Pandemic recovery on track for small business
- Managing a Business
May proved to be a month of growth for the small business sector, with job security, sales growth and an increasingly healthier retail market revealing positive signs for financial recovery post pandemic across Australia.
Statistics from the Xero Small Business Index indicated a 5.7% rise in small business jobs (annualised across two years, not just compared to the 2020 data in which Australia was within the height of the Covid 19 pandemic). Even further to this, the stabilising wage growth highlights the strong contribution small businesses are making to the recovery of markets nationally; and this contribution has not gone unrecognised.
Sales in small business has risen 27.7% compared to the dismal May 2020 figures skewed by pandemic lockdown conditions, with a 6.3% growth adjusted across two years.
Industry performance in sales (2020 comparison with 2021)
|Arts and Recreation||-1.4%|
May wages within small business, measured by average employee earnings, has shown an average national rise of 2.7%, slightly stronger than April figures – all positive signs that the road to recovery is well and truly on the way.
Confidence in sales growth combined with this steady increase in wages has meant small business owners are seeing money return faster to their back pocket. Xero Small Business revealed the time businesses are waiting to be paid has fallen by 0.5 of a day, bringing the national average to 22.9 days. It is important to note that while most businesses are still having to wait well over a week to get paid, this is only the second time since January 2017 that this stat has fallen below 3 days.
Let’s see what the next quarter brings to the small business sector, with the hopes retail growth and job security remain on the incline for a long time to come as we rebuild from the repercussions of the global pandemic.
Small business financial checklist – are you taking good care of your business financials?
As we kick off the new financial year, be sure your business financial tasks are in good check with this quick checklist. Keen to discuss this or any other financial questions or concerns? Contact the team at Elevate Accounting today.
- Set targets for financial performance. Consider where you want your business to be in the next year and future years and set targets that align with these goals. Have you set targets that are not being met? Review and alter the targets accordingly. Be sure to factor in the industry benchmarks of your business before setting targets.
- Review your financial statements, comparing performance against objectives and overall past performance. Compare key ratios in relation to employee numbers and stock turnovers against averages in your industry.
- Create a profit and loss budget. Ensure the budgets set for the new financial year are realistic and based off key findings and outcomes from your last review.
- Update your cash flow forecast to reflect actuals, and keep a close eye on the ongoing cash position of your business.
- Review interest rates of any outstanding business loans you may have. Are you paying principal and interest or just interest only? Switching to a lower rate of business loan may provide you the chance to pay more off the loan, or direct the additional funds elsewhere in the business.