With a new business year ramping up, it’s time to crystal ball the year ahead for a sense of how the economic landscape will play out.
The bad news
You’d certainly be forgiven for feeling some sense of caution given the doom and gloom forecasts that appear in newspapers and our inboxes everyday. As the European debt crisis continues to loom large, we are reminded each day about the troubled retail sector, which here in Australia grew only 0.3% in 2011 – the worst result in nearly 30 years. Domestic tourism and manufacturing is still being hit hard by a strong Australian dollar and the continued weakness in the housing sector is seeing a slump in construction and associated industries. Together with continued volatility in our financial markets and the real risk of a slow down in China, it’s no wonder business and consumer confidence is suffering. But it is not all bad news.
A silver lining
The last quarter of 2011 saw the Reserve Bank of Australia (RBA) cut interest rates for 2 consecutive months offering some relief to consumers and small business owners. Moreover, when you reflect on Australia’s GDP growth in 2011 it was a very respectable 2.5%. Underpinning these figures was household consumption at 3.8%, and while consumer spending was clearly not flowing through into the traditional sectors of retail and housing, some parts of the economy were benefiting such as travel, transport, home services, healthcare and technology/online. With the $A expected to decline over the course of this year and the RBA demonstrating a willingness to shield the Australian economy from risks abroad by easing monetary policy, there are some positive signs out there.
Accounting services in demand
So what of the accounting industry? The latest IBIS World 2011 Market Research Report on Accounting Services in Australia, forecasts average annualised growth for the industry of 5.5% to 2016-17. I conducted my own field research while travelling to all the major capital cities in December to catch up with many of Xero’s most loyal partners over a few end-of-year drinks. While not a statistically valid sample, I was overwhelmed with the number of accountants and bookkeepers that told me they were flat out and doing very well despite the current economic conditions.
One thing we can be sure about is that small businesses need accounting services and good advice. This is accentuated when times are tough. Hamish outlined what small businesses look for in an accountant in his recent blog and if you’re giving good advice, promoting innovation and delivering excellent service, your practice should thrive. So for me, rather than stoking the fire of discontentment about our hapless and fragile economy, I’m taking a positive outlook. Here’s why…I know small businesses need their accountants. I know they want innovation, simplicity and ways to save money. And, I know Xero, and the efficiency gains we offer to both the accountant and client, are compelling. Hence I feel optimistic about our industry and what we are doing.
Xero keeps growing
I’m pleased to say we’re continuing to invest in the business and right now we’re looking to hire six new staff in Australia. The first role we’re recruiting for is a new National Sales Manager for our accounting channel. Wayne Schmidt will shortly switch his focus to our fast growing bookkeeper channel – watch for extra resource and investment in this area throughout the year! We’re also seeking an Events/Sponsorship Manager, two Associate Account Managers and an Enablement Specialist in NSW to further build our presence in this key geography. So if you know of anyone who you think would love to work at Xero and who shares our optimism about the future, send them our way.
Here’s to a prosperous 2012!!!