A new report has found that Australian small businesses are in economic decline across all sectors – except for HVAC&R and plumbing.
The findings are based on 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). This shows that businesses invoiced 7.6 per cent less in FY 2019 – an average revenue contraction of $8,315.
The industries hardest hit by slowing economic conditions were:
- Interior design: 22 per cent decline; average invoiced amount decreased from $123,975 to $96,809.
- Finance, insurance, real estate and consulting: 20 per cent decline; average invoiced amount decreased from $102,353 to $81,937.
- Veterinary and other pet services: 13 per cent decline; average invoiced amount decreased from $142,079 to $123,249.
- Education, health and personal care: 13 per cent decline; average invoiced amount decreased from $62,406 to $54,553.
- Transportation and warehousing: 10 per cent decline; average invoiced amount decreased from $115,066 to $103,541.
The figures are a particular concern for Australia, where small and micro-businesses play a vital role in the economy. According to the Australian Small Business and Family Enterprise Ombudsman, small businesses account for 35 per cent of Australia’s gross domestic profit and employ 44 per cent of Australia’s workforce.
Of the 877,744 total employing businesses, 823,551 are small businesses (93.8 per cent), and of those businesses, 627,932 are businesses that employ only one to four people, known as micro businesses (76.2 per cent).
“This critical data-based look at what’s really happening across the small business sector is an important indicator for the country’s health,” says Invoice2go CEO Greg Waldorf. “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.”
But despite some sectors clearly suffering from the housing construction downturn, the HVAC&R and plumbing sector bucked the downward trend. It was the only sector to experience growth, with average invoiced amount rising from $132,166 to $137,150 (3.8 per cent).
Of the 29,629 Australian small businesses in the data set, 1,633 were in the HVAC&R and plumbing sector.