Survey Finds Majority of Small Businesses Don't Know Where Their Money Is Being Spent

New Survey by OnePoll Data and Digits Finds Lack Of Financial Visibility Is Creating Headaches And Slowing Growth

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Oct 13, 2021, 09:00 ET

SAN FRANCISCO, Oct. 13, 2021 /PRNewswire/ -- Small businesses today are facing more challenges than ever before. Eighteen months into a pandemic, they are faced with safety concerns, changes in consumer demand, and hiring challenges, all while the economy rallies towards recovery. To be able to succeed, businesses need to be able to adapt quickly and make informed decisions. However, a recent survey of two thousand small businesses conducted by Digits uncovered that most small businesses lack the financial visibility they need to be successful.

The findings show that small businesses are struggling to understand where their money is being spent, how much cash they have, and more importantly, where they should be optimizing for growth or cost savings. The result is that more than half (56%) are making decisions guided by incomplete information every month. The data underscores the challenges that small businesses face today despite the fact that 75% have an accounting firm or finance team.

The survey of two thousand U.S. small businesses found:

- Business owners lack day-to-day insight on what's affecting their business most, exposing them to risk in both the short and long term.
          - An APQC General Accounting survey found the average monthly close takes 6.4 days, with some spending as much as ten days on a close creating a costly lag time for owners.
          - 80% of respondents have been caught off guard by a sharp rise in expenses in the past year.
          - 78% of respondents report that having immediate access to financial insights would make them more successful, and one in two said that this lack of clarity has negatively impacted their growth.
          - Nearly a third of respondents (29%) don't know which area of their business had the highest expenses, and 37% don't know which vendor they invested the most in over the last three months or in the last year.

- Accounting and finance teams have been an increasingly important partner to SMBs.
          - Despite these challenges, 82% of respondents are happy with their accountant or accounting firm.
          - Small businesses are pulling in their accountant and finance teams to help them navigate this challenging time; 88% of respondents reported using their accountant or finance team to support strategic planning.
          - The majority (72%) see their accountant or finance team as a key strategic partner.

- Small businesses are prioritizing speed and accuracy in every area of their business, including accounting.
          - Nearly three-quarters (71%) of respondents said that the use of innovative tools was an important factor when selecting an accounting firm.
          - 80% of small businesses cited timeliness as the most important factor when selecting an accountant or accounting firm.
          - Meanwhile, 37% said it takes 1-3 days to get accurate financial data about a specific part of their business.
          - Small businesses are still spending too much of their accounting time reviewing reports (40%) rather than strategic planning (20%), which is where they're most needed.

"We know from experience just how important it is to know what's happening with your business as it happens and how scary it can be when you are hit with a large, unexpected cost," said Wayne Chang, co-founder of Digits. "Fortunately, new tools are now giving small business owners a complete daily picture of their finances in ways that wasn't previously possible."

Methodology
An online survey was conducted with a panel of small business owners from September 9 - September 16, 2021. A total of 2,004 small-medium-sized business owners with less than 500 employees in the United States completed the survey. The sample was provided by OnePoll, a research panel company.

About Digits
Digits is on a mission to revolutionize business finance. The company builds simple but revolutionary finance tools for accountants and small business leaders. Digits has raised over $32M from Benchmark, GV, and 72 independent angel investors, including the Founders, CEOs, and Board Members of Box, Github, Carta, Tinder, Gusto, and more. Learn more at https://digits.com.

CONTACT: Digits Press Team, [email protected]

SOURCE Digits