Small businesses are fleeing to cloud
Small businesses are fleeing to cloud
The mobile revolution has reached mom-and-pop shops. According to a new Intuit study, 64% of small businesses across the US, Canada, Australia, and the UK now run their operations in the cloud—up from just 37% in 2015. And 68% of these enterprises use mobile or web-based apps in their day-to-day business, compared to just half last year.
The growth is not a surprise, said Vinay Pai, vice president of the Intuit Developer Platform. Many small business owners, he said, are using apps such as Facebook, LinkedIn, and Snapchat in their everyday lives. “That same expectation has bled over into how they’re running their business, looking to using apps for invoicing, billing, and time management,” Pai said.
The study collected responses from 2,000 small enterprise owners across the four countries, the majority of which employ one to 50 employees.
More than two in five small businesses reported their biggest challenges were controlling costs and reducing expenses. Improving cash flow, customer billing, and time management were the top factors considered among businesses looking to integrate apps.
Not surprisingly, about half of small businesses said they judge technology success on whether it will increase their revenue, the study found. “Most of these small companies are looking to grow their business, and for anything that helps with cash flow and minimizes expenses,” Pai said.
For example, in the US, federal compliance regulations require tracking employee overtime hours and ensuring they are paid. Paying for an app that tracks hourly employees can cost far less than the penalty a business would incur for not doing so, said Pai.
Apps for invoicing are also popular because they cut down on the time it takes for a business owner to get paid, Pai added. With paper invoices, it usually takes about 30 days to receive a check. With an app, businesses can get their money wired within 8 days, with half receiving payment the same day.
For small business app adopters, 68% reported using an average of 4 apps, the study found. And 66% of all small businesses surveyed said they use mobile to run their business.
Benefits and drawbacks
Many small business leaders were reluctant to move systems to the cloud, but did so because of all the available software, said Gene Marks, owner of the Marks Group PC, a small business consulting firm specializing in CRM applications.
Cloud-based apps allow the software vendor to offer easier support and updates in real time, Marks said. But, it’s important to note that monthly or yearly subscription models cost business owners more over time than the pay-once models of the past.
Marks said that his clients have reported quicker updates and increased accessibility and mobility with cloud-based apps. Using cloud-based apps can also attract millennial business and workers, who grew up using the web and mobile devices, Marks said.
The Marks Group, a 10-person firm, moved to the cloud-based Zoho CRM earlier this year, due in large part to the ability to integrate cloud-based applications. It can now use many third-party apps such as the Google suite in their system, Marks said.
App priorities for small business owners included gains in privacy, security, and cost, the Intuit study found. For Marks however, the biggest issue is the price, in terms of both longer-term costs and control. Most app services ask for a monthly fee, rather than a single payment for the system, and do not protect small business users if that fee rises over time, he said.
Tips for small business leaders
The largest barrier for small businesses considering app adoption is the sheer number available: 41% of owners said they feel there are too many to choose from, and that they are unsure which apps will be best for their business needs. Other barriers were cost (39%) and complexity (23%).
Business owners should look at reviews and search for apps that solve a particular business problem, Pai recommends. Many apps have a 2 to 4 week free trial period, so don’t be afraid to try them out, he said.
While apps can solve for certain challenges, small business employees often do not know how to fully leverage these tools, Marks said. He estimates that his typical client only uses 20% of a cloud CRM system’s full capabilities. He recommends finding a partner or outside expert who knows the app well, and offering training to employees. Some 66% of app users said they would pay for training, the study found.
Small businesses that have success with cloud app initiatives often assign someone internally to own the system, Marks said. That person becomes the go-to support system for the app, and should have training and resources on using it. “If you create an expert inside your company, it will expand the use of the application for everybody,” Marks said.