We’ve just passed the one-year mark at Xero Small Business Insights (XSBI), and it’s been a journey with some unexpected turns. As we close out 2018, we’d like to take a look back at the terrain we’ve covered.
When we conceived of XSBI in late 2017, the project was driven by the vision of Xero Australia Managing Director Trent Innes. Trent believed with the right data, policymakers and large enterprises could help end practices such as late payments that were crippling small businesses. XSBI launched with monthly data on cash flow, late payments, trading overseas and hiring people, drawn from hundreds of thousands of anonymised, aggregated businesses.
We were gratified when in early 2018, Xero data found its way into media stories, parliamentary hearings, and briefings to Treasury. The data explained just what Australia’s 2.23 million businesses were experiencing. Today, Canberra officials increasingly recognise XSBI as a torch that illuminates a corner of the economy that has long been hidden.
“Xero has actually given us real data on what’s happening with payment times,” Australian Small Business and Family Enterprise Ombudsman Kate Carnell told a Sydney audience in October. “The reason the federal government, I think, took action on payment times was that it had data that showed small businesses were paying each other quickly, but big businesses and government weren’t doing their bit. Data gives us the grunt to get policy changed.”
Late payments is just one area where XSBI sharpened the debate. In collaboration with outside economists, XSBI has gone on to produce special reports on tax cuts, the rollout of the National Broadband Network (NBN), and metropolitan versus regional wage growth. These are in addition to monthly updates on small business conditions.
Here are some milestones for Xero Small Business Insights in 2018:
1) Do company tax cuts boost jobs, wages and investment? An XSBI special report
What’s the impact of company tax cuts on Australian businesses – do they hire more workers, increase wages and boost investment after tax cuts? Economists and policymakers have struggled to answer these questions, in part because of a lack of quality data. Using anonymised Xero data, this report directly observed how business owners responded to tax cuts, whether it by was hiring more workers, raising wages or keeping the savings. The report offered an unbiased look at the data, and different news outlets seizing on select parts of the report for their headlines. “No joy for staff wages as small business pockets tax cut savings” was the summary from the Australian Associated Press. Meanwhile The Australian offered a more optimistic take with the front-page headline “Company tax cuts lift jobs growth, study finds”.
2) The state of Small Businesses: An XSBI special report
How does wage growth at small businesses in regional and metropolitan Australia compare? We crunched the numbers, and we found wages at businesses in metro areas were growing at 4.2 percent per year, or about a third faster than at regional peers. “There is certainly a lot of work to do to ensure that people in Australia’s regions have as much economic opportunity as the cities,” said Andrew Charlton, the director of economics consultancy AlphaBeta. “The National Broadband Network will help with that, and we are just starting to see Australian businesses — big and small — recognise the benefits of locating in regional areas.”
3) From little things, big things grow: How digital connectivity is helping Australian small businesses thrive
Following on from the State of small businesses report, we examined tens of thousands of businesses to see whether faster broadband and cloud-based apps supported revenue growth and employment. Among businesses on Xero, the data showed that those in mature National Broadband Network regions grew employment by one-third more than peers in non-NBN regions. And businesses on Xero with at least one integrated app saw revenue grow almost twice as fast as peers with no apps.
4) XSBI TV: Pickings and Parry
In 2018, we made XSBI a truly multimedia platform with the introduction of Xero Small Business Insights TV. Managing director Trent Innes interviewed a small business owner each month to get an up-close, in-person look at trading conditions. In this episode, Trent chatted to Chris Pickings, the owner of Melbourne menswear store Pickings and Parry. Chris explained how his passion for quality clothing led him to opening two retail stores, side by side, in Fitzroy. But with the expansion, there were challenges accessing capital and managing cash flow.
5) Businesses in Tasmania and ACT get paid fastest. Here’s why.
Late payments are a recurring problem for Australian small businesses, but a closer look at XSBI data revealed two locations that enjoy unusually prompt payments: Tasmania and the Australian Capital Territory (ACT), where businesses get paid on time or even early. What did these two locations do differently and how could other states emulate them? We took a look, and the answers were surprising.
It’s been a rewarding year in XSBI, and we look forward to providing even more insights in 2019!