Xero Small Business Insights sheds light on Australia’s most important sector

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Many years ago, a small business had no way to track its real-time financial position, or to sync its accounts with banks, bookkeepers, accountants and add-on apps. A lack of connectivity meant business owners often made decisions with incomplete information.

Today, that shortcoming has improved because of Xero. Our customers have a real-time view of their financial position and can benchmark their performance against peers. Small businesses tell us it has made all the difference in their success.

Yet many government agencies and large enterprises that support small businesses are handicapped as our customers were pre-Xero. They’re working with incomplete information. At Xero, we wanted to improve this picture, for their benefit and that of our customers.

We have more than 500,000 subscribers in Australia, and our close relationship with small businesses gives us a unique understanding of their challenges. This week, we’re proud to begin sharing some of our findings through Xero Small Business Insights.

Small Business Insights is a snapshot of the Australian sector’s health, updated monthly. Its metrics are based on anonymised, aggregated data selected from hundreds of thousands of our subscribers. The result is a picture of business conditions that’s more accurate than most private surveys, which have a far smaller sample size. Furthermore, Small Business Insights is more frequently updated than most ABS data on small business.

Xero Small Business Insights tracks five key areas of the sector’s health:

Cash flow
Getting paid
Hiring people
Trading overseas
Cloud adoption

What does the data show? Looking at recent years, we’ve found that in any given month, about half of Australian small businesses are cash flow negative, with more money going out the door than coming in. The percentage of businesses operating in the red is tied to how quickly they get paid. And payment times consistently expand and contract at certain times of the year.

These are just a few of the things we’ve learned. We encourage you to visit Xero Small Business Insights for a full rundown.

As policy makers and enterprises discuss how to shorten payments times, we feel confident the Xero Small Business Insights will help inform the conversation. We want to enrich the dialogue and give small businesses a clearer voice.

We’re happy to be supported by KPMG Enterprise in our effort. KPMG Enterprise provides a specialist full service offering to the mid-market across tax, audit and advisory, helping small-to-medium-size businesses fulfil their objectives and ambitions. We’ve worked closely with their team in identifying the metrics showcased in Xero Small Business Insights that best capture the health of small businesses.

Rounding out the Xero data is commentary from business journalists and KPMG, as well as the voices of small businesses themselves. We hope that a deeper understanding of the small business economy will produce better conditions for every business owner. Given that small businesses generate a fifth of GDP and employ almost half of all workers, we believe the mission is important for all Australians.

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