Australia’s new small business boom
A Xero study shows Australia’s small business boom is expected to continue over the next ten years.
Research into Australia’s small business sector reveals that our small business boom is expected to continue over the next ten years, with an additional 3.5 million new small businesses expected to be established.
While the pandemic disrupted thousands of businesses, it also created opportunities for new businesses in a variety of industries. For example, while brick-and-mortar stores were bleeding, e-commerce reached new heights. Similarly, Fintech and Edtech companies saw a significant increase in their consumer base.
Prior to the pandemic, small businesses accounted for 99.8% of total businesses, 66% of employment, and 55% of value added in Australia. This rapid growth in response to an economic crisis is unprecedented, and it is the polar opposite of what happened after previous periods of economic uncertainty, such as the 2007-09 Global Financial Crisis.
According to the study, the following external factors are likely to have contributed to the increase in new business registrations:
- Job uncertainty: reduced hours, redundancies, limited opportunities for pay rises
- Great resignation: Australians re-evaluated their job satisfaction and sought greater enrichment, control, and flexibility in their work.
- Digitalisation: increased use of technology and digitalisation has decentralised many workplaces creating opportunities for business owners to work in regional areas.
- New opportunities: the rise of the gig economy, digital ways of working, and favourable business lending have created the conditions for more budding entrepreneurs to take the plunge.
Australia’s small businesses are investing in their recovery, with an uptick in financing for equipment and machinery financing among small businesses.
The Federal Budget included provisions that allow small businesses to receive a $120 tax deduction for every $100 spent on employee training or technology investment, up to a maximum of $100,000 per year.
According to Xero, the landmark report arrives at a hopeful chapter in our nation’s pandemic journey: one that sees a surge in small business creation as Australians adapt to uncertainty.