1 00:00:04,080 --> 00:00:07,470 Sean Aylmer: Welcome to the Fear and Greed Daily Interview. I'm Sean Aylmer. What 2 00:00:07,470 --> 00:00:10,080 Sean Aylmer: a year this has been for small business. The first 3 00:00:10,080 --> 00:00:13,320 Sean Aylmer: in three years, not to be decimated by lockdowns, but 4 00:00:13,320 --> 00:00:18,209 Sean Aylmer: still the pandemic eras, supply chain challenges have persisted. Then 5 00:00:18,300 --> 00:00:21,030 Sean Aylmer: add in the challenges of ongoing labor shortages and rising 6 00:00:21,030 --> 00:00:24,060 Sean Aylmer: interest rates as inflation soars with the cost of everything 7 00:00:24,090 --> 00:00:27,300 Sean Aylmer: from food to energy through the roof. A challenging time 8 00:00:27,300 --> 00:00:30,750 Sean Aylmer: for businesses of all sizes, but felt particularly hard by 9 00:00:30,750 --> 00:00:33,660 Sean Aylmer: small businesses who may not have the scale and resources 10 00:00:33,930 --> 00:00:37,379 Sean Aylmer: to absorb much of this. Will Buckley is Xero's Country 11 00:00:37,380 --> 00:00:40,979 Sean Aylmer: Manager for Australia and has a pretty unique insight into 12 00:00:40,979 --> 00:00:43,589 Sean Aylmer: how small business has fared this year with Xero tracking 13 00:00:43,590 --> 00:00:47,640 Sean Aylmer: monthly data on sales, jobs, wages and payments. Will, welcome 14 00:00:47,640 --> 00:00:48,390 Sean Aylmer: to Fear and Greed. 15 00:00:48,540 --> 00:00:50,340 Will Buckley: Thank you very much for having me. It's good to 16 00:00:50,340 --> 00:00:50,700 Will Buckley: be here. 17 00:00:50,880 --> 00:00:52,380 Sean Aylmer: Now look, I loved my intro. Will, I got to 18 00:00:52,380 --> 00:00:55,320 Sean Aylmer: tell you, however, I want you to tell me whether 19 00:00:55,320 --> 00:00:57,360 Sean Aylmer: I was right or wrong. I mean, just how tough 20 00:00:57,360 --> 00:01:00,810 Sean Aylmer: was 2022 for small businesses? 21 00:01:01,440 --> 00:01:05,760 Will Buckley: In general? Definitely challenging, and we've seen and heard of 22 00:01:06,090 --> 00:01:09,330 Will Buckley: a lot of that commentary come through and sentiment come 23 00:01:09,330 --> 00:01:12,330 Will Buckley: through from small businesses. On the positive side, we certainly 24 00:01:12,330 --> 00:01:16,440 Will Buckley: did see a number of industries such as hospitality and retail, 25 00:01:16,860 --> 00:01:20,310 Will Buckley: arts and recreations start to have a pretty strong bounce 26 00:01:20,310 --> 00:01:22,620 Will Buckley: back off the back of a couple of challenging COVID 27 00:01:22,620 --> 00:01:26,399 Will Buckley: years. So for some industries, there was definitely some strong 28 00:01:26,400 --> 00:01:29,670 Will Buckley: signals of some strong bounce back earlier on in 2022. 29 00:01:29,940 --> 00:01:33,270 Will Buckley: But as everyone knows, we've been seeing some pretty strong 30 00:01:33,600 --> 00:01:36,480 Will Buckley: inflation growth throughout the year in terms of year- over- 31 00:01:36,480 --> 00:01:39,960 Will Buckley: year compares, and what we've just started to see now 32 00:01:40,080 --> 00:01:42,690 Will Buckley: off the back of the month of November is that 33 00:01:42,690 --> 00:01:48,090 Will Buckley: sales growth coming into holiday season, still positive, but starting 34 00:01:48,090 --> 00:01:52,050 Will Buckley: to slow down, show signs of slowing year over year. 35 00:01:52,110 --> 00:01:54,540 Will Buckley: The key thing to call out is that that sales 36 00:01:54,540 --> 00:01:59,280 Will Buckley: growth is still trending above and positive