8 in 10 small business owners ‘make costly mistakes’
Hiring decisions and working for free are some of the most costly business mistakes impacting small business owners, Xero research has found.
A large majority of small businesses owners have admitted to making costly mistakes over the course of running their business, according to research released by Xero.
The ‘Do Better Business’ research, which surveyed more than 1,000 Australian small business owners and leaders, found that hiring the wrong or inexperienced staff and working for free or at low cost are considered the most costly business mistakes, impacting more than one in five (22 per cent) small business owners.
Of those surveyed, 83 per cent admitted making costly mistakes over the course of running their business.
In addition to hiring challenges and working for free, working with the wrong partners, suppliers and investors (18 per cent) and working with family and friends (12 per cent) were other common mistakes made.
Additionally, 19 per cent reported spending every dollar of their personal savings in the early years of running their business.
Business owners were also asked about their biggest learnings, with the need to implement strong financial management practices rated at the top.
This was followed by building a strong network of industry contacts (63 per cent), working with an accountant or bookkeeper (46 per cent), and asking for help when struggling (46 per cent).
Xero Australia country manager Will Buckley said small businesses play a crucial role in the economy, with insights into successful firms important to help those amid the difficult economic climate.
“Small businesses make up more than 97 per cent of all businesses in Australia and form an integral part of our communities,” said Mr Buckley.
“We know running a small business can be incredibly rewarding, enabling Australians to pursue their passions or achieve greater flexibility. But, as our research has highlighted, it also comes with its unique set of challenges, which have only been exacerbated by a turbulent economic climate.”
“As the new financial year commences, it’s a timely opportunity for business owners to reflect on the year that was and embrace key learnings that will pave the way for future success.”
Greater flexibility driving business ownership
The survey revealed business owners listed the desire to be their own boss as the number one reason behind their decision to set up a business at 64 per cent.
This was followed by seeking greater flexibility (61 per cent), and wanting to pursue a passion or dream (41 per cent).
Nearly three quarters or 71 per cent of small business owners, however, admitted to delaying starting their own business, with financial concerns being the number one reason holding them back, followed by a fear of failure.
“Despite this, 65 percent of business owners surveyed by Xero say there’s never a perfect time to start a business, but they wish they’d done it sooner,” the software firm said.
The survey also highlighted some of the sacrifices made by small business owners with one in five stating that they had missed a significant life moment like the birth of their child, a wedding or birthday in the early years of running their business.
The majority of those surveyed also said they wished they could prioritise their personal boundaries more while running their business, especially around their physical and mental health and spending time with their family, friends or partner.
“Fostering an environment where Australians feel confident to pursue business ownership and are supported throughout their entrepreneurial journey is essential to ensuring a prosperous small business community and a resilient economy,” said Mr Buckley.
Younger Australians holding back on starting a business
The survey revealed it’s tougher for younger Australians to get into business ownership, with with 77 per cent Gen Z respondents reporting they were more likely to face negativity and discouragement from friends, family and associates about starting their own business venture compared to 60 per cent of Baby Boomers.
The fear of failure was also more common amongst young business owners and entrepreneurs with 29 percent of Millennials saying they delayed starting their business because they didn’t want to fail, compared to just 12 percent of Baby Boomers.
“Despite this, the flexibility of being a business owner was a central reason for 68 percent of Gen X business owners, with 60 percent saying they are now achieving this goal,” Xero said.
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