Data drawn from small businesses — a key employer of millions of Australians — is showing positive signs about an economic recovery post lockdown.
- Victoria’s small business revenue is down 3.8 per cent compared to one year ago, but a rebound post lockdown could be fairly swift
- In the meantime the closure of the economy has impacted local real estate, with more homes on the market unable to sell
- Those businesses embracing technology have actually survived and thrived during the crisis
Revenues for more than 100,000 small businesses nationally in August were slightly higher — up 1.4 per cent, compared to a year earlier — according to data from local clients of accounting software program Xero.
And the data shows revenue was steady for these businesses between July and August.
“What we saw actually was quite a strong recovery, especially from a revenue perspective.”
But jobs shed haven’t yet been replaced and Victoria is the outlier.
The outlook for small business differs depending on the severity of restrictions in place to slow its spread and whether the health crisis created by the coronavirus can be beaten.
Melbourne went into stage four lockdown on August 2, including an 8:00pm curfew, the closing of almost all shops, the shuttering of manufacturing and restrictions on travelling more than 5 kilometres from your home.
Regional Victoria has been under slightly less restrictive stage three conditions for the same period.
Comparing that tough last month to August one year ago, Victoria’s small business revenue is down 3.8 per cent — a 5.3 percentage point gap compared to the rest of the nation.
Real estate takes a hit as loans get tighter
The hit is no shock to real estate agent Daniel Cheng of ReMax Property Specialists in Dandenong, a multicultural suburban hub in south-east Melbourne.
“Usually the phone would be ringing at this time of the year, people start enquiries, inspections … now it’s into the second week (of spring) and we haven’t had many phone calls from people at all.”
Mr Cheng said there were many listings, with sellers keen to offload off-the-plan developments and sites for new development.
And first-home buyers were hoping to get into an area where houses can be bought for less than $600,000, he said.
But difficulties in securing finance had held back potential buyers.
“It’s just a matter of getting the loan, that’s the main reason people can’t move forward,” he said.
Jobs are quick to go when revenue dives
When revenue goes, jobs follow.
By mid-May Australian small businesses had slashed 12 per cent of employees from their rosters of just two months earlier, before the crisis.
The bulk of the losses were in the early stages of the pandemic as restrictions tightened, and small business employees lost their jobs at a rate 50 per cent higher than big businesses.
“When you think about it from an employment perspective it kind of makes sense in a lot of ways,” said Mr Innes.
That is backed up by grim figures showing the number of filled jobs in Australia decreased by 932,400 to 13.6 million in the June quarter.
The seasonally adjusted figures from the Australian Bureau of Statistics (ABS) found the number of “main jobs” down (by 739,000) as well as “secondary jobs” (down 193,400).
The number of hours worked decreased almost 10 per cent, (slipping 527.3 million hours to 4.9 billion hours) and the average income per the number of employed people fell 6.9 per cent from a year ago, to $20,259.
“That’s not rocket science. Scared families and businesses don’t spend.”
But things don’t happen at the same speed.
Unemployment rockets up, but only floats down.
“Getting unemployment back down again is going to be harder than any similar experience that Australia has had in your lifetimes,” Mr Richardson said.
Technology saves some from staff cuts
The Xero data also suggests that companies that attempted to transform their businesses by embracing digital solutions lost less revenue and lost fewer staff.
Small businesses using more than five applications to run their operations — such as payment services Stripe and Square or online shopping platforms like Shopify and WooCommerce — had a one-third smaller fall in revenue and 40 per cent smaller job losses.
But these figures include data from the software’s other key markets in New Zealand and the United Kingdom.
Founder of Hawthorne Creative, Carolyn Ferrando, helps small businesses get online and isn’t surprised that those either suited to digital sales or changed their model in the much-discussed “COVID-pivot” have fared better.
The Logan City businesswoman lost half her business as the crisis hit, but had recovered and put “an extra 30 per cent on top” within weeks as small operators realised they needed to move their outlets online.
“We’re bringing on staff.”
More broadly, Ms Ferrando sees small business owners optimistic about the near future.
“It’s definitely picked up,” she said.
“But with the end of (wage subsidy) JobKeeper in March, people are already a little worried about what that’s going to look like.
“You can see them making preparations. So it’s positive, but with a wary eye on the future.”