to the rate 37 00:01:59,280 --> 00:02:03,090 Will Buckley: of inflation, but it has started to taper off, probably 38 00:02:03,090 --> 00:02:05,610 Will Buckley: at a time of year where a lot of businesses 39 00:02:05,610 --> 00:02:07,950 Will Buckley: are sort of banking on a pretty strong holiday season 40 00:02:07,950 --> 00:02:10,380 Will Buckley: to get them through into next year. 41 00:02:11,100 --> 00:02:13,770 Sean Aylmer: Will, do you have a sense of what business confidence 42 00:02:13,800 --> 00:02:16,200 Sean Aylmer: is like right now? Because what you just described was 43 00:02:16,200 --> 00:02:19,799 Sean Aylmer: interesting, particularly, I'm sure, a lot of restaurateurs and cafe 44 00:02:19,800 --> 00:02:23,970 Sean Aylmer: owners who were relieved early on in the year and 45 00:02:23,970 --> 00:02:25,560 Sean Aylmer: probably have done pretty well. If you go to the CBDs and some 46 00:02:26,550 --> 00:02:29,700 Sean Aylmer: of the major cities at the moment, they're really thriving, 47 00:02:29,880 --> 00:02:32,160 Sean Aylmer: at least parts of the week, they're really thriving, which 48 00:02:32,160 --> 00:02:35,310 Sean Aylmer: is great to see, but maybe business confidence is coming 49 00:02:35,310 --> 00:02:37,320 Sean Aylmer: off just to touch right now. 50 00:02:38,130 --> 00:02:41,459 Will Buckley: Look, it's still positive sentiment in the sense that sales 51 00:02:41,460 --> 00:02:46,530 Will Buckley: growth is outstripping inflation. But it is that slight softening 52 00:02:46,770 --> 00:02:49,680 Will Buckley: that we're starting to see come through, start to, not 53 00:02:49,680 --> 00:02:53,100 Will Buckley: deteriorate confidence so much, but create a little bit more 54 00:02:53,100 --> 00:02:56,040 Will Buckley: of a sense of caution going into the holiday season. 55 00:02:56,310 --> 00:03:00,090 Will Buckley: One thing that is quite interesting and worth mentioning is 56 00:03:00,090 --> 00:03:03,180 Will Buckley: that we aren't at a point, and all of our 57 00:03:03,180 --> 00:03:05,880 Will Buckley: research suggests that we're not coming to a point of 58 00:03:05,880 --> 00:03:10,859 Will Buckley: having to handle a wage price spiral. That can certainly 59 00:03:10,860 --> 00:03:15,480 Will Buckley: be pretty detrimental to the economy in times of high and 60 00:03:15,480 --> 00:03:18,480 Will Buckley: aggressive inflation. From everything that we're seeing at the moment 61 00:03:18,480 --> 00:03:22,589 Will Buckley: through the Xero small business insights is that wages growth. 62 00:03:22,590 --> 00:03:26,910 Will Buckley: Whilst yes, it is growing, it is not outstripping or 63 00:03:26,910 --> 00:03:29,580 Will Buckley: growing at a faster rate than what sales growth and 64 00:03:29,580 --> 00:03:32,790 Will Buckley: inflation is doing at a top line. So we're doing 65 00:03:32,790 --> 00:03:35,460 Will Buckley: a pretty good job so far of avoiding that wage 66 00:03:35,460 --> 00:03:41,040 Will Buckley: price spiral, which suggests that small business owners are definitely acutely 67 00:03:41,040 --> 00:03:45,450 Will Buckley: aware of trying to find ways to mitigate any cost 68 00:03:45,450 --> 00:03:48,510 Will Buckley: pressure in their business while still trying to find ways 69 00:03:48,510 --> 00:03:51,990 Will Buckley: to hire people into roles and get their capacity up 70 00:03:51,990 --> 00:03:55,470 Will Buckley: so that they can continue to produce. So things are 71 00:03:55,470 --> 00:03:58,140 Will Buckley: softening off. But yeah, look, there's a couple of signs 72 00:03:58,140 --> 00:04:01,230 Will Buckley: there that suggest that the Australian economy is actually balancing 73 00:04:01,230 --> 00:04:03,780 Will Buckley: itself quite well through these uncertain times. 