Inaugural report provides insights and analysis
of the current state of small business in the UK, the US and
Canada
Intuit (NASDAQ: INTU), the global financial technology platform
that makes Intuit TurboTax, Credit Karma, QuickBooks, and
Mailchimp, has released the 2023 Intuit QuickBooks Small
Business Index Annual Report. Developed in
collaboration with leading global economist Professor Ufuk Akcigit
and his co-authors, the report reveals how macroeconomic pressures
like inflation and higher interest rates are affecting small
businesses' ability to create jobs and get the funding they need to
grow.
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the full release here:
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Intuit QuickBooks Small Business Index
Annual Report 2023
THE STATE OF SMALL BUSINESS
The report finds that in 2023, while overall employment levels
have trended upward in the UK, the US, and Canada, small business
employment has been less resilient. Using anonymised data from more
than 3.4 million Intuit QuickBooks customers and surveys of more
than 5,000 small businesses in the UK, the US and Canada, the
report explains how small businesses are responding to these
challenges, and examines the relationships between small business
growth, access to capital, and use of digital technology. Key
findings include:
- With elevated inflation and high-interest rates, small
businesses have increasingly depended on their credit cards, with
the current spending being 20% higher, on average, than they were
before the pandemic. At the same time, their monthly credit card
payments, which include interest charges, are up by 26% on
average.
- These pressures are affecting jobs: in the UK, small business
job vacancy growth rates declined in all of the first eight months
of 2023. Similarly, small business employment rates declined in the
first five months of 2023 in the US and in seven of the first eight
months of 2023 in Canada.
- The rise of the solopreneur (non-employer businesses) shows
entrepreneurship is stronger than ever; however, in the US and
Canada fewer new businesses are creating jobs, a concerning trend
because in the US, more than a third of all jobs are with small
businesses while in Canada and the UK it’s more than two in
five.
- Access to funding is essential for small business growth, but
roughly half of small businesses in the UK, US, and Canada, are
self-funded by the owner. New businesses and businesses owned by
women or members of underrepresented racial groups often face
greater funding challenges.
- Despite inflation declining over the past year, small
businesses in the UK, US, and Canada say rising costs are still the
#1 challenge they face.
FRESH INSIGHTS ON UK SMALL BUSINESSES
The report also examines the pivotal role of small businesses
within the UK economy, evaluating their economic performance, owner
characteristics, financing practices, digital transformation
efforts, and the diverse array of challenges they encounter. It
reveals:
- Small businesses contribute strongly to the economy: In
the UK, nearly 99% of all businesses are small businesses –
providing nearly 44% of all jobs (rising 2% between 2011 and 2022).
More than 82% of UK firms have less than 10 employees and
collectively employ nearly 19% of the country's workforce - in
addition to solopreneurs (non-employer businesses) that also
contribute a significant proportion of the UK workforce.
- The rise of the solopreneur (non-employer businesses):
The share of non-employee businesses in the UK has increased from
68% in the early 2000s to 74% today. The rise of the gig economy
and use of automation tools - which let solopreneurs
single-handedly run their operations - could also be facilitating
this increase. The UK also has the highest percentage of business
owners over 65 – making up 9% of the total group.
- Self-funding amidst UK small business’ challenges in
accessing credit: Nearly half (48%) of small business owners
have used personal savings at some point to fund their business.
Small businesses in the UK are least likely to have sought funding
(with 59% not seeking any) in the past 12 months compared to 48% in
the US and 54% in Canada.
- Cost and availability of funding worsens: About a third
(32%) of UK small businesses agree that, over the past 12 months,
the cost and availability of financing has deteriorated, rising to
39% amongst the youngest firms aged 0-5 years who are in the
crucial early stages.
- Credit card spending on the rise: At the same time,
monthly credit card expenditure has increased 22% since the
pandemic - again higher than in the US (20%) and Canada (18%),
equivalent to £2,400 per business. Due to the current high-interest
rate environment, monthly credit card payments against account
balances have risen 25% since pre-pandemic, equivalent to almost
£2,000 per business.
- Going digital to improve resilience: The report
indicates a clear correlation between higher use of software, apps,
and other digital technologies and better business performance. In
the UK – much like the US - a substantial 54% of enterprises that
are high users of digital tools (using 8 or more) report positive
revenue growth. The report reveals the top three digital tools used
by UK small businesses as: social media (51%), business website
(50%) and accounting/financial software (45%).
Leading global economist, and Arnold C. Harberger Professor
of Economics at the University of Chicago, Ufuk Akcigit said:
“The Intuit QuickBooks Small Business Index Annual Report gives
unique visibility into the health of small businesses and the
issues they are facing today. Inflation rates have been soaring in
the UK since 2021, and reached a peak in October 2022. Even now,
consumer prices have risen 6.3% in the past 12 months. Against this
backdrop, the Annual Report indicates small businesses have been
funding their business through their own savings or credit cards -
which are incurring extra costs due to higher interest rates. Our
goal is for policymakers, industry leaders, and aspiring
entrepreneurs to draw valuable conclusions from this in-depth
analysis to create policies and foster an environment conducive to
the success as well as the resilience of small businesses within
these specific sectors and regions. Part of this includes a greater
diversity of funding options so small businesses don’t have to
struggle with extra costs in today’s high interest
environment.”
Sasan Goodarzi, CEO of Intuit said: “Becoming an
entrepreneur is a bold decision. Given the significant impact new
and growing small businesses have on job creation, innovation, and
the economy, policymakers and industry leaders should be equally
bold in creating an environment where small businesses can grow and
thrive. We remain focused on working across the industry to create
new and innovative ways to serve our customers and help solve their
most pressing challenges.”
