Business owners have enough to worry about without being accountants, too. Kevin Reeth explains how Outright improves on the Excel and shoebox approach to bookkeeping and how SaaS and cloud computing could change the bookkeeping software market.
Most business owners aren't accountants and loathe the day-to-day grind of bookkeeping, not to mention the chore of quarterly tax filings. Bookkeeping software can ease the burden by integrating tax preparation into daily accounting tasks, and, used properly, financial software can help identify opportunities for increasing revenue, trimming operating expenses, and taking additional tax deductions. Despite the power of this software, the majority of small-business owners don't use software to manage their books, instead clinging to Excel spreadsheets or paper ledgers. SaaS has made financial software more accessible and easy to use than ever before, with little or no cost to business owners. And as the hosted model evolves, vendors are specializing in particular areas of business financial management, from invoicing to tax preparation to payroll.
Now in public beta, Outright is a relatively new player, providing an online application for managing the back-office accounting functions of income, expense, and tax deduction tracking. Outright's co-founders, Kevin Reeth and Ben Curren, each spent years with Intuit working with Quicken and QuickBooks, where they saw firsthand how small-business owners struggle with bookkeeping. Those insights led Reeth and Curren to found GoBootstrap.com -- a name that resonated in Silicon Valley, but less so elsewhere -- and was recently rebranded Outright. The company expects to end public beta next month and continue to offer its core functionality at no charge, but plans to roll out premium tiers offering customers additional features for a fee.
Recently, Reeth spoke with bMighty about the bookkeeping pain points for small-business owners, the power of "dead simple" software, and what he hopes SaaS and cloud computing will eventually make possible for financial applications.
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bMighty: There's a lot of competition in the financial software space, from Intacct to Intuit, Mint to Xero. Who are your direct competitors, and what's the opportunity?
Kevin Reeth: Our primary competitor is [Microsoft] Excel. Most smaller businesses are using an Excel spreadsheet to track their finances, a shoebox for their receipts, and [Microsoft] Word for their invoices. People generally recognize Intuit as the 800-pound gorilla of financial software, but there are 4 million small businesses using QuickBooks and 3 million using Quicken. There are 27 million small businesses in the U.S.; 7 million is not a dominant position. The reality is that less than 50% of SMBs use accounting software.
bMighty: What's keeping so many businesses using Excel?
Reeth: One of the questions you need to answer when you set up QuickBooks is, "Would you like to use the cash or accrual method of accounting?" Now most small-business owners aren't accountants. They're asking, "What on earth is accrual accounting?"
When we look at the competitive landscape, it's far too complex. We are big fans of Mint [a consumer financial application]. In fact, the majority of our backers also invested in Mint. We hope to be similar in simplicity of approach to what Mint offers, but with the functionality small businesses need. You can sign up and start handling your bookkeeping in five minutes using Outright. Our Holy Grail would be customers only coming to Outright four times a year -- so use is tied completely to tax deductions.
Next Page: Why would a small business need accounting software?
