It’s hard to believe that just over a year ago, the word ‘pandemic’ had barely entered our collective vocabulary. Since then, COVID-19 has changed the way we live and work for good. For small business owners, 2020 was a test of resilience, yet they pulled themselves up by the bootstraps to survive (and even thrive) through one of the toughest years yet, writes Trent Innes Managing Director Xero Australia and New Zealand.
In February last year, Xero released its first Boss Insights report, looking back on three decades worth of data to explore the great Australian dream of becoming your own boss. But a year like no other called for a new perspective. This is why we teamed up again with leading demographer Bernard Salt of The Demographics Group to bring you our latest report, Boss Insights 2021.
What we’ve learned about small business during the pandemic
Alongside confirming the unwavering resilience of small businesses, three key findings stand out: a growing number of sole traders, the acceleration of digitisation, and a rise in regional business hotspots. By taking a closer look at these trends, we can better understand how the pandemic impacted our small business economy, and what that means for the future.
The rise of the self-employed
Think of our business economy as a pyramid. The base – or majority – is made up of sole traders, which builds to fewer big enterprises at the top. Our report analysis of Australian Bureau of Statistics (ABS) data shows that in 2020, many small to large companies had no choice but to adapt and downsize, shedding labour that fell down the business pyramid. Bernard calls this the ‘tumble-down effect.’
As a result, Boss Insights 2021 reveals that 55,900 new sole trader businesses were created in the year to June 2020 – the only sector to grow more than it did in the previous year. As we work towards pre-COVID job levels, this data proves how important it will be to support sole traders – the “pilot light of Australian entrepreneurship,” as Bernard says – to take on employees of their own.
The industries on the up and up
Periods of economic downturn often speed up the arrival of new trends. And although technology may have already allowed us to work anytime, and from anywhere, it wasn’t until millions of Australians found themselves working from home that the acceleration of digitisation went into overdrive. From reaching a wider audience online to automating admin, the benefits of embracing technology for sole traders and small businesses are limitless.
In turn, some discovered that the economic uncertainty that sadly caused them to lose their jobs also brought about new potential. Industries like logistics, agribusiness, and eCommerce grew considerably as priorities changed. Fast forward to today, and these industries continue to thrive, proving there are countless new opportunities to be found.
The new business hotspots
Lots of Aussies live in pursuit of a slower lifestyle, but it wasn’t until the pandemic that many of us made that dream a reality. With the right technology, working from home allowed us to cut out the office commute and inflexible schedules. As a result, our research shows that as of early 2020, the top entrepreneurial hotspots increasingly spread from major cities to regional and coastal areas.
Boss Insights identifies 15 towns where business boomed. On the list includes Yanchep, a tradie’s paradise on the north coast of Perth; Melton, a transport hub in Melbourne’s outer western suburbs; and Orange, a foodie’s heaven in the Central Tablelands of New South Wales. Each town has its own uniqueness and strengths, making them prime places to start something of your own or expand your existing offerings in 2021.
Above all else, our research proves that it takes more than a pandemic to dampen our entrepreneurial spirit. We know that Australian business owners are relentlessly resilient. And over the past year, we’ve learnt that our recovery rests with the smallest of businesses. Now is the time to support our nation’s newest bosses as they grow to take on their first employees – adapting and rebuilding stronger, together.
For those on the path to recovery, here are three Boss Insights 2021 takeaways to remember:
- Lean on technology as you would a real-life team. When it comes time to take on employees or expand your team, having the right digital tools will make it faster and easier to scale up.
- Keep a close eye on consumer trends. If your business can quickly meet changing demands, you’re on the right track to earn loyal customers.
- Consider which towns are putting your chosen industry on the map. If you’re thinking of expanding or starting your own business, a sea or tree change might not be a pipe dream.
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