Productivity tips to take into FY25
Thankfully, the latest Xero Small Business Insights (XSBI) report is delivering some valuable insights that could help you better understand why your industry is operating in a particular way.
As we kick off another financial year, many small business owners are looking for ways to boost their productivity levels. But it can be difficult to know how to get started.
Thankfully, the latest Xero Small Business Insights (XSBI) report is delivering some valuable insights that could help you better understand why your industry is operating in a particular way. We sat down with Louise Southall, Xero Economist, to discuss the report as well as get her practical tips for small business owners who want to be more productive in FY25 and beyond.
Benchmarking productivity by industry and region
Productivity can mean different things in different contexts, so it’s important to first define what ‘productivity’ means — and how it is determined — according to the XSBI report (which is focused on labour productivity). Effectively, the term looks at how well a business transforms labour into outputs. Put the two measures against one another, and productivity can be seen as sales per hour worked, or sales per employee.
The XSBI report revealed a number of key findings across various industries and regions in Australia. The most productive industry in 2023, for example, was wholesale trade, with productivity measured at $214.20 per hour. Southall says this sector benefits from having well-established systems and an essential role as the “middle point” in the supply chain.
Elsewhere, while most industries saw a decline in productivity in 2023, there were 10 sectors — including manufacturing, agriculture and construction — that exceeded the national productivity average of $100.30 per hour. Agriculture, in particular, is setting the standard for other industries in how to adapt to modern times.
There were also some interesting regional differences. Western Australia was far and away the most productive state, with an average productivity of $102.50 per hour, which is 15% higher than Tasmania at $89.00 per hour. In fact, Southall says WA has been consistently outperforming Tasmania in “jobs, sales and wages”.
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Lessons from top-performing and low-performing sectors
Agriculture and construction are two industries that Southall is keen to shine a light on as having done impressive work to boost their productivity levels: “Agriculture is a fantastic example of a really traditional industry that has continually embraced innovation and technology to improve its productivity.”
Meanwhile, the construction sector is reaping the rewards of taking on the responsibility of training up staff.
“There’s a very deep and long-standing use of apprenticeships in construction,” she says. “The combination of on-the-job training and going to TAFE is really developing the relevant skills and delivering workers who are needed for the industry.”
At the other end of the spectrum, hospitality was one of the least-productive sectors. But Southall says there are positive signs of improvement.
“The hospitality industry is one of the few industries that has higher productivity following the pandemic compared to where it was before,” she says. “They’ve been greatly disrupted and small businesses have had to embrace different ways of operating and using more technology, such as QR code ordering systems that free up staff for more productive tasks.”
Tips for boosting productivity in FY25
Drawing from the most critical insights from the XSBI report, Southall has four strategies that small businesses can use to improve their productivity levels:
- Review your processes: “Everyone is guilty of doing things the same way because that’s how they’ve always been done. But it’s worth reviewing each task in your business to make sure you are operating as efficiently as possible.”
- Invest in tools and technology: “No matter what sort of business you run, invest capital into the latest equipment, apps and technologies to run your business well.”
- Invest in training: “It’s no good having all those new processes and tools in place if you or your staff have no idea how to use them, so be sure to dedicate time and resources to upskilling where you can.”
- Feed your entrepreneurial spirit: “Business owners should always be connected to the vision – the ‘why’ – that inspired them to start their business.”
Southall is quick to add, “There’s often a misconception that productivity is about cutting costs, but actually, productivity is about investing in the business to then reap long-term gains.”
That’s where a platform like Xero can deliver huge productivity benefits. There are countless tools and resources that can help small businesses streamline their operations. “Xero is more than just the accounting element. We also have over 1,000 apps in the Xero App Store that integrate with the Xero platform to boost productivity.”
So whether you need to automate time-consuming tasks like chasing payments or managing quotes to reduce administrative burdens, there’s a productivity tool that can help you – and your team – focus on more business-critical activities.
Read now: Expert tips on how to get prepared for EOFY and FY25
