Home FreshBooks Provides Unique View into Small Business Finances

FreshBooks Provides Unique View into Small Business Finances

Businesses under 10 employees account for a large portion of the US workforce. Yet the metrics associated with this market remain enigmatic, at best. And while professional organizations have tried to capture information on these workers – like the AIGA’s annual review of design salaries – those surveys only show a slice of the pie.

Enter FreshBooks, a Web-based invoicing system focused on individuals and small companies. FreshBooks holds a wealth of data about this workforce – across a variety of disciplines – and they’ve asked their users for rights to share that data in anonymous aggregated form. The result? A unique glimpse into the numbers that make these businesses tick.

With the release of FreshBooks Report Cards, FreshBooks will provide an ongoing series of publicly accessible quarterly reports, detailing the financial performance of these workers through metrics like amount invoiced, average time to collect, amount invoiced per client, percentage of revenue from new clients, and percentage of revenue that is recurring.

Those who choose to subscribe – or sign up for a free account – will receive a more extensive report, detailing how their finances match up to their peer group:

The first set of report cards covers Web Professionals, IT Services, Design, Marketing, and Service Providers. A roundup of all industries is also provided.

Are the metrics statistically significant? That remains to be seen. While there is no clear indication of the population size, it is known that FreshBooks has been gathering user data for two years.

How accurate is the data? According to FreshBooks:

“We have removed the top ten 10% and the bottom 10% of the populations to eliminate outliers that might undermine the accuracy of the group as a whole. Also, we only included businesses we deem to be credible FreshBooks accounts.”

Whether the data is able to stand up to the scrutiny of a statistics professor is largely irrelevant at this point. What is relevant is that this marks one of the first opportunities to see how Web-app-adopting freelancers and small businesses are managing their finances – and how they compare with their peers.

That, in and of itself, provides a truly interesting vantage into the work lives of a heretofore metric-light market. Access to this type of reporting may yield some very surprising results.

Disclosure: FreshBooks is a RWW sponsor

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