The Forecast

Intuit Reports: Small Business Revenues Down, Profitability Up

January 12, 2011 , 1 Kate Hunt

This Intuit blog post clearly illustrates revenue and profitability trends for small businesses (specifically QuickBooks Online users) from 2009 to 2010. 

To sum up what Intuit found:  overall revenues are down from 2009 to 2010, but profitability has improved in the same period. Vermont, the third highest performing state for small business revenue growth and top performer for profitability growth, reports a 15% reduction in revenues and a 71% increase in profitability from 2009 to 2010.  Conversely, Alaska, among the nation’s worst performing states, saw small business revenues shrink by 41% while their overall profitability grew 6%. 

These statistics illustrate that small businesses across the nation seem to be moving in the same direction:  doing more with less, turning smaller revenue dollar intakes into larger bottom line outputs.  How many of these small businesses are or could be your clients? 

Enter the cloud.  For 2011, expect only minor improvement in small business revenue numbers, but continued strong growth in profitability…thanks in no small part to cloud computing adoption.  All these statistics are indicative of the fact that demand in the SMB market for the efficiencies and cost savings of cloud computing is growing every day. 

Remember how I mentioned in the beginning that Intuit compiled this data from its QuickBooks Online users?  QuickBooks Online is a hosted Software-As-A-Service (Saas) offering so there’s a strong case to be made that these small businesses are already pumping more money to the bottom line by using a cloud-based accounting software.  At the very least, “the pump is primed” to introduce more SaaS and cloud-based technologies into these environments. 

One interesting side note from the Intuit report:  every industry analyzed saw profitability growth from 2009 to 2010 except for one:  Health Care Services.  Surprising and counter-intuitive, I’ll need to think this exception through some more before drawing a conclusion.  Stay tuned.