The woes of small businesses with respect to accounting, sales, resource management, etc, have been discussed in scores of articles across various publications. An answer to such problems lies in products provided by a company that has positioned itself as a huge player in the personal finance and business management space, Intuit Inc (INTU -1.68%).The company has consistently exhibited strong performance despite tough competition from entities like H&R Block (HRB -2.50%) and JTH Holdings (NASDAQ: TAX)

A player for all seasons
There is no denying the fact that Intuit has achieved a commendable position in the accounting space for small business. However, its series of acquisitions over the last few months, including the most recent Docstoc deal, clearly show that the company aims to become an indispensable and dominant force in this segment.

The numbers from Intuit's previous quarter exhibit the strong momentum building up in this segment, which is attributable to the explosive growth of cloud-based Quickbooks. A Healthy growth of 11% in the small business segment testifies to the need for reasonable expansion in this area, which management is pursuing.

Quickbooks' online subscriber base grew a phenomenal 29% in the quarter, crossing the 500K mark. The company seems to have acknowledged the fact that future growth will come from a full-fledged adoption of cloud power. Going ahead, the company has well-placed plans of rolling out Quickbooks online to a larger audience. 

A change for the better
The seasonality factor in the consumer tax business definitely affects the overall results of the company. Investors should appreciate the way Intuit has offset the slow growth in this segment by enhancing growth in small business financial and management solutions. The company is in a transitional phase wherein it is making important changes to its core competencies by pursuing the target of becoming an operating system for small businesses.

Intuit has spent a considerable time in the business management space but now, it is attempting to expand its positioning to include scores of services that are required by small entities. Hence, it can be expected that a major portion of its revenue and growth would come from this segment in the future. 

If the company can efficiently manage the consolidation of its operations, though this will be challenging, then it would go a long way in establishing a robust business model.

Making it tough for peers
Besides the pursuit of becoming an operating system for SMBs, Intuit is also putting reasonable efforts into its tax preparation software, TurboTax, which is a market favorite. The success of TurboTax has caused considerable damage to the operations of H&R Block, which has been struggling with its numbers due to an unfavorable movement in tax filing trends. The company has been working on launching a simplified interface for electronic tax filing with the intent of making the most out of the coming tax season.

Additionally, H&R Block has encountered a visible stall in the exercise of unloading its banking division after Republic Bancorp called off the deal to buy this business. Though the company highlighted some progress in this area in the earnings call, nothing seems to be conclusive. However, the management laid a lot of emphasis on the company's readiness for the 2014 tax season, which prima facie conveys a strong intention of generating the optimum gain during that period. Investors surely need to watch out for H&R Block's performance in the 2014 tax season.

Another entity becoming a big player in the tax filing business is Liberty Tax Service, which is a unit of JTH Holdings  and threatens to eat into the market share of both Intuit and H&R Block. This fast-growing kid (though a veteran in terms of tenure) has also initiated full-fledged preparations for the 2014 tax season, and the numbers that management announced in the earnings call give substantial evidence of a big season.

Last year, the tax preparers went into a bit of shock when the expected level of growth in the number of tax-filers did not materialize. While management is optimistic and certain about the numbers this time based on its survey, it also sounded a note of caution with regard to franchise-fee revenue for the coming quarters. One of the reasons for the possible decline in revenue is the franchise model itself, wherein the company does not get any revenue when a franchisee opens a second office in an already-owned territory.

Stay put with Intuit
A management accounting concept advocates viewing an organization as a group of core competencies that generate constant revenue for the company. If we analyze Intuit from this perspective then it is quite clear that the company is making a tectonic shift in its core business model, and hence, this will require time and trust from its investors. Intuit has been successful in fostering innovation and it has established a firm foothold in the consumer tax business with its cash cow TurboTax. Another of Intuit's highly successful products, Quickbooks, is growing at a considerable pace and with the power of the cloud, it can boast of better connectivity and efficiency for its customers.

Final words
Intuit's financials are also in good shape and they outweigh the industry numbers. For instance, the debt to equity ratio of Intuit is quite low at 0.22 compared to the industry, which leaves room for more capex spending in the coming quarters. In light of such strong financials and robust fundamentals, Intuit has the potential to generate good returns for your portfolio over the long run.