Based on the research and insights from the report, Intuit has
developed a set of recommendations for policymakers, accountants
advising their small business clients, and entrepreneurs starting
and running small businesses. These concrete, actionable
recommendations can help policymakers foster an environment
conducive to small business growth and resilience; accounting
professionals provide guidance to their clients in responding to
the challenges and trends identified in the report; and small
business owners set their businesses up for success.
For more insights, check out the Intuit QuickBooks Small
Business Index Annual Report here. To stay up to date on the latest
monthly Index releases, visit the Intuit QuickBooks Small Business
Index interactive hub.
ABOUT THE REPORT
RIGOROUS METHODOLOGY
The report’s findings are based on a new analysis by Ufuk
Akcigit, Raman Singh Chhina, Seyit M. Cilasun, Javier Miranda, Eren
Ocakverdi, and Nicolas Serrano-Velarde of four data sources, in
partnership with Intuit QuickBooks data analysts:
- Intuit QuickBooks Small Business Index: recent
employment and hiring trends among small businesses in the US,
Canada, and the UK. Methodology details available here.
- Intuit QuickBooks customer data: anonymised, aggregated
and reweighted/adjusted to reflect the wider population of small
businesses in the US, Canada, and UK, not Intuit’s business, to
provide new insight into small business access to credit, credit
card expenditure, and payments against credit card balances during
the recent inflationary period. Sample: 3.4 million small
businesses; 2,795,000 in US; 305,000 in Canada; 313,000 in UK.
- Intuit QuickBooks Small Business Insights: regular
online surveys of small businesses with up to 100 employees,
commissioned by Intuit QuickBooks in the US, Canada, and UK every
three to four months. Total sample size for April 2023 wave of
surveys: 5,175 (comprising 2,805 small businesses in the US; 1,210
small businesses in Canada; and 1,160 small businesses in the
UK).
- Official statistics and other external sources,
including publicly available data from: the U.S. Census Bureau;
Federal Financial Institutions Examination Council, Bank Holding
Company (US); National Federation of Independent Businesses (US);
Statistics Canada; Office for National Statistics (UK), Department
for Business, Energy & Industrial Strategy (UK);
New insights from the analysis of this data comprise four major
topic areas in the Intuit QuickBooks Small Business Index Annual
Report:
- Long-term small business employment trends and the
critical role small businesses play in the US, Canadian, and UK
economies, including: job creation, the rise in self-employment,
and the COVID-19 pandemic’s contribution to new business growth.
Source: official statistics.
- Recent trends in small business employment since the
COVID-19 pandemic, in four phases: initial downturn due to the
spread of the virus; recovery period as small businesses adapted
and new businesses were created; second downturn coinciding with
higher inflation and interest rates; and, lately, early signs of a
second rebound, particularly in the US. Source: Intuit QuickBooks
Small Business Index.
- Small business access to funding: why small businesses
need funding, where they get it, how they use it, and which
businesses face the greatest challenges obtaining it — with a close
examination of the impact of inflation on small business finances,
using anonymised data from QuickBooks customers in the US, Canada,
and UK. Source: Intuit QuickBooks customer data and Intuit
QuickBooks Small Business Insights survey (see sample details
above).
- The state of small business in the US, Canada, and UK
today: combining a new analysis of official statistics with
survey data from more than 5,000 small businesses, including 2,325
QuickBooks customers. Source: Intuit QuickBooks Small Business
Insights survey (see sample details above).
The full methodology is provided in the appendix of the Intuit
QuickBooks Small Business Index Annual Report.
ABOUT PROFESSOR UFUK AKCIGIT
Ufuk Akcigit is the Arnold C. Harberger Professor of Economics
at the University of Chicago. He is an elected Research Associate
at the National Bureau of Economic Research, Center for Economic
Policy Research, and the Center for Economic Studies, and a
Distinguished Research Fellow at Koc University. He has received a
BA in economics at Koc University, 2003, and Ph.D. in economics at
Massachusetts Institute of Technology in 2009.
As a macroeconomist, Akcigit’s research centers on economic
growth, technological creativity, innovation, entrepreneurship,
productivity, and firm dynamics. His research has been repeatedly
published in the top economics journals, cited by numerous policy
reports, and the popular media. The contributions of Akcigit’s
research has been recognised by the National Science Foundation
with the CAREER Grant (NSF's most prestigious awards in support of
early-career faculty), Kaufmann Foundation's Junior Faculty Grant,
and Kiel Institute Excellence Award, among many other institutions.
In 2019, Akcigit was named the winner of the Max Plank-Humboldt
Research Award (endowed with 1.5 million euros and aimed at
scientists with outstanding future potential). In 2021, Akcigit was
awarded the prestigious Guggenheim Fellowship and was named a
Fellow of the Econometric Society. In 2022, he received the Sakip
Sabanci International Research Award and Kiel Institute’s Global
Economy Prize.
ABOUT INTUIT
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prosperity for the people and communities we serve. With 100
million customers worldwide using TurboTax, Credit Karma,
QuickBooks, and Mailchimp, we believe that everyone should have the
opportunity to prosper. We never stop working to find new,
innovative ways to make that possible. Please visit us at
Intuit.com and find us on social for the latest information about
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Dan Alder-Lundmark, Intuit QuickBooks UK
Daniel_alderlundmark@intuit.com
Julia Sammons, Ogilvy UK Julia.Sammons@ogilvy.com
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