The Melbourne Cup to be run tomorrow is likely to have a negative impact on Australia’s small businesses, with SMEs taking a hit to their profits as punters spend money on race events and celebrations, according to accounting software company Xero.
According to Xero, the number of small businesses with positive cash flow – “an indication of profitability” on Melbourne Cup Day - has been on the decline since 2014.
In fact, Cup Day in 2014 dropped to 38% in 2015 and 33% last year – with 39% of small businesses cashflow positive on Melbourne Cup Day in 2014, dropping to 38% in 2015 and 32% in 2016.
Xero says another indicator of this trend is the year-on-year decline in average cash intake on Melbourne Cup between 2014 and 2016.
{loadposition peter}Xero bases its stats on transaction data (2014 to 2016) from businesses that run on its accounting software platform and which it says show that "the race that stops the nation is indeed doing that”.
According to Xero celebrations across the country are getting larger each year, impacting small business profits as people spend more time celebrating at race events and less time spending money in small businesses.
And figures compiled by Xero reveal that nationally in 2014, the average amount of cash intake by small businesses on Cup Day was 34% less than in the day prior - the Monday before the big race.
What’s more, Xero says this gap increased to 43% in 2015 and 45% in 2016.
Meanwhile in NSW in 2014, the average amount of cash intake by small businesses on Cup Day was 25% lower than in the day prior, but the drop in cash intake increased significantly to 40% on Cup Day in 2016.