74 00:04:04,140 --> 00:04:08,130 Sean Aylmer: The fact that wage pressures haven't come through is good, 75 00:04:08,640 --> 00:04:11,130 Sean Aylmer: but I would say surprising. We have an unemployment rate 76 00:04:11,130 --> 00:04:16,020 Sean Aylmer: of 3. 4%. Last month, there was about 60,000 plus 77 00:04:16,529 --> 00:04:20,610 Sean Aylmer: new jobs created. I mean, do you think small businesses 78 00:04:20,610 --> 00:04:23,669 Sean Aylmer: will be able to maintain a leader on wages? Often 79 00:04:23,670 --> 00:04:25,589 Sean Aylmer: they're not going to have much control over that, I'd imagine. 80 00:04:26,670 --> 00:04:30,120 Will Buckley: Yeah, it's challenging. Small business owners are absolutely leaning into 81 00:04:30,120 --> 00:04:33,030 Will Buckley: that challenge, though. We hear all the time of businesses, 82 00:04:33,450 --> 00:04:36,779 Will Buckley: particularly the smaller ones, the family- owned businesses, that do 83 00:04:37,470 --> 00:04:40,620 Will Buckley: find it quite difficult to find staff with such low 84 00:04:40,620 --> 00:04:45,690 Will Buckley: unemployment. But there's also opportunities for transient workers and staff 85 00:04:45,690 --> 00:04:49,110 Will Buckley: that perhaps have been on reduced hours or reduced schedules, 86 00:04:49,110 --> 00:04:52,320 Will Buckley: looking for opportunities to pick up those schedules, and business 87 00:04:52,320 --> 00:04:55,349 Will Buckley: owners certainly look to identify those opportunities where they can 88 00:04:55,350 --> 00:04:59,280 Will Buckley: do that. So the fact that jobs growth has been 89 00:04:59,339 --> 00:05:02,580 Will Buckley: healthy, low unemployment is there, and that wages growth hasn't 90 00:05:02,580 --> 00:05:06,210 Will Buckley: spiraled and hasn't started to eclipse the rate of inflation 91 00:05:06,210 --> 00:05:10,710 Will Buckley: or the rate of sales growth across small businesses. It suggests 92 00:05:10,710 --> 00:05:13,800 Will Buckley: that business owners are, whilst it is difficult, they're doing 93 00:05:13,800 --> 00:05:16,589 Will Buckley: a good job of trying to strike that right balance. 94 00:05:16,589 --> 00:05:19,560 Will Buckley: So everything we see when we talk to small businesses 95 00:05:19,830 --> 00:05:23,040 Will Buckley: is all about trying to avoid that cash flow crunch 96 00:05:23,040 --> 00:05:26,640 Will Buckley: moment. As I mentioned coming into the holiday season, a 97 00:05:26,640 --> 00:05:29,910 Will Buckley: lot of industries are heavily reliant on getting through that 98 00:05:29,910 --> 00:05:32,490 Will Buckley: holiday season to get them through to next year. So 99 00:05:32,970 --> 00:05:36,030 Will Buckley: finding staff now and making sure that they're able to 100 00:05:36,210 --> 00:05:38,609 Will Buckley: hit their sales targets throughout the holiday season is going 101 00:05:38,610 --> 00:05:41,310 Will Buckley: to be key to a lot of those businesses exiting 102 00:05:41,310 --> 00:05:43,950 Will Buckley: the holiday season in a strong position and maintain that 103 00:05:43,950 --> 00:05:45,630 Will Buckley: level of confidence going into next year. 104 00:05:46,260 --> 00:05:48,240 Sean Aylmer: Stay with me. Will, we'll be back in a minute. 