Over the New Year period, I was lucky enough to enjoy lunch at a winery on the south coast of NSW. Given the COVID-19 outbreak in Sydney’s northern beaches at the time, you can imagine that the venue was extremely cautious in their operations, writes Angus Capel, Small Business Advocate, Xero Australia.
To respect social-distancing protocols, my fellow diners and I ordered directly from our tables via an app. It was a clever way to minimise movement and close contact, and a wonderful example of how small businesses can implement new systems, procedures and technology pretty much overnight to stay efficient and operational under fast-changing circumstances.
It was also a reminder of how agility is one of the top competitive advantages small business has over big business and will be key to success in the year ahead.
Small business is bouncing back in 2021
The opportunity is there. The latest Xero Small Business Insights (XSBI) data, based on anonymised and aggregated data of hundreds of thousands of customer records, shows that Australian small businesses are on the road to recovery, reporting positive revenue growth for six of the last seven months of 2020.
It’s been an inspiring turnaround, with small businesses recording average growth of 3.9 per cent year-on-year from June to December – just below the pre-COVID average of about 5 per cent.
Small business jobs also recovered to land 3 per cent higher than pre-pandemic figures. Even the initially badly hit casual-job and hospitality sectors saw growth, up by 3.8 per cent and 1 per cent, respectively.
Not all smooth sailing, but there are some bright spots
Despite the impending rollout of a vaccine, it’s likely we’ll see COVID-19 clusters breaking out around the country over the next 12 months, and more short, sharp lockdowns. As a result, small businesses will need to continue to exercise agility and keep a close eye on cash flow.
International travel will also be restricted – although there’s potential for travel bubbles to expand between Australia and other ‘COVID-safe’ countries such as New Zealand and Taiwan. The flipside of these travel restrictions will be an uptick in domestic tourism and more money in people’s pockets to spend elsewhere.
How to set yourself up for success in 2021
Your small business agility means you are uniquely positioned to identify new tech that fits a customer or business need, implement it and benefit from it a lot faster than big businesses can. This can be anything from optimising cash flow to improving your customer experience. I’ve shared my top tips below.
1. Get paid faster through e-invoicing
XSBI shows average payment times to small businesses are heading in the right direction, falling to 23.1 days in December. That’s 2.4 days faster than in pre-pandemic times, but more can still be done. Thankfully, there’s a big government focus on decreasing payment times to small businesses. We saw the introduction of the Payment Times Reporting Framework on 1 January and a series of policy announcements encouraging faster payments through e-invoicing. While e-invoicing is not yet widespread, it’s a smart idea to start thinking about the tools you’ll need in place to be able to access it and its benefits. Online accounting software is a good first step.
2. Work closely with your advisor
Over the past year, accountants and bookkeepers played a critical role in helping small businesses survive, particularly by connecting them to JobKeeper. Now it’s all about keeping your cash flow in a position where you can handle anything 2021 might throw at you, so continue to work with your advisor to prepare for possible scenarios.
3. Cater to cautious consumers
If you don’t offer your customers safe, contactless ways to deal with you, you’ll miss out on a whole segment of the population that is still very cautious about COVID-19 – not to mention those who value modern-day convenience. This might mean changing up the way your customers can pay you when they’re in-store, or offering more of your products and services online.
Take the opportunity to respond to changing consumer preferences by working with your advisor to explore your competitive advantage, and discuss how you could leverage tech to streamline your operations, reach more customers and better serve them. These are the simple foundations to set your small business up for success in 2021.
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