Aussie small business wage growth hits five-year high, while sales stall

• Business News
• Managing a Business

Small businesses in Australia saw another month of improved performance with the latest Small Business Index rising in April 2022 to 122 points – up four points on the 2021 figures.

According to Xero this rise has been driven by “wage growth,”which is up 4.1% compared to this time last year.  

Construction recorded the largest wage rise at 5.1 percent y/y, followed by manufacturing (4.6% y/y) and hospitality (4.5% y/y).

However it’s not all good news for small business owners with the increased wages complimented with a dramatic slowdown in sales growth throughout April.

“In April, wages have jumped significantly among small businesses – and at a rate higher than we have seen since the Index began. While this is a positive sign in the health of the sector, we should be cognisant that small businesses are facing rising costs across the board as inflation continues to climb.

“It’s important for the new government and broader industry to consider how they can alleviate some of this growing financial burden,” said Joseph Lyons, Managing Director Australia and Asia, Xero.

Sales stall

April’s sales stall revealed the cost-of-living pressures are significantly impacting the bottom line for Australian small businesses.

After more than a year of strong double-digit growth, sales plateaued to 5.8% compared to the previous year’s figures.

Industries that rely on “discretionary spending” – including arts and recreation, education and training, and information media and telecommunications – were significantly impacted, seeing growth slower than the national average.

“With the broad-based increase in the cost of living, consumers are shifting their spending to more pressing bills that cannot be avoided.

“This can be seen in the sales results for April – particularly in sectors such as arts and recreation and retail. Industries that are not directly affected by discretionary consumer spend, such as professional services, saw a larger sales increase,” said Louise Southall, Economist, Xero.

Top tips to maintain sales growth in your small business

• Request customer feedback

Customer feedback helps businesses broaden services and products, increase sales, and strengthen the relationship with the customer. If you don’t ask your customer for their feedback – you may be missing out on untapped sales opportunities.

• Re-shape your go-to-market approach

COVID-19 has forever changed the way business owners approach the market, so offering different solutions to meet the customer needs, and delivering them in a different (more appealing way) can elevate your business in a crowded retail space.

• Re-engage with your current customer

A targeted, incentive driven marketing campaign that appeals to the needs of your customer can often act as a timely reminder of the service offering of your business. A personalised direct marketing campaign – it can be as simple as a special discount for the customer’s birthday –  reminds them of your business and it’s service offering.

• Provide exceptional customer service

Genuine customer service is key to the growth of any small business, so a service strategy where a clear vision for your customer experience is clearly crafted and executed across the entire business is essential.

• Generate “word of mouth”

Word of mouth marketing is easily one of the most effective ways to increase sales and leads in your business. In fact, research states that 90% of people are more likely to buy from a brand recommended by a friend.

Find out more

To learn more about managing your small business, book your obligation free consultation with the team at Elevate Accounting HERE.