Xero, the small business platform, has released new research uncovering valuable insights shared by Australian small business owners.
The findings highlight that hiring inexperienced or unsuitable staff and engaging in unpaid or low-cost work are considered the most costly mistakes for over one in five (22 per cent) small business owners.
The research, titled ‘Do Better Business,’ surveyed over 1,000 Australian small business owners and leaders. It not only sheds light on the challenges faced by these entrepreneurs but also provides invaluable lessons for businesses entering a new financial year and aspiring entrepreneurs.
Will Buckley, Xero Australia Country Manager, emphasised the significance of small businesses, which constitute more than 97 per cent of all businesses in Australia, as vital components of local communities. He acknowledged that while running a small business can be rewarding, allowing individuals to pursue their passions and achieve flexibility, it also comes with a unique set of challenges, especially amidst a turbulent economic climate. As the new financial year begins, Buckley encouraged business owners to reflect on the past year and embrace key learnings that can pave the way for future success.
The research revealed that owning a small business is an ongoing learning process, with a majority (83 per cent) of surveyed owners admitting to making costly mistakes throughout their journey. Apart from hiring challenges and unpaid work, working with ill-suited partners, suppliers, and investors (18 per cent) and collaborating with family and friends (12 per cent) were cited as other blunders. Additionally, nearly one-fifth (19 per cent) reported spending all their personal savings in the early years of their business.
One of the major takeaways from the study emphasised the importance of implementing robust financial management practices. Approximately three-quarters (73 per cent) of respondents considered this a top priority for small businesses starting up. Building a strong network of industry contacts (63 per cent), working with accountants or bookkeepers (46 per cent), and seeking help when facing challenges (46 per cent) were also rated highly.
The research further uncovered the driving forces behind Australian business ownership. The desire to be their own boss emerged as the primary motivation for 64 per cent of respondents, followed by the pursuit of greater flexibility (61 per cent) and the aspiration to pursue a passion or dream (41 per cent). However, financial concerns were cited as the main reason for delaying business ownership (35 per cent), followed by a fear of failure (21 per cent). Interestingly, 65 per cent of surveyed business owners expressed that there is never a perfect time to start a business, but they wished they had done it sooner.
Small business ownership entails sacrifices, as revealed by the survey. One in five (20 per cent) small business owners reported missing significant life moments such as the birth of a child, a wedding, or a birthday during the early years of running their business. The majority of respondents (86 per cent) expressed a desire to prioritise personal boundaries more effectively while managing their businesses, especially concerning physical and mental health (43 per cent) and spending quality time with family, friends, or partners (40 per cent).
Buckley emphasised the importance of fostering an environment where aspiring entrepreneurs feel confident to pursue business ownership, receiving support throughout their journey. By understanding the challenges faced by small businesses and working collectively with industry and governments, he believes the right tools and technology can be provided to ensure businesses have the best chance to thrive in the current financial year and beyond.
The research also highlighted a generational divide in business ownership. Younger Australians, particularly Generation Z, reported facing more negativity and discouragement from friends, family, and associates when considering starting their own business (77 per cent) compared to Baby Boomers (60 per cent). Fear of failure was more prevalent among young entrepreneurs, with 29 per cent of Millennials admitting to delaying business start-ups due to this concern, compared to only 12 per cent of Baby Boomers. Nevertheless, 68 per cent of Generation X business owners identified flexibility as a central reason for business ownership, with 60 per cent indicating that they are currently achieving this goal.
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