105 00:05:54,570 --> 00:05:58,410 Sean Aylmer: My guest today is Will Buckley, Xero's Country Manager for 106 00:05:58,410 --> 00:06:02,310 Sean Aylmer: Australia. So how do you think 2023 will play out 107 00:06:02,310 --> 00:06:03,510 Sean Aylmer: for small businesses? 108 00:06:04,050 --> 00:06:06,510 Will Buckley: I think one thing that we've all witnessed is that, I mean, 109 00:06:07,050 --> 00:06:10,950 Will Buckley: we're definitely in uncertain economic conditions. But what we track 110 00:06:10,950 --> 00:06:14,250 Will Buckley: and the insights we see is that there's definitely a 111 00:06:14,250 --> 00:06:18,030 Will Buckley: softening off from the acceleration that we're seeing in inflation 112 00:06:18,600 --> 00:06:20,520 Will Buckley: at the beginning of the year. So the fact that 113 00:06:20,880 --> 00:06:23,549 Will Buckley: the indicators that we track are starting to show some 114 00:06:23,550 --> 00:06:27,240 Will Buckley: softening suggests that everything that the RBA is looking to put 115 00:06:27,240 --> 00:06:30,990 Will Buckley: into place and achieve that soft landing scenario, it does 116 00:06:30,990 --> 00:06:33,960 Will Buckley: look as though we're coming over the hump of that 117 00:06:33,960 --> 00:06:36,990 Will Buckley: peak and starting to come into that softer landing territory 118 00:06:37,589 --> 00:06:42,390 Will Buckley: depending on how we go throughout the holiday season across retail, hospitality 119 00:06:42,690 --> 00:06:46,980 Will Buckley: and industries that are, I guess more susceptible to the ebbs 120 00:06:46,980 --> 00:06:51,660 Will Buckley: and flows of discretionary spend. If that discretionary spends does 121 00:06:51,660 --> 00:06:55,349 Will Buckley: take a big cutback, and businesses do, they're the brunt 122 00:06:55,350 --> 00:06:58,560 Will Buckley: of that, then, yeah, we might be in some different 123 00:06:58,620 --> 00:07:01,230 Will Buckley: territory coming off the back of the holiday season. So 124 00:07:01,230 --> 00:07:06,300 Will Buckley: our message would just be to support local and small 125 00:07:06,300 --> 00:07:10,620 Will Buckley: businesses wherever reasonable and wherever possible because it's been a 126 00:07:10,620 --> 00:07:13,920 Will Buckley: challenging year for them and they do rely on their 127 00:07:13,920 --> 00:07:16,500 Will Buckley: holiday season to get them through into next year. 128 00:07:17,610 --> 00:07:20,070 Sean Aylmer: Do you think that there's a role for big business 129 00:07:20,370 --> 00:07:23,910 Sean Aylmer: in supporting small business and government? But I mean government 130 00:07:23,910 --> 00:07:27,810 Sean Aylmer: during COVID, whether like it or not, I think government did a lot to 131 00:07:27,810 --> 00:07:31,050 Sean Aylmer: help small businesses and it has a number of programs. 132 00:07:31,050 --> 00:07:32,400 Sean Aylmer: I kind of want to stay away from the government, 133 00:07:32,400 --> 00:07:34,980 Sean Aylmer: but big business. Do they have a role in supporting 134 00:07:34,980 --> 00:07:35,760 Sean Aylmer: small business? 135 00:07:35,880 --> 00:07:38,130 Will Buckley: Absolutely, and I'm so glad you called that out. One 136 00:07:38,130 --> 00:07:41,130 Will Buckley: thing we're super passionate about is making sure that small 137 00:07:41,130 --> 00:07:44,460 Will Buckley: businesses get their invoices paid on time. Over half of 138 00:07:44,460 --> 00:07:48,690 Will Buckley: small businesses in Australia don't get their invoices paid on 139 00:07:48,690 --> 00:07:53,340 Will Buckley: time. So any small business that finds itself in commercial 140 00:07:53,340 --> 00:07:56,640 Will Buckley: arrangements and doing