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Data & Insights 3 min read

Three things we learnt about small business from the latest XSBI data

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Louise Southall

Nov 23, 2023

LAST UPDATED: Dec 20, 2023

The latest round of Xero Small Business Insights (XSBI) featured plenty of new data showing how small businesses are tracking across Australia, Canada, New Zealand, the United Kingdom and the United States. XSBI is released quarterly and uses anonymised and aggregated data to track the performance of, and improve understanding about, small businesses. We track several small business indicators including sales, payment times, jobs and wages.  

Here are the top three take-outs from this release:

1. Sales growth is slowing in all five XSBI countries, but at different paces 

All five XSBI countries are dealing with persistent inflation and higher-than-normal interest rates. This is leaving households with stretched budgets and not as much capacity to spend in small businesses, once all the household bills have been paid. So it’s not surprising sales growth is slowing. What is more interesting is to see the differences in the size of the spending impacts across countries.

Small business sales are proving most resilient in Australia, averaging growth of 6.2% year-on-year (y/y) in the three months to September. This is below the pre-COVID average but sales growth has still broadly kept pace with, or been faster, than average price rises. In New Zealand (+0.7% y/y) and the UK (+2.1% y/y), sales growth was weaker than in Australia over the same period, but has been able to stay positive for most months of 2023. The picture in Canada (-3.5% y/y) and the US (-5.6% y/y) is that sales were actually lower than they were a year ago for the three months to June.    

2. Small retailers have been particularly hard hit

Stretched households are increasingly having less to spend on the non-essential items once they have paid for mortgages/rent, groceries and household bills. Industry level data shows small retailers have been particularly hard hit by slowing sales, recording some of the softest industry results in the three months to September. Retail sales fell an average of 0.8% y/y in Australia, 2.6% y/y in New Zealand and 2.4% y/y in the UK over this period. 

3. Late payments remain an issue for small business

We’re also seeing small businesses continuing to be paid late. This makes it more difficult for owners to manage cash flow and pay their own bills, staff (and themselves!) on time. Even in the two best performing countries – Australia (6.5 days) and New Zealand (6.4 days) – small businesses were paid on average almost a week late in the three months to September. This rises to over a week in the UK (7.1 days), and even higher for the three months to June in the US (7.7 days) and Canada (8.8 days). All of the latest results are the same as (in Australia) or longer than the 2022 averages, highlighting that the late payment situation has not improved over 2023. 

What can you do to support small businesses in your community this holiday season?

This festive season is a great time to support your local small businesses, whether you are stocking up the pantry or buying gifts for loved ones. Before you go on holidays you can also make sure that you have paid any outstanding bills you might have from a small business. This will make it easier for owners to start off the new year in a solid position, as we know from past XSBI research that January and February often see a revenue dip for small businesses. Exploring (and shopping in) small businesses should also be on your to-do list if you are taking a holiday or vacation in the coming months. 

If you would like to take a deeper dive into XSBI and learn more about the program see the dedicated XSBI site, which also includes downloadable spreadsheets and a detailed methodology. From our global page, you can navigate to a specific country’s data by clicking on the link beneath the relevant country’s chart, and it will take you to a dedicated page with a detailed country report.

Mark your diaries for the next round of XSBI data – out in February 2024.

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