As a consumer, you have seen rising prices for everything ranging from gas to your favorite foods. You've maybe even had trouble getting certain items. As an accountant or bookkeeper, have you seen the results of this on your small business clients? How are rising prices hitting them?
Intuit recently conducted a survey of over 2,000 small business owners and decision-makers. Here are some of the results that might help you help your clients.
Nearly all small business owners are concerned about inflation.
More SMBs were concerned about inflation in March (99%) compared to September (96%), but a different number is even more indicative of the stress facing SMBs. In September, 35% of small business owners expressed they were very concerned about inflation. In March, that number had grown considerably to 52%.
Unsurprisingly, these concerns made it to the top of the top 10 list of threats facing small businesses. Rising costs and inflation were the first two items on the list.
Inflation leads to cash flow problems
In March, more than two-thirds of the businesses surveyed said they had cash flow problems. In addition, businesses that reported cash flow as a major problem grew from 14% in September to 23% in March.
The results of a major cash flow problem are not surprising. Two out of five are using cash reserves and nearly as many are using the business owners' personal savings or credit cards.
Consumer reaction to inflation adversely affects small businesses
Intuit commissioned a second study of over 8,000 employed consumers and their top reaction to the rising cost of living should be concerning to many small business owners.
Nearly three out of five consumers say they may be forced to reduce spending. The three top areas where they plan to stop spending are meals in restaurants, non-essential items, and energy such as gas and electricity. Other expenses on the chopping block for two out of five respondents are vacations, large purchases such as computers or cars and home improvements.
How can you help your clients?
Your clients are experts in delivering their products or services, but they probably aren't experts in operating a small business. And they are less likely to have the knowledge to make decisions based on their actual financial position. With SMBs self-identifying cash flow as a major problem just last month, they definitely need help.
Although you may not consider (or want to consider) yourself as an advisor, your clients probably already consider you to be one, particularly when it comes to their financials. Projecting and managing your clients' cash flows is one critical and high-value service you can provide - and charge for accordingly.
How can you learn this? There is no need for you to re-invent the wheel. Woodard has two options available for you.
- Learn full financial advisory skills. This ten-week Financial Advisory course starts April 26th.
- Focus on cash flow management skills. The one-day Cash Flow Management Power Day will be held on May 20th.
Not sure which is right for you? Connect with Steven Hoffman, Vice President, Practice Engagement at Woodard, who can work with you to determine the best path for the goals you have for your practice. You can either email Steven directly or, if you prefer, you can schedule time for a one-on-one conversation – just click on this link.