Canberra is leading the small business charge: “There’s a level of certainty”

Most Aussies think of Canberra as home to only Capital Hill, but it’s also fast making strides as the nation’s small business capital. The latest Xero’s latest Small Business Insights data shows the Australian Capital Territory is the place to be for SMEs, with an employment boom and a drop in late payments during 2017.

The study analysed the small business economy in Australia over the past year, using the aggregated data of more than 500,000 subscribers nationally. And what it found is the ACT had the highest percentage growth in small business employment — up nearly 10% on 2016, compared to a national average of 7.8%.

The territory also recorded the fastest payment rates for invoices, at an average of 31.35 days. This compares to a national average of 34.94 days.

The news comes as no surprise to Canberra Business Chamber chief executive Robyn Hendry, who sees it as a welcome recovery.

“During 2013-14, the federal government had major contractions. We lost 16,000 employees from the federal public sector. It sent shockwaves through the economy and consequently business downsized significantly, some going out of business,” she explains.

“Fast forward to now — we’ve had government stability for some time.  They’re not in expansionary mode, but their expenditure has continued, so there’s a level of certainty. And so now we’re seeing a fast growing population, gaining 5,000 to 6,000 people per year — both from immigration and people coming back in to work.”

And in response to that growth, Hendry says there’s been a huge growth in tourism and hospitality supply.

“We’ve had our first low cost carrier start — TigerAir has opened up the Melbourne market to us and so the numbers are extraordinary. So clearly there was pent up demand for such a service.  And so Tiger has expanded its number of flights on that route and has also added Queensland to Canberra.”

And it’s that private investment in tourism and hotel infrastructure she says is really bearing fruit for business.

But Emilio Cataldo, director of Canberra hairdressing business Cataldo’s Salon, says it’s local transport infrastructure that needs addressing if Canberra small businesses are to maintain their competitive edge.

“Small businesses are at a disadvantage compared to the big malls because we don’t have the same level of convenient parking they do,” he says.

“We don’t have the critical mass to support an efficient transport system yet. And yet they keep on diminishing the amount of car parks.”

He also says the ACT’s employment boom is a double-edged sword for some.

“Because of the labour shortage in an industry like ours, we have to pay more to find someone and therefore it puts pressure on us to charge more,” he says.

But ultimately Canberra Business Chamber’s Robyn Hendry feels the small business future is bright for Canberra and beyond.

“Universal conditions have been helped by low interest rates and the favourable Australian dollar,” she says.

And that’s an opinion certainly borne out in Xero’s latest nationwide numbers.

• Payment times for Australian small businesses hit record lows in 2017, with small businesses in August receiving full payment within 35 days;
• Cash flow is positive with 56.9% of small businesses showing positive cash flow in September 2017; and
• Employment levels remain steady and have begun to rise in late 2017 for part-time and casual staff nationally.