Small business hit twice as hard as larger counterparts by pandemic

Two new reports highlight the economic and emotional impact of the COVID-19 pandemic on small businesses across multiple countries, enabling a comparison of how the sector has fared in Australia compared with elsewhere in the world.

Xero’s Pandemic Insights: Small Business Experience report, gathered from data collected from over 300,000 of the global small-business platform’s subscribers in partnership with AlphaBeta, revealed that Australian small businesses had the largest job losses at 12 per cent. However, manufacturing is leading the recovery here, as it is in the UK and New Zealand, with revenue growth in these jurisdictions of between one and 13 per cent. Small business has been twice as badly hit as big business, but digitally-enabled businesses experienced revenue declines that were one-third smaller and job losses 40 per cent smaller than other small businesses.

The report’s August insights also found Australia’s overall small-business revenue growth in positive territory (+1.4 per cent), but the “second wave” lockdown meant revenue for Victorian small businesses was down 3.8 per cent year-on-year. Small business jobs changed little in Australia during August and have recovered around eight per cent since the May low point, though they remain five per cent below their pre-pandemic levels.

“Being able to quickly provide insights of this scale, with country comparisons, provides better understanding as to how the small business recovery can be supported around the world,” said Xero CEO Steve Vamos. “Small business is family and community. It’s a big source of growth and innovation in economies and they are doing it tough right now.”

Trent Innes, Managing Director of Xero Australia and Asia said, “This analysis arrives at a critical time as we address the economic rebuild here in Australia and around the world. Small businesses in Australia have had to navigate a turbulent year from the outset of 2020, and the data shows us they have been hit twice as hard as larger businesses. What’s encouraging is that we’re seeing small businesses rebound when restrictions are lifted. This speaks to both the resilience and agility of the sector.

“…We can also now reveal the heightened resilience of digitally-enabled businesses. Those with a higher use of apps saw revenue declines smaller than other small businesses and were also better able to retain staff,” added Innes.

The other report by Xero, Emotional metrics: small business mindsets during the pandemic, focused on the human impact of the crisis with research in Australia, New Zealand, the UK, North America and Singapore. It found that 43 per cent of small-business owners in these countries are worried about their own mental health, and 39 per cent are worried about the mental health of their employees. Analysis from a sentiment measurement tool also showed the predominant emotion of small businesses is one of being “worn down”.

“We have found several Xero small business customers who survived the Spanish Flu of 1918 and are still operating today, including a winery in South Australia and a pie and eel shop in London,” Vamos said. “It is incredible to think that these businesses have already survived a global pandemic, along with many other major economic disruptions since, and are still trading during this latest crisis. We are in awe of their resilience.”

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