Small businesses will continue to face challenges accessing fresh capital, boosting profits, managing payroll costs, weathering supply chain difficulties, and hiring new employees over the next year as economic turmoil persists in the U.S., accountants predicted in a new survey.
The survey of 536 accountants who represent 100,000 or so small businesses was conducted during tax season in March and April by tax compliance automation provider Avalara in partnership with accounting news and analysis website CPA Trendlines.
Nearly four in 10 accountants (39%) noted that 2023 so far has been “much” or “somewhat better” for their small business clients compared to 2022, while 45% reported “about the same,” according to the 2023 Avalara Accountants Confidence Report.
But when asked how the economy would shape up for their small business clients over the next 12 to 18 months, nearly 61% of accountants indicated “much” or “somewhat worse,” with less than 1% expecting anything that could be termed “better.” Overall, 70% of accounting professionals predict the economy will be “much” or “somewhat worse” over the next 12 to 18 months than it is right now.
When it comes to the key drivers of growth and profitability, the survey examined how economic conditions—such as high inflation, stock and bond market woes, heightened interest rates, a looming recession, tightening credit, and a bourgeoning banking crisis—will affect the ability of small businesses to do the following:
- Access fresh capital: 72% of accountants said clients’ ability to access fresh capital would be “much” or “somewhat worse” over the next 12 to 18 months.
- Raise revenues: 49% of accountants said clients’ ability to raise revenues would be “much” or “somewhat worse.”
- Increase profits: 61% of Main Street firms surmise that small business clients’ ability to increase profits will be “much” or “somewhat worse.”
- Manage payroll costs: 63% of accountants said clients’ ability to manage payroll costs would be “much” or “somewhat worse.”
- Hire new employees: 60% of firms surveyed said small business clients’ ability to hire new employees will be “much” or “somewhat worse.”
Accountants were more optimistic about the ability of their small business clients to adopt new technology and automation, with 70% responding “about the same,” “much,” or “somewhat better.”
“Never before have small businesses been so in need of hands-on business advisory from their accountants, from input on staffing to advice on taking lines of credit and dealing with inflation costs,” Sona Akmakjian, head of global strategic accounting partnerships at Avalara, said in a press release. “As these clients navigate their way through turbulent times, they’ll depend increasingly on their trusted advisor—the pressure is on for accountants to strengthen client relationships, level up their valued advisory capacity, and leverage all available tools and resources to stand by small businesses on the front lines.”
The 2023 Accountants Confidence Report can be found here (use code avlr).
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