Technology and advisors keeping SMEs in business
Cloud-enabled SMEs stay in business longer than the national average and make more money, according to recent Xero data. Is it time you made a change?
Recently I attended Xero’s flagship conference Xeroncon South held in Brisbane. Why were we there? Well, in case you hadn’t heard, we’ve recently partnered with Xero to enable bills to be paid automatically out of Xero.
That’s right folks, if you use Xero and Tyro together, you no longer need to double handle supplier bills in Xero AND internet banking. You can see it in action here.
However in this blog post, rather than sing the praises of the Tyro Bank Account, I want to share some amazing statistics Xero referenced about how cloud is helping small business thrive.
Xero said its data proves cloud-enabled businesses both stay in business longer than the national average and make more money. And that’s a story every business owner needs to hear today.
So let’s set the scene. First and foremost, it’s important to understand how Xero see themselves as an enabler of small business here in Australia. Like Tyro, they are strongly invested in seeing SMEs succeed.
Yet often you’ll hear a frightening statistic thrown about when it comes to the expected lifespan of small business, the fact that around 50% fail in the first five years. This certainly doesn’t bode well for SaaS businesses like Xero that want to limit churn as much as possible.
Now, it may be that a number of these businesses deserve to fail. Perhaps their business idea doesn’t quite cut the mustard, or perhaps they overcharge customers or provide bad service. For these businesses, going out of business is a natural, Darwinian outcome.
But what if they did neither of those things? What if they had a great idea and great customer service, but just couldn’t manage their books properly, or couldn’t access finance, or couldn’t find enough hours in the day to get their admin done?
It’s not that far-fetched. Most of us know of one or two stories of businesses that failed due to innocent mismanagement. The thing is, wouldn’t the economy be better off overall if those businesses succeeded?
Given small business are the engine of most economies worldwide, the answer to this one is most certainly yes.
Well, thanks to some recent data from Xero, it looks like there is some truth to the idea that cloud connected services really are helping businesses fly.
Xero’s key figures:
- 88% of businesses on Xero make it to five years, smashing the average statistic of 51%.
- Businesses that connect with an advisor through Xero’s platform grow their net profit by 23% more than those that don’t
- 99% of small businesses that make it to five years have a live bank feed coming into their software
- 40% have at least one app connection from Xero’s ecosystem
Considering that less than one percent of the world’s small business owners currently have access to cloud accounting, it looks like there is a massive opportunity to increase the health and profitability of global economies, simply by improving the small business technology stack.
The great thing is that given the continuously dropping cost of technology, many businesses can afford to invest in cloud. Given a small business is typically far more agile when it comes to swapping out systems, then this can prove to be a competitive advantage in a marketplace dominated by larger players.
The good news for small business owners is that cloud accounting is now in sync with cloud banking providers like Tyro, not to mention the armies of cloud enabled business advisors, ready to provide consulting services over skype, from any where in the world.
So if you’re a small business reading this, and the idea of staying in business longer and becoming more profitable sounds like something you’d be up for, what are you waiting for?