2020 has been a rolling thunder of challenges for small businesses and their advisors. I’m proud of the incredible resilience New Zealand small business has shown this year. In the same way, accountants and bookkeepers have worked hard to help their clients get access to support to get through these challenging times.
Xero’s report, Pandemic Insights shows small business was twice as badly hit by the impacts of COVID-19 as big business. After the first lockdown in March, Kiwi small businesses experienced a significant drop in revenue of 40%, but compared to our international counterparts, Aotearoa has since seen an encouraging recovery over the last few months, with small business revenue now close to 2019 levels.
It’s been heartening to see the community come together to support small business. Platforms like Manaaki , delivereat, the ‘Chooice’ Facebook group and SOS Business have enabled Kiwis to get behind their local businesses more than ever before. In fact, a recent global study shows New Zealand small businesses had the most positive outlook during COVID-19, thanks to the support from their communities.
Continuous support needed for small business
Despite the encouraging signs, it’s crucial for small businesses to keep a close eye on cash flow over the summer and into 2021. Xero’s Small Business Insights shows January is the worst month for cash flow positivity. Not only is it a provisional tax month, but a lot of Kiwis head away on holiday, which means payments can be further delayed.
To help do your part for the small business community this summer, one of the best things to do is pay bills promptly – or even better – early. For other businesses, especially big businesses, committing to paying bills within a shorter payment term such as 10 days can make a huge difference to small businesses – not just their cash flow but also their livelihoods. I’m pleased to see the Government has been focused on improving payment terms this year. It’s also something we’ve committed to at Xero to help small businesses get paid faster.
Looking forward to 2021
I’m feeling optimistic for the year ahead, and I think there are some solid opportunities in front of us to rebuild better, together. We’ve already seen many small businesses get online and adopt technology to increase efficiency or grow their business.
This summer, I encourage you to take some time to think about what you want for your business in the next 12 months. It might be adopting new tools to make life easier, making your team’s wellbeing a priority, or perhaps you’re in a position to grow your business. While we can’t know what’s going to happen next year, we can promise you that we’ll be there to support you.
Wishing everyone a safe and relaxing holiday.
Noho ora mai