We all know that cloud-based services attract and store a vast amount of data. Some of this is made public (see Google Trends for example), but usually it either sits silently in databanks or is commercialised behind closed doors, used to inform those who can afford it.
Thankfully, Xero, probably the proprietor of the most valuable data on the way small business works in New Zealand, is giving the world access to some of Xero’s insights into what’s happening and, as importantly, what’s not.
The data, which is selectively analysed and published as Signals, is the first of an ongoing report on the state of New Zealand’s small business economy. Signals is based on aggregated data from nearly 10,000 businesses across the country and surveys of approximately 500 representative small businesses (many of which aren’t Xero customers) and 1,300 other Xero customers.
“This is the largest and most important data release for small businesses in New Zealand's history,” says Anna Curzon, Xero’s managing director. “It’s for businesses, stakeholders, advisors and the government – everyone that's interested in helping Kiwi businesses to thrive and navigate the challenges small businesses are facing. It's designed to alert them to potential issues, but is also designed to give them some tips and tricks, things we've observed that other small business are doing to help them solve those problems.”
Curzon says Signals came out of Xero’s communications with its customers. “A consistent theme was that they'd really like to understand how they're going,” she says. “It's easy to feel really isolated. If you're a bookstore in Taranaki, if you're a farmer in Invercargill, it can feel very lonely sometimes as a small business owner.
“We got a lot of feedback saying, ‘We’d really love to understand how we’re doing compared to others, and what others are doing to help their businesses to either grow or save some time or save some money. And we've got the privilege here at Xero with over 25% of the New Zealand market to have a look at a representative sample of our customers' data and reflect that back to them. So we see this as our customers' data, and we automate and aggregate the data together and give it back to them so they're able to make some meaningful decisions from it.”
So, what surprised Xero, a company with access to so much business data you may think nothing could surprise?
“I was really fascinated that two thirds of Kiwi businesses have said that they actually just don't want to grow, which was a surprise because here at Xero, we're all about growth," she says. "So that's a really good insight for us, in terms of understanding small businesses here in New Zealand and what makes them tick, and what success looks like.
“We know that 83% of small business customers want to be more efficient and that's really interesting because we're coupling that with the data that our small businesses are having to run harder to stand still. So they're telling us to give them tips and tricks and advice in how they can be more productive and efficient to give them the time back to do whatever matters most. That might be spending more time with the family, it might be spending more time having a life, or it might be giving back to the community. But our small business community, en masse, is saying they want to become more efficient and more productive to achieve their goals, whatever they might be."
For a quick taste, here are some insights and advice that feature in the first release:
- 87% of invoices are overdue and 40% of invoices are more than a month overdue: Don’t wait until the 20th of the month to invoice – invoice as you go. Also, consider reducing payment periods from 60 days to 30 days, or 30 days to 14 days
- 70% of small business owners don’t want to grow their business, but 83% want to improve efficiency
- Less than 10% of small businesses have an accountant and only one in three small businesses have a business plan
- Small business revenue declined in 2015 compared to 2014 but profits are steady
- Consider lower stock holding levels, so they don’t tie up money on products they can’t move
- Consider growing their online presence: 78% of New Zealanders 18 or over make online purchases, but only 15% of small businesses have an online shop
Read Xero's Signals here.
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