Today, in conjunction with Accenture, Xero launched a new Small Business Index providing a single composite figure that indicates how small businesses are faring across Australia, New Zealand and the UK. The index is based on the four key measures of jobs, sales, time to be paid and wages and shows performance changes in the short and long term across the three countries currently in the program.
This index, which is part of Xero’s Small Business Insights program, is a natural and significant step forward in our ability to help inform decisions in support of small business success.
Unlike other survey-based research that has been used to understand the sector, the Xero Small Business Index analyses over 300,000 transactions (anonymised and aggregated for privacy) that flow through the Xero platform. Each month we’ll analyse the data and provide unique, activity based, timely insights. The aim is to enable analysts and policy-makers, business leaders and industry groups to dig deeper into what is happening to help shape the right sort of support.
The index is not all about economics, we’re also conscious that we talk about the human impacts; small business owners, their families, their employees and the places that they go to work. Small businesses are at the centre of the economy, and more importantly they are at the heart of their communities.
The Xero Small Business Index, along with the accompanying report, ‘The Job Ahead’, demonstrates the important role that small businesses play in creating employment. This report focuses on five of the key economies where Xero operates (Australia, Canada, New Zealand, United Kingdom and the United States). Collectively, Xero estimates these five countries need to create approximately 2.9 million new small business jobs during 2021 to get back to the level that would have been achieved by the end of this year without the shock of the pandemic. Over two-thirds of these jobs are in the United States.
While we continue to be encouraged by how many small businesses have been able to adapt to challenging and unpredictable conditions, we know from the report that young people, women and casual small business employees were more badly affected by job losses during the pandemic.
We have also been able to see that firms that were more digitised were more resilient. At the peak of the crisis, those firms that had more than five applications attached to their Xero account had a 14.8% y/y decline in jobs, compared to a larger 18.4% y/y decline for those with no apps connected. During the recovery phase, in December 2020, the firms using more than five apps had jobs down 1.8% y/y, compared to jobs being down 5.1% for those firms with no apps connected.
We are all too aware that you can’t just use data to understand the full significance of small businesses. Small business is family, it’s people doing their jobs and it’s community. The sector is a major source of jobs and wages, and we believe a key driver in enabling us to recover from the pandemic. Xero has a responsibility to help and this index is another way for us to advocate on the behalf of small business.