Expert Q&A: What Our Small Business Data Shows, and How COVID-19 Affects Everything

Last year, we finished gathering all data for our United States Small Business Survey of SMB Owners - the results of which you can find right here.

While the results are certainly enlightening, to say that things have changed since this data was collected is definitely a bit of an understatement. 

According to a piece that originally ran in early April, nearly 7.5 million small businesses were in danger of permanently closing as a result of COVID-19. Only a month later, that prediction came true for more than 100,000 small businesses who ended up closing their doors forever as a result of the continuing pandemic.

Since the economic narrative in this country is constantly shifting as a result of COVID-19, we asked a series of financial and tax professionals to take a look back at the data and weigh in on what they thought it all meant. What was positive and what wasn't? Was there anything particularly surprising? Is there anything in there that might clue us into where the industry might be headed now that states are opening back up?

We wanted them to dive beneath the stats and uncover the true narrative hidden inside, and they were more than happy to do exactly that.

The True Story of SMB Owners: Our Experts Weigh In

As you can imagine, financial experts had a lot to say regarding the 2019 survey of US-based small business owners. Joshua Standley, EA, ABA of DKK Accounting said that the overall theme of the responses was clear to him: "Business owners want to have an understanding of what is going on financially. However, we've noticed that nine times out of ten, clients are unable to get this information or ask when it's too late to make any changes to help them."

He said that in his opinion, this is actually symptomatic of a much larger issue. "Many people don't understand that they are sometimes only paying for a service to be done, which may or may not include information they need to successfully operate their business." He said that if nothing else, these responses underlined the importance of hiring someone who can support you in your specific efforts, all while generating the service quality that you need. 

Brian Dela Cruz, CPA of Take Flight Business Solutions, LLC zeroed in on an entirely different trend, stating that "many people responded that they do their own bookkeeping, payroll and budgeting and financial planning, with a response rate of 50%, 47% and 58%, respectively." He indicated that his takeaway from this was that "the need for accounting professionals is more than people realize because of the amount of value those pros can and do provide." He also said that it all makes him wonder "what the level of financial success or failure, and growth or decline, is in the 'mostly by myself' business versus those who utilize an outside accounting and tax professional or, at the very least, in-house staff."

Ronald Flores of Curious Finance had a similar observation, saying that "more and more, small business owners get their tax professional on social media rather than the old-fashioned way." Ultimately, he believes this to be a problem, as "information flows too fast, which is why it's very important for tax professionals to continually connect with their small business owner clients. All of this also confirmed for me that for business owners to be profitable and grow, they NEED a team of experienced individuals like tax professionals."

It All Comes Back to the Quality of Those Relationships

Terrence O'Neill, EA of Terry O'Neill EA LLC was particularly fascinated by the answers to the question "please rate your accounting and tax professional on the following attributes." He immediately noticed that four categories rose to the top: knowledge, trustworthiness, responsiveness and friendliness.

"What's remarkable is that three of those four don't require the professional to acquire that characteristic - they just have to be it." He said that "I would agree as a small business owner and tax professional that this is spot on as to how I decide which professional or firm I choose to work with."

Ellwood Howard, EA of Great Basin Tax Service, LLC looked at all of this with a particularly optimistic view. He said that "running a small business is not an easy task and anything that can make that job easier is a valuable tool." To him, the survey responses illustrated how often tax professionals are accomplishing exactly that. He concluded, saying that "by listening to their needs and caring about their businesses and lives, and constantly training and learning through a variety of channels, we can become a welcome part of someone's business family."

But it was Chip Fugate of Fugate Business Solutions who came away with the most positive observation of all. He said that "we were very happy to see that of the 70% of small business owners that have used an accounting or tax professional in the last 12 months, 95% of them were very satisfied."

He went on to say that "it makes it very easy to see why the profession is so trusted - great work to all fellow accountants!"

Especially in the wake of the ongoing COVID-19 pandemic and during a period where we're all going through such a seismic shift together, trust for accountants is that one trend that couldn't have come along at a better time. Thankfully, it's also one that shows no signs of slowing down anytime soon.

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All Articles by Lee Reams II