We’d like to offer our heartfelt congratulations to the Coalition on its re-election over the weekend. The voters have spoken, including the nation’s small businesses. In fact, it’s estimated that one out of every seven voters was a small business owner.
We care deeply about the sector, given more than 700,000 Australian small businesses are Xero customers. So we recently asked our community what they would like from the next elected government. Here’s what we heard from almost 1,000 people – small business owners as well as the accountants and bookkeepers that advise them.
Follow-through: Some 70 percent of small business owners told us policy initiatives affected their vote – but an equal percentage said they were sceptical that politicians would honour their campaign promises. This implies a deep pessimism that government leaders are looking out for the nation’s 2.3 million small businesses.
This new government has an opportunity to impress these businesses – and consolidate their support – by implementing Coalition campaign initiatives quickly, such as seeding the Australian Business Growth Fund with $100 million as the Coalition promised.
The sooner these materialise for the nation’s millions of small businesses, the sooner we can expect to see the “engine room of the economy” kick into high gear.
Skilled workforce: Over half of employers (48 percent) told us they struggle to find workers who can help their business succeed. The biggest obstacle? A scarcity of skilled, affordable employees in their region. In the accounting and bookkeeping sector, the lack of technology skills is so serious that one in three respondents said they were somewhat open or very open to outsourcing their staffing needs offshore.
It’s clear we need greater government investment in Australian education, as well as a path for small businesses to bring employees from overseas where necessary. Xero is already partnering with Australian universities such as Swinburne to give accounting students today the tech skills they’ll need tomorrow, and it offers webinars those already working. If the government can give priority to its proposed investment in vocational training and education, we think there’s a greater chance that all jobs can be filled within Australia.
Payment times: We know from Xero data that small businesses, on average, were paid about a week late throughout 2018. But how does that impact a business owner? Our survey suggests a it discourages employment: over 40 percent of accountants and bookkeepers said they’re frequently paid late and this strain on cash flow makes them less likely to hire.
We’d like to see policies that knock late payments on the head once and for all. The federal government’s pledge to cut payment times to 20 days this year for invoices under $1 million is an excellent start. Canberra could also encourage state governments to adopt similar policies; New South Wales is a leader here. Late payments and poor cash flow are inextricably linked; if we solve late payments, we may fix both.
Red tape and digitisation: Nearly half of small businesses (45 percent) told us government regulation is frequently too heavy-handed, and a further 21 percent said it sometimes is. While it’s unlikely that this or any government will repeal regulations en masse, technology can make compliance less painful. The ATO’s initiative Single Touch Payroll is a case in point. And almost two-thirds of small businesses (62%) told us it would help them if the government offered more services in a digital format. We’d like to see more compliance move to a digital format where it can be automated, and importantly, provide insights that benefit both small business and the policymakers working on their behalf.
The impact of small business is by no means small. The sector employs roughly half of all workers and generates a fifth of GDP. Let’s hope the new government, with its outright majority in Parliament, can empower this vital part of the economy for the benefit of all Australians.