Exclusive: Sales at Small Businesses Are Finally Starting to Grow Again
Exclusive: Sales at Small Businesses Are Finally Starting to Grow Again
New data from the accounting platform Xero should give American entrepreneurs a reason to be optimistic about 2025.
Illustration: Getty Images
Uncertainty from the looming specter of trade wars aside, things are generally looking up for the American economy. Recent data has shown that 2024 was a growth year for both private equity deal-making and venture capital investment, while a deregulatory Trump bump and an IPO resurgence now have many dealmakers entering 2025 with optimism.
There’s another important datapoint to be optimistic about: Sales at American small businesses grew an average of 0.8 percent year-over-year in the third quarter of last year, which, while not a large increase, did mark the first positive quarterly growth since late 2022, and was also an improvement over the 0.1 percent decline seen in Q2 2024.
That’s according to a new report out today from the accounting platform Xero, based on the company’s own customer data.
“This particular quarterly data is great news for the U.S.,” Xero economist Louise Southall tells Inc. “It’s a very, very small rise, but it’s been that kind of period, hasn’t it, for small businesses. You celebrate what you can.”
The firm’s data indicates that the Northeast led the pack in sales growth, at a 1.3 percent year-over-year improvement, followed by the West (0.8 percent), South (0.6 percent), and Midwest (0.2 percent).
However, the accounting firm’s report also notes that sales volumes—“which removes the effect of price changes” from the data, in the words of the report—dropped 1.8 percent year-over-year in Q3 2024. Factoring in changes to the U.S. consumer price index reveals that small businesses “sold fewer units of goods and services” year-over-year, the report says.
(Although sales volume data reflects how economists often conceptualize growth, Southall says that entrepreneurs concerned about their real-world cash flows will probably find more utility in the 0.8 percent growth data-point.)
Xero also found reason for optimism in its analysis of payment times, which indicated that American small businesses got paid “an average of 9.1 days late” in Q3 2024—half a day faster than in the prior quarter.
“It’s great that it improved, but at 9.1 days late—that is very high,” Southall says. “In fact, in the context of the other countries, the U.S. has the highest [delay]. Canada’s next, at just over eight days. Australia, New Zealand, and the U.K. tend to be around six to seven days.”
Southall encourages business owners to set up an automatic invoice reminder, ideally with an embedded pay-now button and multiple payment options, to help speed up their customers’ payment times.
Entrepreneurs seem to be picking up on some of the more positive signals, too. An online survey of small businesses that Xero conducted in November found that 88 percent of American respondents “were either still positive, more positive, or much more positive about the future of their business than they were in the previous month,” which the report chalks up to “the lower inflation and interest rate environment.”
The poll was conducted after the presidential election, so Trump-related optimism could also be at play. SMBs in Australia, Canada, New Zealand, and the U.K. reported being more pessimistic relative to the U.S.
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BY BRIAN CONTRERAS AND CARL PHILLIPS
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