Small businesses in Australia’s construction, manufacturing and healthcare sectors are most confident about the state of their industry over the remainder of 2020, according to a new research report released today by Xero.
While some sectors are optimistic, small businesses in professional services, accommodation, food and the education industries are the least confident about their business’ outlook over the same period.
Many small business owners in construction had a positive outlook, with 9.1 percent very confident and a further 47 percent somewhat confident about the state of the industry. Only 23.1 were somewhat unconfident and 1.4 percent very unconfident. Only health care and social assistance and manufacturing small business owners were more confident.
Commissioned by Xero and authored by Bernard Salt, one of Australia’s leading social commentators, the 'Rebuilding Australia: the role of small business' report provides a deep dive into how the engine room of Australia’s economy has fared during the COVID-19 crisis, as well as opportunities for the revival of the small business sector beyond the pandemic.
Salt's report, which combined ABS statistics, survey information collected by CoreData and Xero Small Business Insight figures, found nearly half (48 percent) of surveyed small business owners are optimistic about their prospects in the second half of this year, and that one in four (23 percent) expect revenue to jump up by more than 10 percent by December.
Commenting on the report’s launch, Bernard Salt says: “Here we are in the middle of both a pandemic and the worst recession in three generations. The fact that half of all small businesses remain optimistic about their prospects in the second half of the year says something about the sheer determination and inherent optimism of the small business community in Australia.”
Most small businesses say that COVID-19 will change the way they do business over the long term and remote working is set to be the new norm with the emergence of ‘self-contained’ suburban regional centres. In the three months to 20 May 2020, regional towns experienced significant jobs growth and are emerging as potential hot spots for small business, with Toowoomba, Illawarra (Wollongong) and Geelong leading the pack. During the same period, 32,000 jobs were added to the construction industry.
The lockdown has seen a surge in demand for skills in home improvement as small business shifts online and workers improve their new home office.
Trent Innes, managing director, Xero Australia and Asia, says: "Small business has long been the backbone of Australia’s economy, and so when the pandemic hit, the sector bore the brunt. Data from the 'Rebuilding Australia' report sheds light not only on how resilient businesses have fared in navigating the uncharted waters presented by the COVID-19 crisis, but it also delivers valuable insights into what it takes to operate a small business, to adapt in challenging times, and to remain confident of coming out the other side even stronger.
"We also see that the pandemic has hastened the adoption of digital trends by businesses, highlighting the importance of continued investment in digitisation in the revival of our small business economy, Innes says.
While small businesses have been hit twice as hard as bigger businesses by the crisis, the lockdown period has been a ‘time to thrive’ for some. The CoreData survey showed that one in 10 small businesses have prospered through the lockdown.
There are common themes behind small business success stories, with 25 percent of small businesses that thrived during the pandemic reporting to have adapted their operations, while 39 percent have found new customer markets. Flexible working hours (30 percent) and remote working arrangements (28 percent) have also been common enablers allowing businesses to prosper during these challenging times.
Another common theme among businesses that report prospering is investment in technology, with 35 percent expecting to increase their investment in tech even further in the next three months. Of those looking to invest in the coming months, sales and marketing platforms will be the primary investment focus, followed by product/service innovation and project management.
"Small businesses that have prospered during the pandemic may well have been in the right industry at the right time but, according to the survey, the best-of-the-best adapted, found new markets and invested in technology," Salt says.