What are the best things about working alongside your brother? A “strong team dynamic” and “complementary skill sets,” according to Top10 Dynamic Entrepreneurs Myles and Piers Redward. The brothers work together as the co-founders and joint CEOs of Payright, which is the latest payment plan provider in the market that targets products and services with higher price Read More…
The big mistakes small businesses are making right now: Interview with Trent Innes, Xero MD
Trent Innes, Xero MD Australia
Mon 30 September 2019 - 11:13 amFeatured | Small Business
Dynamic Business attended Xerocon in Brisbane earlier in the month, and spoke with Trent Innes, Managing Director of Xero Australia about the problems small businesses are facing right now.
Xero regularly release small business data insights that shed light on the SME community and the real-time issues. We wanted to ask first-hand what’s happening on the small business cashflow and growth front, and what the best steps are to avoid common problems with finance.
We discuss the difference between businesses that do or don’t invest in tech, the reason behind that, when a business might outgrow Xero and require ERP and the big mistakes small businesses are making right now.
As you mentioned in your talk earlier, the recent Xero ICT report, shows us that only around 1% of small businesses are investing their turnover into tech.
But, those companies that do invest are 68% more likely to see growth.
Can you add any comment to that, especially as to what you believe are the main reasons this is happening, or more accurately – not happening?
“Basically what we are trying to establish with Xero small business insights is that we are looking for trends on things that may not have been reported on before, and we want to tell stories that haven’t been told before for small businesses.
“The report will get bigger over time, but we started with ICT spend. I was a little bit shocked as it was lower than I thought it was going to be. It’s only about 1% that invest.
“Customers on the Xero platform, on average, are spending about $5000 a year on ICT. Technology is actually being democratised and it’s actually more readily available at a lower cost than a few years ago. This might be a good thing. For the ones that are spending more – they’re growing faster, they are 68% more likely to be growing faster.
“I have two examples [of how investing in tech benefits small business.]”
“Recently I needed to get my tyres done on my car, and I went into the garage and after talking to the guy I realised that every single tyre repair shop in Australia uses the same piece of old software. It’s digital but all out of date. And it’s not easy to use or good for the business. There seems to be a similar thing across all industries, right?”
“The second example is hairdressing. I always get fascinated when you go for a haircut – because as soon as the phone starts to ring they stop cutting your hair to go and pick up the phone… and they lose so much productivity.
“I went to a barbers recently who were using Xero and Timely (a booking app) – I didn’t know this before I went in as it wasn’t my usual place. You can go online on the Timely app or their website and you can find a time that’s available and hit reserve. The next time you book, they know who you are and it’s all set up. As soon as I’ve [used the platform to book in] they’ve started to market to me through Instagram today. So that’s a classic sign of a small business using digital tools in their ecosystem to grow.
“So we do see a divide between the businesses that are doing it and that aren’t.”
What are the differences between those businesses willing to invest in tech and evolve, and those not?
“I think it’s mindset. You always have a certain part of the population that will wait until they absoultely have to.”
When is it appropriate to get ERP? When would a company outgrow an accounting software such as Xero?
“It’s really hard to define. One thing I will tell you is that I get people almost in tears if they have to leave Xero. Because the user experience is quite beautiful and easy to use. They don’t want to leave.
“It really depends on the why and the business requirements. Is it the number of employees you have? Is it about your turnover? Are there other complexities within the business?
“Generally the bit where you start to outgrow Xero is if you need to build your own customer workflows. But to do this jump is a big investment, I mean to put an ERP in you are looking at 6 figures.”
Can Xero help with CRM and marketing?
“Through our ecosystem yes, our partners. We recently launched ‘Single Sign On’ which makes it easier to embed those other services on the platform.
Why are the biggest mistakes small businesses are making at the moment? What they should be aware of?
“The biggest one for me is payment times. We looked recently at the economic impact of this.
“At any one time there is around $115million outstanding between small business and big business that’s overdue.
“There’s a lot of things small businesses can do to help themselves in this. One is to bring payment terms down, so bring them right down with less flexibility.
The second thing is to release invoices electronically and embed payment services in it. We see that companies that do this get paid 15 days quicker than if they don’t. Businesses using platforms like Stripe and PayPal – these are easier ways for their customers to pay.”
- January 24 2020 Employers beware! Many Aussies looking to leave jobs in January
- January 22 2020 Let’s talk: New Year
- January 20 2020 Is flexible working destined to become the new norm?
- January 17 2020 “Eighty-nine per cent were negative”; How Adala Bolto defied her critics