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The Truly Small Business: Do You Fit The Name?

By November 5, 2020No Comments

At Kashoo, we’ve built the world’s simplest accounting software, with everything that small business owners need one click away. 

In this introductory article we will cover:

  • The overused term of small business
  • What is a Truly Small Business (TSB), anyway?
  • Truly Small business values
  • Limitations of Traditional Accounting as they relate to businesses that are truly small
  • Conclusion: How Kashoo serves TSBs to help you succeed!

We built the world’s simplest accounting software because we understand that small business owners are busy. From a stressful day dealing with tough customers and late payments to navigating the complex world of accounting, running a business isn’t your average stroll through the park. 

Luckily, small businesses can rest easy knowing that Kashoo’s software is built for the everyday small business owner. From the busy digital freelancer meeting deadlines to the busy construction contractor looking for new clients or the overwhelmed first-time eCommerce business owner selling candles—we’ve got you covered!

But there’s just one problem. No one’s accounting for the truly small business. 

Here’s why.

The Truly Small Business: Do You Fit The Name?

The Overused Term of ‘Small Business’

A 2017 Government of Canada study has shown that small business owners make-up 1.15 million small businesses in Canada out of a total of 1.18 million employer businesses. But out of those—how many are truly small

Let’s get more granular.

Small businesses make up 98.2% of all businesses in Canada. But did you know that out of nearly 1.1 million small businesses, more than half (55 percent) have fewer than 4 employees? These businesses, both small and the really small ones, are the engine of our economy. Their success is vital to economic prosperity. 

Why Differentiation Matters

As the world’s simplest accounting software, we saw the need to make this differentiation. At Kashoo, we saw a clear gap between the average small business and the truly small business—the really, really small ones.

These truly small businesses comprise a large number of total businesses in Canada and beyond and are a vibrant and profitable segment of our economies. But they often get swept up in the same tornado that applies to all small businesses in general. 

One-Size-Does-Not-Fit-All 

Many truly small business owners are entrepreneurs and go-getters. From contractors, owner-operators, to freelancers and digital professionals, these individuals make up a large segment of the entrepreneurial community. Unfortunately, they continue to receive little attention to their importance in the economic landscape. 

This lack of attention is why we continue to see policymakers develop small business legislation that may impact truly small businesses and how they operate, without properly evaluating their specific needs. 

Businesses that are truly small often need different resources and tools than their small business or medium-sized business counterparts to succeed. It’s not a one-size-fits-all solution.

So, because no one is properly accounting for the truly small businesses, we’re going to do it.

What is a Truly Small Business (TSB), anyway?

Truly small businesses, also known as micro-businesses, are a relatively new group of small businesses who identify as a small business, but often lack the specific resources (and business legislation) needed to truly succeed. 

Micro-businesses aren’t a new trend. In fact, in the United Kingdom, micro-businesses make up a whopping 96% of UK businesses alone—accounting for £824 billion in combined annual turnover and employ 33% of Britain’s workforce. 

Am I a truly small business?

So, how do you know if you are a Truly Small Business (TSB)? TSBs often identify with these traits: 

  • Have 500 or less business transactions a year
  • Annual sales and assets are valued at less than $250,000 a year
  • Consists of 5 employees or fewer, including the owner 
Am I a truly small business?

Businesses who are ‘truly small’ can come from varying backgrounds and industries. The common thread here isn’t the fact that they simply run a business. It’s that they run a small business—often starting out as a one-man show—with the need for simplicity. After all, truly small businesses can function with the same tools that larger businesses have, but it doesn’t mean they need all of it—all at once.  

Truly Small Business Values

Here are some values that we came up with, that are essential for the building blocks of Truly Small businesses (TSBs): 

  • A sense of ownership like no other. Businesses who are ‘truly small’ are typically private and made up of self-employed entrepreneurs and their small team.
  • An inherent need to streamline operational efficiency. TSB owners are always on the hunt for new networking and partnerships opportunities, tools, and software that are purpose-built. They need specific tools for specific work functions so that money is spent strategically. The goal is to save money! 
  • A continual quest to save time—because time is our greatest asset. Running a business is hard enough already without the accounting and finance aspects. TSBs don’t have time to waste on learning additional features to do their work.
  • Are resourceful. As entrepreneurs, freelancers, and small business owners, we like to conduct solutioning. We tend to find solutions for problems—even during challenging times.

So, if you self-identify as a TSB, then you might be thinking: how does this apply to me? A large part of being a TSB is its emphasis on continual improvement. And accounting processes should be one of them! 

But there is another gap. 

The Limitations of Traditional Accounting 

One of the greatest shifts of modern businesses is the transition to digital. This year’s global pandemic has ignited some major economic turbulence. Now more than ever, there is an increasing demand for small businesses to adapt in order to deliver better business results. 

