Tax & Client Services Director The BaCo Group
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small business owners

3 Challenges Small Business Owners Are Facing Now


Thanks to the COVID-19 pandemic, many small business owners are feeling less than certain about the future. While their needs may vary from industry to industry, all of them are facing some of the same obstacles. Joe Abesamis, CPA at BaCo Tech, reviews these issues and explains how accounting professionals can help.

Jul 12th 2021
Tax & Client Services Director The BaCo Group
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It’s no secret that the pandemic has taken a toll on many people, but the trend that we’ve seen this past year is that small businesses are struggling now more than ever. There are a number of challenges small businesses have faced in this time, but CPAs can help, especially when it comes to areas like cash flow forecasting. Let’s look at some specific obstacles and solutions you, as an accounting and finance professional, can provide.

The Small Business Landscape is Changing

The effect of the COVID-19 pandemic on small businesses has not been uniform. Many small companies are facing permanent closure, changes to compensation plans, layoffs and more. The way small businesses operate is changing as they adapt to this “new normal.” As an accountant, you need to be empathetic to what they’ve been through. And surprisingly, despite the difficulties business owners are experiencing, less than 2 percent faced permanent closure. Your small business clients are adaptable and resilient, so your approach to helping them should be as well.

Stress About Cash Flow

In the wake of COVID-19, a lack of cash flow threw small businesses for a loop. Whether they had a consistent cash flow before the pandemic or not, it was disrupted in March of 2020. Small business owners were facing the challenge of trying to maintain whatever cash flow they could as business declined. Accountants can help small businesses navigate this issue by analyzing their current finances and figuring out what cuts to make so they can operate with little to no revenue. CPAs can also work with small business owners to discuss PPP loans and other government programs that can help.

Another issue that we discovered with business owners in response to cash flow concerns was hoarding cash. They spent less, understandably, during an uncertain time and ended up accruing more money than they had the year before, which will be recorded as taxable income when it comes time to file. Checking with your business owners to ensure that this isn’t the case will help them avoid a much-higher-than-expected tax bill after filing.

The Overall Uncertainty

One could say that the biggest challenge small businesses have faced in the past year is the overall uncertainty of the situation. Many thought the pandemic would be over in a few weeks or a couple of months. Few of us were prepared to still be feeling the effects of it in July 2021, over a year later. This made it hard for small businesses to prepare in many ways. This is an opportunity for you to engage with your clients and help them understand the value of proactive planning throughout the year. At my firm, we engage with many of our clients and develop a relationship that is focused on frequent touch points throughout the year versus a rushed annual meeting once a year after the client’s year end.

Doing this with more of your clients can help streamline workflow and make it more consistent and logical, which is the best way you can help your small business clients. Seeking ways to spread out your workload and touch points throughout the year will help you prepare, react and adapt to the changes that will inevitably occur.

Amid uncertainty, you, as an accountant, can remain calm and logical when working with small business owners. Form a relationship with your clients so they feel more confident in the position they’re in. Keep your clients aware of information that you think is important for them to know, and seek new developments that can help ease their anxiety. Our technology makes taxes stress-free for us and our clients, so it’s one less thing they’ve had to worry about during this crazy time. In turn, it’s allowed us to engage with them in more meaningful ways, helping them navigate changes and make wise decisions. At other times, providing comfort has meant just been sitting down and talking and being a listening ear. Doing what you can to calm your clients’ anxiety is a key way to drive value to the relationship help yourself and them be better prepared for uncertainty.

We know that the pandemic has been especially hard for small businesses, and we as accountants should do what we can to make this process less stressful and more successful for our clients. There are likely many other pressing concerns as the year goes on, so engage with your clients now and ask them about what things are on their horizon that are concerning to them. Then, seek out ways to help them navigate that.

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