 2 apps report the same. Understanding this appetite for technology adoption among small businesses helps inform how to advise clients on technology adoption that can set them up for success.
High adoption of digital technology isn’t just supporting revenue — it’s also supporting employment. As emphasized in this year’s report, the Intuit QuickBooks Small Business Index uncovers signs of a slowdown in small business employment growth following these interest rate increases. That’s because as central banks try to combat the rise in demand and pricing by increasing interest rates, consumers are tightening their spending in an effort to adjust. But as consumers consume less under the pinch of higher interest rates, demand for the services and products of small businesses declines.
If small businesses aren’t hiring, they’re spending more time running their business than managing it. Digitization can be a resource — helping to both keep small businesses that aren’t hiring efficient and to support the businesses that are growing. The report’s authors find a clear correlation between the use of digital technology and small business growth. One in 5 high adopters report workforce growth, but fewer than 1 in 10 low adopters report the same.
Accounting professionals can help small businesses plan their digital strategy by providing tech stack recommendations that are cost-effective and streamline workflows. By empowering small businesses with the knowledge they need to make smart technology decisions, accountants can help set small businesses up for increased efficiency and expansion.
This article originally appeared on the QuickBooks Resource Center and was syndicated by MediaFeed.org.
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23 small business & side hustle ideas for 2023
When you’re thinking of starting a new business, there are plenty of possibilities to consider. But what if you don’t have a large startup budget ready to go? Doesn’t that limit your dreams severely?Whether you’re trying to launch a side hustle to supplement your day job or you just want to be your own boss, there are many businesses you can start that don’t require huge sums of money.
Explore this list of 23 of our best small business ideas. The sooner you get started, the sooner your small business might be the next great success story.
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At-home workouts became popular during the pandemic restrictions, and it’s still a favorite go-to for busy people who need exercise. If you’re a fitness lover, you may be able to launch an online training business in one of a number of different ways. An easy way to get started and build an audience is by making videos to post on YouTube or sell as a course. According to a survey by Personal Trainer Development Center, online-only trainers made $54,000 yearly on average prior to the pandemic.
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Developing websites — building and maintaining their core structure — is a technical skill that’s in high demand. Yet, it’s also a skill that you can teach yourself through videos, website lessons, and books. Once you’ve mastered and practiced the skill, you can build a portfolio and start pitching clients. All of that takes time and effort but not really money.
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Web design is a skill set you can market as a freelancer, providing your services to multiple companies that need help with the usability and aesthetics of their sites. You can focus on helping design websites from scratch or on troubleshooting and/or redesigning existing websites, or even on a combination of both. Pay for web design may run at around $60 per hour and a full website design might pay between $5,000 and $10,000.
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If you’re wondering what kind of business to start, you might think about consulting in an area you’ve already worked in, like human resources, management, IT, or operations. You can set your own hours, potentially charge more than you earned as a full-time employee, and pick and choose the projects you’ll enjoy the most.
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Starting your own graphic design business is another easy option for people who have the talent and experience. If that’s you, you can launch a website with some portfolio pieces and start pitching potential clients. If you’ve already been a graphic designer for a company, you likely already have everything you need to get started. As of May 15, 2021, the average hourly pay for a graphic designer in the U.S. was $17.99.
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Life coaching can be an extremely satisfying business. You can pick a niche you’re passionate about, like career changes, productivity, health and fitness, or some other idea you find compelling. Getting certified as a professional coach may increase your clout and marketability. While that training probably won’t be free, you might consider it an investment and take out a loan to cover your tuition.
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Whether you’ve been a hobby sewer throughout your life or just picked up the new skill during the pandemic, you may be able to turn that interest into a business. You can specialize your services in any number of ways, like making alterations, designing custom home decor like curtains and pillows, or creating hand-sewn crafts to sell.
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Résumé writing is in demand, thanks to how many people are job hunting. If this is something you have a knack for, you can either find clients on your own or freelance for a résumé agency. The average yearly income for a full-time résumé writer is $42,745, but pay varies. Bear in mind you may be able to earn more if you have expertise in a specific industry. (Learn more atWhat is a Swaption?)
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Selling used books online can be fun as well as lucrative for bibliophiles. It does involve some startup costs since you’ll need to stock up on inventory, but sourcing inexpensive books from places like thrift stores or yard sales can be fun, too. Once you make your first few sales on a site like Amazon or eBay, you can reinvest some or all of the profits to keep your inventory growing.
