in Technology for the Small Business
businesses remain the main engine of economic growth, generating
about half of U.S. gross domestic product and representing
99% of the nation’s employers, employing roughly half
the private sector workforce, and creating the vast majority
of new jobs.
recent survey by Intuit showed that more than 80% of small
businesses are very satisfied with the services their accountant
provides (a 28% increase from 2002), and more than 59% would
also like their accountant to provide additional services,
including human resources (HR), technology, financial advising,
and business consulting.
fact that small business owners hold their accountants in
such high regard offers accountants the opportunity to play
a larger role as business advisors, particularly when it
comes to technology. Small businesses are investing heavily
in technology: According to research by AMI Partners, in
2003 the nation’s small businesses spent $86 billion
on IT products and services and spending on IT grew by 11%.
America is also taking heed and paying unprecedented attention
to the small business market, as companies, including IBM
and Hewlett-Packard, announce initiatives to equip small
businesses with the latest advances in hardware and networking,
and enterprise software companies scale down their million-dollar
applications to attract smaller customers. All of this,
coupled with tax regulation such as the Jobs and Growth
Tax Relief and Reconciliation Act of 2003 (with extended
benefits into 2004) and low interest rates, could prove
strong incentives for small business owners to invest in
Accountants Can Help
countless technology solutions available that address every
facet of running a small business, choosing the right solution
can be daunting.
An accountant’s counsel is valuable in helping small
business clients find the right technology solutions. The
following suggestions can help guide them through the process:
Make a holistic assessment of the business. Determine
which business processes (e.g., accounting, HR, inventory,
contact management) need to be automated with technology
or upgraded with new equipment. What will provide the
return on investment? Will technology actually free up
the business owner’s or manager’s time to
focus on core business issues? Do the changes meet the
evolving needs of the business’ industry?
Evaluate the business owner’s tech savvy. What is
the business owner’s learning curve to use the hardware
or software involved? How easy are they to use? Will owners
and employees require training? Will the business rely
on an IT consultant to handle installation and set-up,
and will the business invest in technical support?
Consider how to pay for the technology. If the business
is borrowing money to finance buying or leasing new equipment,
it should determine how the new equipment will help generate
additional revenue to repay the loan.
Prepare a cash flow projection for the period that it
will take to pay for the technology expenditure. This
helps determine if the business has sufficient operating
cash for both ongoing business needs and the new technology.
If a lending institution is involved, determine the level
of financial statements (plain paper, review, or compilation)
that it expects. Prepare a list of any property or equipment
to be used as collateral, along with its current market
Walker, CPA, is a director of Intuit Accountant Central