NEW RESEARCH | Small business owners know more about accounting than they think

Many small business owners outsource their accounting to consultants because they do not believe they have the knowledge themselves. But they have partly gotten it wrong, says Fredrika Askenmalm, Jönköping International Business School.

Congratulations on your dissertation! You have investigated how farmers that run small farms know about accounting, and your results are generalizable to small businesses in general. Why is this research important?

– I am a forest owner myself and meet many small business owners in the countryside. Everyone I’ve spoken to over the years has said that they find accounting complicated, bureaucratic and something they don’t understand. That’s why they hire accounting consultants to do the work for them. This saves time, of course, but it is also very costly.

– It is important to have transparency and full control of your finances, and therefore necessary to review how much small business owners know about accounting. From this, we can understand what actions need to be taken by society to increase knowledge.

What do your results say?

– Small business owners understand much more about accounting than they think. When I have talked to farmers in the study, they describe in detail how they make calculations and calculate a lot of things that are accounting, but which they themselves do not see as such.

– We can see that small business owners use their accounting calculations in practice. For example, farmers in my research look at whether they should buy or lease machinery, whether they should grow feed themselves or buy it in. They also pay close attention to their cash flow calculations, which is an important part of accounting knowledge.

What are your top tips for small business owners who want more control over their accounting?

– They should know that accounting is not necessarily complicated. And that they should use the accounts in the way that suits their business. In addition, small businesses should do at least part of the accounting themselves. It’s profitable and good for business, says Fredrika Askenmalm.

Contact fredrika.askenmalm@ju.se

More about the thesis
Fredrika Askenmalm recently defended her thesis at Jönköping International Business School How milk in the tank becomes crowns in the bank: The rationality of common sense.