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If you’re fluent in multiple languages, you can utilize those skills as an interpreter or translator. This is work that can often be performed from the comfort of your own home. Global businesses may not have a full-time need for translation services, so you may be able to step in and help them as a contractor. According to the U.S. Bureau of Labor Statistics, the most recently gathered median annual earning for an interpreter/translator was $52,330.
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Pet owners spare few expenses when it comes to pet care. And since many people adopted new pets during the pandemic, a pet walking or pet care business could provide a big market in many locations. Once you land your first few clients, you can then focus on getting referrals from those successes. Nationally, dog walkers make an average of $29,000 from dog walking, though it’s important to remember that it varies by region and that not all dog walkers view it as a full-time job.
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Creating an online course is a fun way to share your knowledge about topics or skills you’re passionate about. There are many course platforms to choose from. All you need to do is create one or more videos and upload them to the teaching platform. Set a price and, ideally, you’ll soon make some sales.
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Designing and selling digital products (like videos or ebooks) is an easy business to set up, plus it becomes increasingly passive as you build up your library of products. From artwork to educational products, you simply upload your creations to your preferred platform so future customers can find your work.
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Gardens and landscaping became even more popular during the Covid lockdown. They remain favorite pursuits. If you’ve discovered that you have a green thumb, consider launching a landscaping or garden-care business to help your clients maintain beautiful yards all year long. Explore startup funding options to help finance new equipment if you need it.
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Cleaning houses is a service that’s in demand in just about every city and town across the country. Decide what particular types of services you’ll offer and collect the necessary supplies. Also consider getting a general liability insurance policy to protect yourself and your new business since you’ll be in other peoples’ homes. House cleaning can pay from about $13.75 an hour to $19.75 an hour, but that may vary based on your location and what services exactly you’re providing, among other factors. (Learn more atOptions for a $50,000 Personal Loan)
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If you have an artistic knack, consider opening an online shop to sell your own handcrafted goods. You can launch your own website or list your items for sale on an existing platform. You can either build up a stock of inventory first or opt for a made-to-order business model, which can help you save on startup costs.
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Starting a dropshipping business can be ideal for people who enjoy online marketing. As a dropshipper, you curate goods from a wholesale supplier and market them for sale online. However, you don’t hold any inventory. Instead, the supplier handles shipping for you.
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It’s easier than ever to launch your own interior design business, especially if you have some relevant design experience (your kitchen makeover!) to include in an online portfolio. There are a number of different services you might offer, like home staging, product curation, or online design plans. Consider picking a particular niche or style when you first get started so you can attract your ideal client.
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You can start a tutoring business in person, but online tutors are also popular. Pick a subject you’re knowledgeable about, like math, language arts, or English as a second language. There are plenty of online platforms through which you can market your services, or you can network to find students in need of a tutor. Online tutors can make around $30 an hour or, if they teach advanced subjects, as much as $60 an hour.
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Starting your own virtual assistant business gives you a lot of flexibility in the type of work you do and the hours and location from which you work. You can offer a range of remote services as a virtual assistant, including managing schedules, sending emails, or even handling marketing activities.
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Opening a home daycare center is a more involved small business idea, but there’s definitely a need for this service. Be sure to check your area’s local rules and regulations about opening an in-home daycare center. It may be helpful to write a business plan to keep track of everything you need to do. Alternatively, you could start small by just babysitting or nannying for one family, or even working as a parents’ helper.
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Video and audio content is increasingly popular, so you could offer voiceover services as your own business. It’s easier than ever before to do this as a remote job, plus you can get started with some inexpensive equipment, much of which you may already have, like a microphone, mic stand, headphones, and some recording and editing software. Prices for this service vary, but you might expect to make around $100 for a local radio commercial, up to $10,000 for a national television commercial, and anywhere from $200 to $300 an hour for an audiobook.
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Flipping — finding and reselling or even fixing up and reselling — used items for a profit can be a great business idea if you love bargain-hunting at thrift stores, yard sales, or even clearance shelves. To get started with no budget, you can even flip your own unwanted items from your home on an online auction site, for instance. As you make a little money, you might want to start expanding your inventory.
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Starting any new business takes some work, but the rewards are often worth it. As you get more involved in a new business — and even as it gets more profitable — you may find you need to put more resources into it. You can launch your next idea by exploring financing options.
This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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