Freshbooks has relaunched its cloud accounting product with an upgrade that reportedly cost $7 million to develop. The interface is slicker and Freshbooks has completely redesigned the home dashboard. Mike McDerment, co-founder and CEO of FreshBooks commented: “Our mission at FreshBooks is to reshape the world to suit the needs of the self-employed professional. The new FreshBooks is designed to be the most ridiculously easy to use accounting software ever built—yet still packed with powerful features for self-employed professionals. This isn’t innovation for innovation’s sake. This is about making it easier for self-employed professionals to succeed, because it’s hard enough being out on your own serving your clients.”
At first glance Freshbooks appears to have done more than a facelift on the new product, they have also decided to focus their product on a specific target market.
Accounting for self-employed professionals
While Freshbooks has been growing, they are facing increasing competition from companies like Xero and Sage. What Freshbooks appears to be doing is targeting a specific section of the SME market. According to the recent JobEconomics US employment Analysis Q2 2016 small business employ 77.9% of all Americans in a job. That statistic will rise as well. What is interesting is that contingent workers make up 40% (60 million) of the workforce today. By 2030 that will have increased to 50% (80 million). Contingent workers are defined as those in part time or temporary positions as well as the self employed or free lancers. It is this latter segment that Freshbooks are targeting now.
The new interface is designed to maximise the efficiency of people running their own business. Small business owners are well aware of cash flow but understanding the accounting behind it can often seem esoteric. What Freshbooks is aiming to do is to make the interface relevant to the day to day tasks of the business owner, without compromising the actual finance side in the back ground. Users will find the updated invoice process is simple and straight forward to interact with.
New Features
Some of these feature are recognisable to existing (Classic) FreshBooks users. The upgraded solutions have already launched in Freshbooks classic. Besides invoices, they have introduced a simple project management solution. This appears to enable a collaboration platform that users clients and colleagues can interact with.
Self employed people often run more than one business as they look to find the right markets with their chosen skills. The new solution allows users to create new businesses and switch seamlessly between them. Finally as well as the desktop interface updating, Freshbooks has also updated the iOS and Android apps to match.
Has Freshbooks developed a platform
Platforms are growing in importance and are key to the success of companies like Salesforce, NetSuite and Xero. McDerment mentioned platform as he commented: “We’re expanding our network of partner integrations, launching with 14 partners today, and will be rapidly adding more as we continue to invest in our platform. When your accounting data flows effortlessly between the apps you use every day –whether it’s your project management, your CRM, or your bank – you end up spending less time on administrative tasks and more time serving your clients. In fact, those who switched to FreshBooks report saving an average of 16 hours a month.”
The fourteen integration partners include some well known companies such as Google Apps, Stripe, Shopify and Yalla it does not appear to be a platform. What Freshbooks need to enable is the ability for companies to access their data directly in a secure platform that enables them to build extensions on top of the accounting system. The fourteen partners work through API’s and it would be interesting to know who actually did the work. What Freshbooks has introduced is the ability for customers to register new domains with GoDaddy. They might have taken this a step further and introduced the ability to create a simple website through an integrated solution with a company like Wix. For entrepreneurs looking to start their business journey this may have been an attractive proposition.
Conclusion
This release is clearly not just about cementing their growth path against Quickbooks. In addition it is also countering the threat of Xero and Sage. The new interface will certainly attract a new generation of users and this is important. As a result, Freshbooks need to ensure that their sales and marketing efforts are targeted effectively at those professionals.
What was surprising is that there is no mention in the press release about solutions for the accountants and bookkeepers. Contingent workers often use bookkeepers or accountants to track the finance side of their business. Freshbooks needs to consider how those users will want to interact with Freshbooks. It is therefore surprising that the announcement made no relevant mention.
Hi Steve – Great analysis! Definitely hitting the key points on target market, simple but powerful interface, and platform integrations. I lead Corporate Strategy at FreshBooks and I’ve spent a lot of time defining and identifying our target customers. Lots of the data on market size is hard to come by or incomplete for our specific segments. We think of it in two ways.
1. Size of business. FreshBooks is built for self-employed professionals and their teams of employees and contractors. Ranges from part-time freelancers working alone to large agencies and consultancies.
2. Service-based. FreshBooks is built for small businesses that bill for the services they provide – typically time and/or expertise. Basically, if you send invoices you can use FreshBooks. We aren’t built for retail or restaurants.