Online Accounting Software Key to How Small Businesses Can Survive Inflation

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Small businesses are a force to reckon with. Defined as independent businesses having fewer than 500 employees, small businesses number more than 32.5 million in the United States. They also comprise 99.9% of all firms in the country, make up 46.8% of private sector employees (61 million), and contribute 43.5% of the gross domestic product.

An important part of small businesses’ success and resilience is their adoption of technology platforms. From the COVID-19 fallout to supply chain disruptions, businesses have relied on technology to keep their operations going.

Now, small business owners are facing additional challenges in the form of rising inflation and worker shortages. Both are serious threats to business continuity and growth. In the latest Small Business Index survey released by the US Chamber of Commerce, 50% of small businesses mentioned inflation as their biggest concern. Staffing problems caused by the lack of qualified workers came in second. Also, 71% of the respondents believe that the worst is still to come for inflation and high prices. During these tough times, adopting technology platforms can be an effective way how small businesses can survive inflation.

Technology Helps Small Businesses Survive

Based on a study from the US Chamber of Commerce Technology Engagement Center, 93% of small businesses are using at least one technology platform, and 83% plan to increase their use. One reason could be that technology has proven to be an enabler despite headwinds.

The most recent example of how technology saved small businesses in a time of difficulty was the during the COVID-19 pandemic. Among respondents in the study, 86% believe that technology helped their business survive COVID-19, while 47% strongly agree with the statement. Small business owners recognized how technology helped them get the most from their employees working remotely.

Moreover, 77% of respondents said that they would struggle to survive without their technology platforms. Through their tech stack, small businesses are able to streamline their processes which helps increase productivity. They can also reach customers and gain deep insights that allow them to become more resilient during challenging times.

Leveraging Online Accounting Software to Beat Inflation Woes

Online accounting software is an important technology platform for small businesses. According to the study, 56% of small business owners use accounting software, which makes it the second most used app after social media apps (66%).

As more businesses adopt online accounting software, vendors can see more opportunities in this niche. Analysts already predict sustained growth for the market. In 2021, the global online accounting software market was valued at $3229.63 million. Analysts expect the market to expand at a CAGR of 11.05% and reach $6056.28 million by 2027.

Automation

Automation features included in online accounting software for small business owners can help address inflation and worker shortages. When businesses are having a difficult time finding qualified workers, they can automate repeatable accounting, payroll, and finance-related tasks so that current employees are not overburdened.

Since automation can also eliminate human errors, businesses can improve internal processes that can help reduce the number of hours and the individuals needed to run the business. What the business saves from hiring additional employees translates to savings, which is vital during inflation.

Flexibility

Upgrading to online accounting software can also be the most cost-effective option for small businesses. As we learned from the Technology Engagement Center study, cloud-based solutions enable remote work. For small businesses, having their accounting or finance staff do their work from home can lead to savings in office overhead costs. Rental for a huge office space is no longer necessary. Also, businesses can save on utilities, internet fees, and other operational expenses. All these things can help business owners who need to do a lot of belt-tightening to combat inflation.

Pay-As-You-Go Model

Payment options can be a lifeline for small businesses during inflation. This allows them to better manage cash flow and prioritize investments in the core aspects of their business.

Since most online accounting software and cloud-based solutions come in a pay-as-you-go model, business owners can avoid the huge upfront costs related to software licensing. There’s no need to invest in expensive IT equipment or hire a full IT staff to manage technology assets.

Most vendors also offer customized plans (users can pay only for the features they need) and discounts for long-term contracts or multiple users. As a result, small business owners can save on tech costs and have more freedom to make financial decisions to keep their businesses afloat.