When Zach Olson founded SOHO Skatelab in 2006, he hadn’t counted on the mountain of paperwork his St. George, Utah, store would generate. Worse, he hadn’t realized how unhelpful the old-school business software he’d plucked off the shelf would be, as he struggled to make sense of his cash flow, inventory, payroll responsibilities, future tax liability, and all the other financial pain points that come with the privilege of owning a small business. Adding insult to injury, even though Olson worked on a day-to-day basis, his bookkeeping tools only gave him insights into the financial health of his company at the end of the month.
This, Olson strongly believed, was no way to run a business. Determined to spare his fellow entrepreneurs the bookkeeping headaches he’d been forced to endure, in 2013 he founded a cash-basis accounting app called Bookly, which was immediately embraced by legions of small-business founders and CEOs. Almost as quickly, by 2015, Bookly had closed its second round of VC funding, and by the summer of 2018, Bookly had caught the eye of Big Four accounting giant KPMG. Upon acquiring the company, KPMG retained Olson to be Bookly’s Managing Director, renamed it Spark, and continued hiring developers, AI and machine-learning scientists as fast as it could. “This is the first time in history that small to medium-size businesses, startups, whatever, have had genuine access to a Big Four accounting firm,” Zach Olson says. “It took six years of blood, sweat, and tears to get Spark to this place,” he adds, “but Spark is now the accounting solution I wish I would have had back when I was selling skateboards.”
Tim Stiles is a KPMG Partner and the COO of KPMG Spark. Though he’s spent most of his career at KPMG, he understands why Spark has been embraced so enthusiastically by business owners. “I’ve owned a couple of businesses myself,” he says. “One of the things you learn early on is that cash flow is king. Without an understanding of your cash needs, your business can rapidly deteriorate. The Spark solution,” he adds, “is incredibly effective at understanding where your cash is, where it’s being spent, and how it’s being managed.”
That means transactions and expenses are updated, reconciled, and categorized in real time, multiple bank accounts and credit cards are seamlessly connected to the Spark dashboard, and reports are instantly accessible, as well as comprehensible to founders whose primary job is to focus on turning their startups into full-fledged enterprises rather than learning how to “do the books.” Naturally, Spark also gives business owners the ability to let multiple team members collaborate—behind the security of a 256-bit encrypted firewall, of course.
At its core, Spark leverages technology to free founders and CEOs from the soul-crushing drudgery and often arcane practices of traditional bookkeeping. As an example of Spark’s technological might, Stiles points to the app’s budgeting feature, which has just been upgraded. “Spark allows you to budget for the year and then incur expenses against that budget, so you know exactly where you are as far as what you’ve spent, what you have left to spend, and how that cash interplays. What’s cool,” he adds, “is that everything is in real time. You can open your dashboard whenever you want to see how much cash you have in your various bank accounts, and how you’ll be doing throughout the rest of the year.”
Spark’s real-time analysis capability can even be used to prepare for tax time. “Real-time tax preparation is not just a figment of the imagination but a reality with Spark,” Stiles says. “Let’s say your calendar year is like that of most taxpayers, January 1 through December 31. You could look at your dashboard at, say, the end of July and run a tax return for the current year based on your budgeting. That would give you a very quick and fairly accurate indication of where your taxes are going to end up for the year.”
Beyond Spark’s experience-based technology, earned the hard way by Olson back in his skate-shop days, the app also leverages the institutional knowledge of KPMG. “Globally, KPMG encompasses more than 200,000 people,” Stiles says, “so if you’re a business owner and you’ve got a question, somewhere within our organization we have the right answer.”
For Spark clients, contact with KPMG’s unparalleled human capital begins with the actual living-and-breathing KPMG accountant assigned to their account. The reason for this two-pronged approach that combines technology with people is simple—machines are amazing at a great many things, but they still can’t quite see around corners the way a pair of human eyeballs can.
“Let’s say you’ve got a multiplicity of credit-card debt that you are managing on a month-to-month basis,” Stiles says. “Software-based accounting systems are only going to tell you how many accounts you have and what your balances are. But a human being in the equation can look at your credit-card accounts and suggest that you consolidate them into a single new account that’s under the umbrella of your major banking partner, with whom you’ve built equity. That reduces both monthly costs and interest charges accumulated over time.” In this case, the machine has the ability to see the dots—the credit-card debt, a relationship with a bank—but not necessarily the intuition to connect them.
For Olson, his needs as a business owner evolved as his businesses grew from ideas in need of nurturing to robust enterprises accountable to investors and board members. Naturally, Spark makes it easy for founders and CEOs to give such stakeholders detailed snapshots on the health of their businesses, although Spark is about much more than seamless reporting.
“The mantra around here is the concept of taking a business from ‘Idea to IPO,’” Zach Olson says. “It’s even on our shirts! But beyond the slogan, what that really means, and what gets me excited about Spark as a former startup founder, is the notion that a client can work with one accounting firm during the entire life cycle of their company. Historically, what happens is that you start your business and do your own bookkeeping for a while before turning to a local firm for help. Soon, though, you’ve outgrown your local accountant, or perhaps your board mandates that you upgrade to a national or global firm so that they have a better understanding of the run rate, the cash-absorption rate, etc. So you go through the cycle of onboarding new accountants over and over, each time starting from scratch. With Spark, we’ve reimagined that whole process so that a business owner can start with one accounting firm and stay with them through the whole tenure of running their business. The client never outgrows us.”
Again, it all comes down to leveraging technology and people. “We’re investing a lot of time and human resources in AI,” Stiles says. I think that’s going to take us to some really interesting places down the road.” In particular, AI is excellent at identifying commonalities across an entire database of clients. Based upon those commonalities, and without violating a particular client’s privacy, Spark will soon be able to suggest accounting approaches and tactics for individual clients.
On the people side of the Spark balance sheet, Stiles is bullish on what he calls “curated managed services.” “Because we are KPMG, we can sit down with a client and help them understand how to do things like aggregate accounts and consolidate debt. A lot of our competitors simply take information and spit it back out. We don’t do that at KPMG. Spark is a quality, KPMG managed-services offering. We’re all about looking at a business and delivering financial and operational results for business owners, and at a price that makes sense for small and mid-sized businesses.”