Australia’s micro businesses across almost every industry sector have reported significant negative revenue generation for FY 2019, invoicing for 7.6% less than the previous financial year, according to research released today by Invoice2go.
A comprehensive data review of the invoiced dollar amounts from over 29,600 Australia-based Invoice2go users over consecutive financial years (FY 2018 and FY 2019) shows that business experienced an average revenue contraction of $8,315 in 2019.
Such negative growth raises concerns for the small business economy, particularly if the downward trend continues through Q3 2019 and beyond. A recession is commonly defined as two consecutive quarters of negative growth.
Which Australian small businesses are suffering the most?
The industries hardest hit by slowing economic conditions are:
- Interior design: 22% decline: Average invoiced amount decreased from $123,975 to $96,809
- Finance, insurance, real estate and consulting: 20% decline: Average invoiced amount decreased from $102,353 to $81,937
- Veterinary and other pet services: 13% decline: Average invoiced amount decreased from $142,079 to $123,249
- Education, health and personal care: 13% decline: Average invoiced amount decreased from $62,406 to $54,553
- Transportation and warehousing: 10% decline: Average invoiced amount decreased from $115,066 to $103,541
The one exception to the downward trend is the plumbing and HVAC sector which experienced 3.8% growth, increasing the average invoiced amount from $132,166 to $137,150.
Protecting your business in an economic downturn
“Small businesses are Australia’s economic backbone, making up 97% of all Australian companies. This critical data-based look at what’s really happening across the small business sector is an important indicator for the country’s health,” said Greg Waldorf, CEO, Invoice2go.
“After analysing our users’ invoicing activity, it’s hard to deny what are clear signs that point to a downturn, at the very least. And worse still, such figures are even indicative of a possible recession on the horizon.”
While a recession and the resulting impacts on customer spending and bank credit are outside of small business owner’s control, one important and often overlooked factor remains firmly within it: Preparation.
Michelle Hargreaves, Founder and Director of That Ladie Tradie, has confounded the trying economic conditions to safeguard her business, and has a message for other small businesses.
“As a Lady Tradie, our obvious point of difference is gender! But beyond that, we understand the importance of doing things methodically and with care, so that we get it right the first time,” says Michelle.
“Our approach to the necessary admin side of the business is the same as our approach on the tools. We’ve grown steadily in recent years and that’s because of the foundation we have built. We’ve paid attention to early warning signs, maintained a positive cash flow, stayed on top of invoicing and had our customers best interests’ at heart, all the time. After all, when money is tight, building trusting relationships with your customers gives them the peace of mind that they’re in the best hands.”