XSBI event an opportunity to discuss how small businesses are faring

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It was great to discuss the state of small business in New Zealand on a panel alongside some inspirational businessmen and women this morning. I always enjoy sitting down with business leaders, and our partners and customers, to talk about how business is faring and what needs to improve.

The Xero Small Business Insights panel event took a close look at the just-released data for June 2018. Despite what some media outlets are reporting, it’s not all doom and gloom for business in New Zealand.

Hosted by Xero’s Small Business Director, Nicole Buisson, the panel also included economist Cameron Bagrie; Curtis Bailey, CEO of Tradify; Rachel Lewis, Chief Community Builder at The WE Network; Rob Campbell, Chairman of Skycity; and Jane Ward, CEO of Tomorrow’s People.

The discussion centred largely around the issues small businesses face when it comes to getting invoices paid, hiring skilled staff and corporate responsibility of large businesses.

Cameron started off the conversation around the slight decline (a decrease of 1.3 percent) in the number of small business employees from May to June 2018. He commented that when hiring numbers slow down it’s not always a bad thing, and I agree. It can often be a good economic signal, as it means that firms are are finding it tough to find skilled people. This may lead to a strong up-tick in tech-based investment as firms look to do things a bit differently.

Hiring skilled staff an issue for large and small businesses

Jane agreed that the skill shortage is a real issue. Tomorrow’s People has countered this challenge by offering a really flexible approach to work. The business attracts a lot of applicants due to its culture of staff working the hours they want, where they want. A lot of applicants and staff are mums returning to the workforce in a part-time capacity. Jane says that culture is the most important piece around hiring – hire people who are a good culture fit and that will translate to client success.

At Tradify, Curtis agrees that it’s important to hire for culture and talent. He has also been having difficulties hiring. Tradify has started to offer benefits beyond cash such as working from home, and an employee share option scheme.

Our big-business voice on the panel, Rob commented that the issue of hiring is a pain point for small and large businesses – it’s pressing for every business he knows of. He said the workforce has changed. The expectations of people who are of working age have changed immensely – we’re selling a product the consumer doesn’t want. The harsh truth is that we need to reframe what we’re offering in order to hire the best talent.

It’s important to note that there may be a slight employee reduction month-on-month, but year-on-year we are seeing small business employee numbers growing by 7.5-10 percent. Small business is actually humming in New Zealand. As Cameron said, Chicken Little can stay in the coop – the sky is not falling.

Late payments a problem for small businesses

The biggest concern these recent figures raise for me, are the payment patterns. Small businesses were paid 8.3 days late on average in June. Late payments are a massive issue in New Zealand, and have a huge impact on small businesses and their suppliers. In turn, this places an ever-increasing cycle of strain on cash flow. One way to address these late payments are to issue invoices with a ‘pay now’ button. We’re seeing these invoices being paid 14 days earlier than those without. We need to make it easier for businesses to pay, with multiple options, to speed up that cycle.

Curtis pointed to some high profile collapses in the construction industry recently which really hurt small businesses – one large business owed $41m to subcontractors. This raised the overarching theme of corporate responsibility when it comes to invoice payment.

Big businesses need small businesses to succeed

As Rob said, big businesses need to realise they don’t exist in isolation. To succeed, they need the businesses around them to succeed as well. Rachel’s comment that paying invoices late is a matter of process, rather than intent, was spot-on. She said that we have so much amazing technology at our fingertips, that there’s no reason why this is continually happening – it’s embarrassing for small businesses to have to beg for payment.

It was great to hear some suggestions from audience members and the panel around how to encourage better payment practices, but it is really up to big business to come to the party and change their culture of delaying invoice payments. The economic impact of late payments can be huge. Right now, the customer voice is louder than ever around the world and it will change how businesses operate. The only way we are going to get change is if we demand it.

To keep up to date with the latest Xero Small Business Insights, please subscribe here. Alternatively, if you’re interested in taking a deeper dive into the data or looking at how further insight might benefit you, please get in touch.

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