Skeptics out there will say that we have reported a slowing in employment growth though and that it is indicative of a turning of the tide. Yes, month-on-month hiring has slowed from May to June (with a reduction of approximately 1.3 per cent).
However, any sector that has been growing at the speed of the small business sector, is bound to go through some small monthly fluctuations - especially as we are getting to the business end of the talent shortage in NZ.
Bottom line, the small business sector is still growing at more than double the national average, so small businesses are doing a lot of heavy lifting on the employment front.
In order to judge business confidence, what we should be looking at is how long it takes to pay our invoices and the cash flow of businesses.
In an economic downturn, businesses start taking longer to pay suppliers and cash flow starts trending downward or gets more lumpy than usual.
According to our data, it took on average 8.3 days to pay an invoice in June. Yes that presents its own set of challenges and we need to look at rectifying this delay as quickly as possible.
However, it is half a day quicker than it was in June 2017 (8.8 days) which means that, overall, we are paying people more quickly - with no sign of the belt tightening we would expect in a downturn.
Likewise, June saw us sitting at 49.4 per cent of small businesses that are cash flow positive. Again, there is work to be done to improve this number but it is in line with the average over the year of 50.4 per cent.
If we continue to take these business confidence surveys at face value, we run the risk of talking ourselves out of business happiness. So, to those businesses who are worried about the conversations happening around them - try to consider the facts rather than the opinions.
We are in a far better position than 'business confidence' will have you believe. There is always work you can do to protect your business though and it's worth keeping this in mind, so you don't grow complacent.
Improve cash flow management
We know that in the past financial year, on average, 50.4 per cent of small businesses were cash flow positive in any given month. This is positive and puts us in a better position than our Australian and UK counterparts. However, we can also see that when it takes people longer to pay their invoices, cash flow can become strained.
In June, payments were on average, 8.3 days late. For seven day and 14-day invoices it was significantly worse. The resulting delay of more than a week can have a huge impact on cash flow.
It makes sense then, to stay on top of your accounts receivable. An easy way to keep payments coming in is to make the best use of online invoicing and features like invoice reminders. We know that invoice reminders have a positive impact, in fact, in the first 25 days after payment is due, overdue invoices with reminders get paid an average of four days sooner than those without.
Likewise, consider using an alternative payment type like Stripe or Paypal - invoices paid via these platforms in conjunction with Xero are paid 10 days faster than other invoices.
Keep track of your online footprint
Take a step back and look at your business' online presence objectively. Try to identify some areas you can improve to attract new and repeat business.
How effective is your website? Is it up-to-date? Is it mobile-friendly? Is it searchable? What results do you get if you Google your business name? Does your business have a Facebook page? This isn't necessary, but if you do have a social media presence, you should be posting regularly and on a consistent basis.
If you sell goods or services, it's worth considering whether an online store would be of benefit. For those who do have an online store, is it easy for customers to buy what you're offering? How do you interact with your customers?
If you don't look after customer service personally, make sure you've set expectations with your staff around minimum response times, email etiquette and telephone manner. Treating your customers well will increase your chances of repeat business.
Stay a step ahead
Chances are - unless you're a bookkeeper or accountant - administration, accounts and business planning aren't your strengths. That's why it makes sense to bring someone on board who specialises in these really important aspects of running a business.
Connecting with a trusted advisor will ensure that your business runs smoothly and that you keep a step ahead and are able to anticipate any changes to your finances.
A lot of small business owners have shared their reluctance to pay someone to look after running the financial side.
Every dollar counts, especially when you're starting out. But the money you spend on an advisor truly is an investment which you will see returns on.
Not only can they look after accounts, payroll and other administrative tasks, their expertise means they'll be able to identify areas in which you could be cutting costs or ways you could increase your revenue.
It's not always blue skies and sunshine when you're running a business. But it's not all doom and gloom either. There are a lot of positives to draw on and we need to step out of this negative spiral and start paying more attention to what we know is true, not what we think is true.
- Craig Hudson is Managing Director - Xero NZ & Pacific Islands.
