This week, Kabbage - a popular provider of capital for small businesses since 2008 - released a new research product that - at least initially - excited me. It’s called the Small Business Revenue Index and it does exactly what it advertises. By digging into its extensive database of more than 200,000 small business customers, the free online tool allows anyone to look up small business revenue growth by year, industry and region.
As an economic indicator its somewhat interesting. Think about it: what better way to track the growth of the economy than to see how small businesses - the engine of the economy - are doing? And how better to track an industry or region's performance then by looking at revenue growth in those areas too?
"We believe this index can play a part in helping inform decision-makers on and off Capitol Hill," Jackson Mueller, associate director at the Center of Financial Markets at the Milken Institute and a member of the Kabbage Index Committee told Inc. "To see the trajectory move up from a revenue perspective is certainly encouraging."
But is this something small businesses need? Unfortunately, it falls way short. Actually, and to me, this tool is just an infuriating tease. Why? It’s because Kabbage has a lot more data to share and I want to see it!
I run a small business - a 10-person technology consulting firm - and like any small business owner I’m certainly interested in the revenue growth of others in my industry. But that's just one very small part of the picture. I don't just want to just know about revenue “growth.” I want to know about actual revenues. Are my annual revenues comparable to a company my size in the technology business? In my region?
And what about profitability? Are my margins and net profits too low when compared to the guy down the street? Do I have too much overhead overall or as a percentage of revenues? Is my payroll too heavy? Am I paying too much rent? Do I have too much debt?
Tell me Kabbage: how is my business performing compared to my peers? You’ve got the data. I know you can make more of it public. Am I on the right track or heading down the wrong road?
It’s not just me asking for this data. It’s pretty much every small business owner I talk to. We think we’re making the right moves. But we don’t know. For the most part, when it comes to our peers, we’re operating in the dark. The only information we get - maybe from our accountants or other experts - is at best anecdotal. Some firms sell this data but we’re not sure if the expense is worth it or the data is even that reliable.
And yet, Kabbage has this data and I know it’s reliable because they’re using it in their business. They're loaning unsecured money to virtual strangers, right? Trust me, the people at Kabbage weren’t born yesterday. You can bet that before they approve any financing they’re making sure that a customer has enough cash flow to meet their debt maintenance. Cash flow isn't just about revenues. It's about overhead, expenses, cash management.
I guess what I'm saying is this: the “Small Business Revenue Index” is nice, and maybe it can play “a part in helping inform decision-makers on and off Capitol Hill.” But there are already plenty of surveys, polls, and research about small business. Politicians and the media don’t need any more.
But business owners? Yeah, we need a lot more. We need detailed analytics about our industries that can help us to better run our businesses. If a large company like Kabbage (or anyone else) can share that kind of data, then that’s the kind of company that would attract my interest…and potentially my business.
In the end, isn’t that why Kabbage is doing this, anyway?