business with big business, we would love 141 00:07:56,700 --> 00:08:00,210 Will Buckley: to see big business play a really influential role and 142 00:08:00,210 --> 00:08:04,140 Will Buckley: proactive role in getting those invoices paid on time, particularly 143 00:08:04,140 --> 00:08:07,290 Will Buckley: coming into the holiday season. If big businesses are looking 144 00:08:07,290 --> 00:08:11,580 Will Buckley: for slowing down and reducing capacity, the ask would be 145 00:08:11,580 --> 00:08:15,840 Will Buckley: to prioritize getting those small businesses paid before going off 146 00:08:15,840 --> 00:08:19,680 Will Buckley: on any breaks and not leaving anything to the January comeback. 147 00:08:20,340 --> 00:08:23,490 Sean Aylmer: Is cash flow always the biggest issue for business, small 148 00:08:23,490 --> 00:08:24,300 Sean Aylmer: business particularly? 149 00:08:24,570 --> 00:08:29,040 Will Buckley: Absolutely. We have released reports on a cash flow crunch 150 00:08:29,130 --> 00:08:31,860 Will Buckley: at Xero, looking through the lens of the impact of 151 00:08:32,100 --> 00:08:35,730 Will Buckley: that cash flow crunch on small business. Yeah, the rising 152 00:08:35,730 --> 00:08:40,290 Will Buckley: costs that small businesses are looking to manage, that extremely 153 00:08:40,290 --> 00:08:44,550 Will Buckley: low unemployment, and yes, there is wages growth for them 154 00:08:44,550 --> 00:08:48,840 Will Buckley: to contend with. The cashflow crunch scenario for small businesses 155 00:08:48,840 --> 00:08:51,239 Will Buckley: comes where they've done a good job of trying to 156 00:08:51,240 --> 00:08:54,720 Will Buckley: mitigate the wages growth, get people on their books to 157 00:08:54,720 --> 00:08:58,710 Will Buckley: be able to produce and have lifted their prices or 158 00:08:58,740 --> 00:09:01,650 Will Buckley: balanced their prices out to mitigate the cost that they're 159 00:09:01,650 --> 00:09:05,339 Will Buckley: incurring. But if they aren't able to actually then go 160 00:09:05,340 --> 00:09:08,100 Will Buckley: out and achieve their sales targets, then that cash flow 161 00:09:08,100 --> 00:09:12,570 Will Buckley: crunch moment becomes pretty confronting for them. So as consumers, 162 00:09:12,570 --> 00:09:14,880 Will Buckley: as Australians, the best thing we can do is to 163 00:09:14,880 --> 00:09:17,400 Will Buckley: get out and support those small businesses that have been 164 00:09:17,400 --> 00:09:21,540 Will Buckley: planning for this holiday season and have a lot riding 165 00:09:21,570 --> 00:09:24,450 Will Buckley: on their ability to see it through successfully. 166 00:09:25,110 --> 00:09:27,750 Sean Aylmer: Let's hope it goes well for all those businesses. Will, 167 00:09:27,750 --> 00:09:29,670 Sean Aylmer: thank you very much for joining Fear and Greed. 168 00:09:30,000 --> 00:09:32,670 Will Buckley: Thank you so much. Good to be here, and I 169 00:09:32,670 --> 00:09:34,530 Will Buckley: love what you guys are doing and look forward to 170 00:09:34,530 --> 00:09:35,010 Will Buckley: chatting soon. 171 00:09:35,340 --> 00:09:38,490 Sean Aylmer: Thank you. That was Will Buckley Xero's Country Manager for 172 00:09:38,490 --> 00:09:41,069 Sean Aylmer: Australian. This is the Fear and Greed Daily Interview. Join 173 00:09:41,070 --> 00:09:43,170 Sean Aylmer: us every morning for the full episode of Fear and 174 00:09:43,170 --> 00:09:47,040 Sean Aylmer: Greed. Australia's most popular business podcast. I'm Sean Aylmer. Enjoy 175 00:09:47,040 --> 00:09:47,400 Sean Aylmer: your day.