According to the report, prepared for financial management solutions provider Intuit India by research firm International Data Corporation, nearly all small businesses believe that they could have been more successful with better financial management from the beginning.
“About 85 per cent said they started their business by utilising personal savings, making financial management even trickier. This affects the way decisions are made as well as how businesses are run,” read the report titled ‘Financial Management – An Essential Tool for a Healthy Business’. One of the findings was that 94 per cent of the entrepreneurs felt that they could improve their financial skills.
“…54 per cent of business owners felt that the first year of operations was the most difficult because they did not invest in financial management. The majority said they eventually had to invest time in understanding the financials of a larger, more complex business,” the study said.
Looking back at their business evolution, small business owners are clear that they will prefer to work differently.
“Almost 75 per cent of small businesses understand the need to educate themselves on financial management, both from the point of view of investments and the associated areas of impact. This trend is seen even among businesses that have been in existence for a few years,” the report stated.
Intuit India said the ‘white paper’ found that 33 per cent of small business entrepreneurs took over three years to realise that business sustainability relies on efficient financial planning.
On the findings, Intuit India vice president and managing director Nikhil Arora said, “Small businesses are at the heart of economic growth in India and are critical to boosting the country’s economic growth and job creation… They face challenges because of the inherent lack of focus on and alignment with financial management and processes.”
“It is critical that small businesses establish the financial management processes in the first year and fine-tune by the time they hit the 3-year mark,” he added.
The report also found out that 78 per cent of small businesses are now prioritising on improving their financial management skills.
It further said around 85 per cent of the country’s small businesses owners are adopting technology to manage their financials better.
The survey covered 350 Indian small businesses, with a fulltime employee strength ranging from 1 to 99 and annual revenue of less than Rs 60 crore.