Small businesses are the engine room of our economy. When they thrive, so too do our industries, communities and jobs. However, despite the unwavering resilience that they’ve displayed over the past year and a half, COVID-19 and the events of 2020 undoubtedly took a heavy toll on the sector. This calls for a mammoth recovery effort to set them back on track – a challenge that everyone from key decision-makers to everyday Aussies are getting behind, writes Trent Innes, Managing Director – Xero Australia and Asia.
Xero’s new report, The Job Ahead, small businesses and the global economic recovery, looks at how small business jobs were affected by the pandemic in Australia, New Zealand, North America, Canada and the United Kingdom. The key finding from our Australian analysis shows that around 210,000 small business jobs need to be created this year to return to pre-pandemic levels of growth. That’s twice as many jobs as are normally created in a single year.
The Job Ahead is based on data from the recently launched Xero Small Business Index as part of our Xero Small Business Insights program. The index is a monthly snapshot of small business performance using real-time anonymised and aggregated data from thousands of small businesses. Despite the record number of new roles needed, it shows that since the start of 2021, jobs growth has been on the rise. This proves that small businesses aren’t just rising to the challenge; they’re tackling it head-on. But it’ll take more than just determination; they need ongoing support.
Reflecting on what’s helped small businesses survive one of our toughest years yet, the report reveals adapting to change and digitisation as the key factors to supercharging resilience and growth. By unpacking these trends, and the latest round of government support measures, we can empower small businesses to forge ahead and continue hiring.
Building digital resilience
Last year, many small businesses faced an important choice: embrace technology to survive the economic downturn, or resist change and attempt to ride it out. But the way businesses operate has changed for good, forcing all of us to rethink how we live and work.
The Job Ahead shows that in April 2020, digitally connected small businesses saw a smaller decline in jobs (14.8 percent) compared to those that were not as digitally enabled (18.4 percent). Arguably, their lean size has always been an advantage – not a shortcoming – for small companies as they have greater flexibility to quickly adapt by adopting or shedding technology as their needs evolve. In a world where uncertainty is the only sure thing, having the right digital tools (and a healthy dose of grit) to continually embrace change is one of the most important ways small businesses will pull through the after effects of the pandemic. What’s more, they’ll be stronger for it on the other side.
Charting a technology roadmap
This month, all eyes were on the government as it handed down one of its most significant Federal Budgets in recent history. The Budget is an outline of how it plans to spend and collect money in the new financial year, and for hard hit small business owners, it can have a big impact. One of its key policies to support small business recovery is the Digital Economy Strategy, which includes a couple of initiatives to take note of:
- The Australian Small Business Advisory Service’s (ASBAS) Digital Solutions program – a subsidised service to help small employers and sole traders digitise their businesses with the help of an advisor.
- Funding to encourage more small businesses to adopt e-invoicing. This will help more business owners to create, send and receive electronic invoices, which Treasury estimates could deliver the sector $28 billion in benefits over the next decade.
Our Xero Small Business Insights data shows a clear link between embracing digital tools and small business growth. And the more companies that scale, the more jobs that are created. Technology is paving the way forward, but it’s the people behind the businesses that are the real drivers of change – bridging the road to recovery, one hire at a time.
Rebuilding jobs for the future
While technology is a critical part of how small businesses operate in 2021, it’s important to remember that innovation starts with people. From apprentices to tenured professionals, Australia is home to some incredible talent. This includes creative and strategic thinkers, and the hard workers that keep our grassroots industries going.
One of my favourite stories to come out of last year is about a Melbourne plumber called Michael Rawnsley, who started his own micro business, MGR Plumbing, during Melbourne’s winter lockdown. Once the state opened up, Michael was able to bring on an apprentice – not just to have an extra pair of hands around; but to give back. As a former apprentice himself, Michael appreciates the value of investing in young talent. In Xero’s Boss Insights 2021 report, he says it was satisfying to pass on the opportunities and learnings that he was given.
To help rebuild jobs, we need to empower small businesses to upskill the next generation of talent – just like Michael. It’s a chance to bolster and future-proof our workforces with the skill sets that small businesses rely on most – creating jobs that will stand the test of time.
Over a year has passed since the peak of COVID-19, and the latest Small Business Index data shows that last month, jobs grew an average of 5.1 per cent compared to March. This result exceeds historical growth records, meaning small businesses are working hard to reach the target of 210,000 jobs by this year’s end. As we focus on the future, rebuilding jobs will only be possible if our smallest employers keep hiring. With the support of the Australian community behind them, and the resources to digitise we’re on our way to a full recovery.
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