New research released by accounting software provider Reckon reveals that resilience can make or break a business, with high resilience doubling the success of small business owners.
The findings from the Reckon Resilience Report show that small business leaders who rank highly for resilience are twice as likely as those with low resilience to be financially successful (43% vs. 23%), satisfied with their overall happiness (93% vs 43%) and have strong job satisfaction (80% vs 40%).
The report also reveals that years of drought, recent bushfires and the current COVID-19 pandemic have had a major impact on Australian small businesses, with nearly half (47%) having seriously considered closing the doors of their current business.
What other findings did this report by Reckon reveal?
According to the findings, 1.8 million (78%) Australian small businesses are feeling additional pressure due to COVID-19, while 29% are feeling the same due to the 2020 recession scare.
Despite this, the research suggests that Australia’s small business leaders are highly resilient overall, with three quarters (74%) saying they tend to bounce back after hard times and nearly two-thirds (63%) saying it doesn’t take them long to recover from stressful events.
The research measured levels of resilience in more than 1,000 people across Australia using the Brief Resilience Scale, which defines resilience as the ability to bounce back or recover from stress. It also asked small business leaders about their biggest sources of hardship and how they developed resilience.
Reckon CEO, Sam Allert, said that the findings were timely given recent challenges experienced by small businesses across Australia.
“Running a business is extremely rewarding, but success sometimes comes at the end of a bumpy road. Things have been tougher than usual for Australian businesses recently – from drought, to fire, and a global pandemic. That is why it is more important than ever for us to talk about resilience and what it means for the small business sector,” he said.
Resilience can stand between success and failure
The Reckon Resilience Report shows that more than half (54%) of small business leaders have lost money due to poor resilience.
Last financial year, the average small business leader forfeited $21,832 because of missed opportunities due to poor resilience, such as pulling out of jobs early, being too tired to fully engage with stakeholders, or not updating cash flow.
With more than 2.3 million small businesses in Australia, poor resilience could be costing the sector $50 billion annually in lost opportunities.
When it comes to giving up, the report finds that the average Australian small business leader has seriously considered pulling the pin on their business almost three times.
However, small business leaders with high resilience are far less likely (29%) to consider giving up on their business compared to those with low resilience (70%).
“Empowering Australia’s small businesses for success is critical to maximising the sector’s health. Given the challenging times, our aim is for the Reckon Resilience Report to spark a national conversation about developing even more resilience within the sector and how that can empower small business owners to continue driving success for themselves,” said Allert.
Resilience through tools and resources
Referring to the report’s findings on how Australian small businesses build resilience, Allert emphasised that resilience can be developed.
“Anyone who has ever faced a challenge and come out stronger will know exactly why the experts say resilience can be developed. Resilience is a skill and – like any skill – it can be learned and improved,” said Allert.
The report sheds light on how Australian small businesses develop resilience, with more than half (51%) of small business leaders defining resilience as knowing how to tap into tools and resources for support.
Small business leaders cite a wide variety of external resources for learning and practicing resilience, with the top five being mentors (33%), business and financial experts (16%), books such as self-help guides (16%), mental health professionals (16%) and online resources (10%).
Additionally, highly resilient small business leaders tend to use technology to their advantage, being much more likely (90%) than their counterparts (70%) to think advances in technology make running a business easier.
The most resilient small business leaders are also more likely (47%) than average (38%) to use accounting software to help them reach their business goals.
“The findings suggest that being able to identify and use all the right resources to succeed professionally and personally is a hallmark of the most resilient small business owners. Those who do so are naturally better at bouncing back during tough times,” said Allert.
“Dealing with cash flow issues given the COVID-19 pandemic is an example that will resonate with many small businesses. Not having the right tools to make it easier for customers to pay you faster could really put the brakes on a business’ cash flow. While it seems like a small thing, not everyone is using payroll software, which streamlines the JobKeeper payments process, and in the case of our payroll app this can be done in just a few taps on their phone.
“Those who can identify and draw on the right resources will find the going easier. They can tap into JobKeeper-ready payroll software or engage professional accountants to quickly access the Government stimulus funds and retain staff through the current challenging circumstances. They’ll be much more likely to bounce back,” he said.
Head to the Reckon Resilience Hub to read the full report and learn the small business community’s top methods for building and maintaining resilience.