The New Year is fully underway, and many are diving into 2023 with the prospect of starting a new business. According to a recent QuickBooks report, this entrepreneurial interest is being driven by the rising cost of living and new ways of working. With this forecasted swell in new businesses, the role of an accountant has never been more vital.
Many may be first-time entrepreneurs or current owners looking to break into an entirely new industry. This means they will be seeking a trusted advisor to help them navigate some of the more difficult aspects of business ownership, particularly when it comes to finances. It is a great time for you to offer your expertise as an accountant and help usher in the next wave of small business growth.
If you find yourself with first-time business owners as clients, here are three tips to keep in mind to help guide these new entrepreneurs to success:
Inflation’s Impacts on Finances
It is no secret that inflation and its impacts are still top-of-mind for business owners. They should consider not only how this will affect inventory and pricing structures but also how it could influence their staffing and overall finances. According to the "QuickBooks New Business Insights" report, nearly two-thirds (61%) said they want to change jobs in 2023 because inflation is driving them to require more income.
Yet, 65% of new business owners also plan to keep the current jobs they have. This is an opportunity to guide these entrepreneurs who are not only starting a new business but also maintaining employment, which ultimately has tax and financial implications. Be proactive about discussing with your clients how inflation is going to impact the cost of staffing, their personal finances and their tax situation, helping them understand the short- and long-term implications.
Industries to Watch
According to the same report, we know that one in five new businesses (22%) is predicted to be in the tech or retail industries, and 14% are projected to be in the arts and entertainment industries. This should be a conversation with your client as they thoughtfully examine how they would like to launch their new business.
Utilizing features like Industry Benchmarking allows you to provide data-backed guidance by comparing a client’s gross and net profit margins against companies in their industry and local area, with similar revenue. This allows you to offer valuable feedback on the industry your client would like to enter.
Consider discussing how their business can cut through the noise if they enter a saturated industry or shake up an industry with more gaps.
Self-Funding on the Rise
Three-quarters (73%) of new businesses are expected to be self-funded, which can have implications that the owner may not initially consider. It’s essential to guide new entrepreneurs through the costs they may encounter to ensure they are properly prepared to bootstrap their businesses.
This includes walking them through how much they can realistically invest, helping them understand overhead costs, and more. The stakes can feel particularly high for an entrepreneur looking to invest their own hard-earned money into a business, so providing careful and strategic guidance for those that are self-funding is key.
It is an exciting time to start a business, but budding entrepreneurs should be equipped with all the correct information before they dive in head first to the venture. This is the perfect opportunity for accountants to provide the strategic counsel that propels small businesses success. Take the time to sit with them and discuss the wide range of factors that could impact their idea, so there are fewer surprises down the line.
From understanding how inflation will impact staffing, exploring how they stack up and can differentiate themselves from competitors, and considerations for self-funding, accountants can help these prospective business owners start their entrepreneurial journey on the right foot.
Jeremy Sulzmann is VP and GM of Intuit QuickBooks Partners Segment.
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