Whether that’s setting up a digital storefront for a retail business, revisiting an old pricing strategy, auditing a bookkeeping business plan, or adopting software to streamline operations, there are a multitude of ways that TSBs can embrace change. 

One of these key changes is through their accounting operations. 

There are clear limitations to traditional accounting that affects more than just cash flow. These traditional ways of thinking (and of doing things) are holding TSBs back—instead of fueling them for long-term success.

These key limitations include: 

A Rapidly Changing Business Environment 

The business landscape is changing. Truly small businesses need to unlock technological innovation to keep up with it. Be it better quality customer service, faster inventory turnover, or more efforts spent on marketing spend, businesses need to automate various functions, where it makes sense, and accounting should be a top priority. 

Imminent Data Entry Errors & Time Intensive

Traditional accounting is not only labor-intensive but prone to data entry errors due to its manual nature. This affects both the validity of the financial data and overall reporting. After all, by definition, accounting is the “recording of a financial transaction.” 

Compared to other traditional accounting packages on the market and the old Kashoo, there are still ways to improve a user’s experience, such as through UX / UI design, strategic content design, and a deeper understanding of our client’s needs (hence the TSB differentiation!) Our current Kashoo 2.0 has greatly automated many aspects of traditional accounting, such as through connecting bank feeds, invoicing and billing, expense management, dashboard analysis, and overall financial reporting. 

Read more on Kashoo’s features: https://kashoo.com/features-expenses/

Traditional accounting software is also similar to modern, automated accounting software: both use a double-entry bookkeeping system, also known as debit and credit. These transactions are entered as a debit or credit in two separate accounts, which was, traditionally-speaking, very time-consuming. Traditional accounting software has (thankfully) improved so that small business owners no longer need to enter the same number twice.

Read more on basic accounting debits and credits: https://kashoo.com/blog/understanding-basic-ecommerce-accounting-debits-and-credits

Although double-entry accounting is still the way to go, Kashoo 2.0 offers TSBs an automated, improved, and much simpler workflow than traditional accounting packages out on the market. 

Why is this important? So TSBs such as yourself can tackle less administration, save time, and reduce data entry errors over time.

Costly Accounting Systems

Traditional accounting systems are expensive. There’s no doubt about that. 

By switching to purpose-built accounting software, truly small businesses can improve their company in two folds: 

  1. Save precious hours each week. Shave hours off of each week to work on other areas of the business that impact the bottom line. (i.e. marketing/sales, innovation, and other scaling-type efforts). 

How this is possible: Every inch of purpose-built software like Kashoo is designed to accommodate the truly small business. This includes streamlining bank reconciliation through connected bank feeds, receipt and transaction matching using machine learning, and more—thoughtfully designed to reduce administration so that TSBs can get back to running their business!

  1. Save money over time. At the end of the day, a business’s goal is to increase profit and decrease expenses. And this includes overhead costs! Whether they like it or not, TSBs pay for a ton of features that they’ll never use when it comes to traditional accounting software. With purpose-built accounting software, TSBs can enjoy a worry-free bookkeeping workflow minus the additional features that they don’t need. 

How this is possible: Purpose-built accounting software like Kashoo is affordable because our team has built this software for the truly small business owner. Unlike traditional accounting software packages geared towards small- and medium-sized businesses, often with numerous features like payroll, inventory management, TSBs can rest assured that they will get the best value for their dollar.

They’ll receive only the essential tools that they need—such as automated income and expense tracking, invoice sending, and up-to-date and accurate reports—to successfully run a business. Nothing more, nothing less. 

Missing Hard Copies: Get Out of the Shoebox

Historically, keeping hard copies for financial data handy is a must, especially in the case that a system error occurs and data is lost or deleted. These financial documents like receipts should be easily accessible when it comes to taxes. However, with a traditional accounting system, documents risk system errors and malfunctions. TSBs also risk losing the hard copies of financial data loss in their shoeboxes for wallets, which is a major red flag when it comes to dealing with taxes and audits. 

On the flip side, modern accounting software stores hard copies of the data in the cloud, which substantially reduces both time and costs of having to store physical copies at an office or worse—in your shoebox.

Conclusion: Why Kashoo has everything Truly Small Businesses need, and nothing more

Truly small businesses have long been forgotten, neglected, and largely invisible in the economic landscape. But our Kashoo team sees you—and we want to help! 

Do you believe that there’s a clear gap between small businesses and those that are truly small? Do you find traditional accounting software packages overly complex? Have you identified overhead costs and software features that your small business can do without? Do your business values align with some of those mentioned above? 

If you’re nodding at your head at all, or most, of the above, then you must be a Truly Small Business. And we are so excited for you to join us! 
Ready to ditch the traditional accounting software and choose a software that’s purpose-built for the truly small business? Sign up for our free trial today, connect your bank and credit card accounts, and find out in seconds exactly why Kashoo is purpose-built for your small business!

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