Small and micro businesses in the U.S. had another quarter of revenue contraction in Q2 2019 (many economists consider two or more consecutive quarters of contraction to indicate a recession), 4% below Q2 2018 revenue, continuing a downward trend in growth rates since 2017, according to research released today from Invoice2go, which primarily serves 1-2 person businesses.
According to the research, which analyzed invoiced dollar amounts from a sample data set of 31,091 U.S. small and micro businesses using Invoice2go over the past three years, Q2 2019 showed (negative) -4% growth over the same period last year, while Q2 2018 displayed (positive) 2% growth vs. the same period the previous year — a total flip in growth rate of more than six percentage points.
Moreover, the data showed that the 4% drop in growth in the second quarter represented a widening trend from the 3% year-over-year contraction experienced in the first quarter of 2019.
With the release, Invoice2go’s experts are believed to be the first researchers to report the back-to-back quarters of slumping small and micro business numbers — something that Invoice2go had indicated “could” be coming. In April, more than two months before the second quarter numbers could even be compiled, Greg Waldorf, CEO of Invoice2go — which is itself as a business seeing healthy subscription growth — was quoted as saying that figures from the first quarter were “showing that small service businesses are seeing a (pullback) that’s indicative of a cooling economy and could be a leading indicator of recession.”
“In a softening economy, micro businesses, which comprise 92% of all American companies, are often the first to feel the pinch,” says Waldorf. “They’re like canaries in a coal mine that are telling us right now that part of the economy is showing widening signs of declining growth.”
“There’s some good news too,” he adds. “We’re encouraged because a few business categories grew a bit. This shows that opportunities continue to exist for small and micro businesses to move forward this year and that now’s a good time to use this period wisely to position yourself to take advantage of those opportunities and to get ready for the upturn that will eventually follow.”
The two sectors that demonstrated positive growth for Q2 2019 vs. Q2 2018 were consulting and event services, both of which nonetheless edged up by less than 1%.
Meanwhile, Invoice2go researchers also found some negative numbers outside the U.S. For example, in Australia, they saw negative year-over-year growth in invoiced dollar volumes for the fiscal year that ended June 30, so the downturn in the U.S. could be part of a broader international trend affecting the global small and micro business economy.
The analysis is based on a comparison of total dollar amounts of invoices sent year-over-year by the same sample set of 31,091 U.S.-based Invoice2go users since January 1, 2016. The data was aggregated, anonymized and winsorized at the account level to remove outliers in the top and bottom 2%.
In addition, the data was cross-referenced by the user’s industry, primarily including the following business categories: accommodation and food services, arts and recreation, construction, consulting, educational services, event services, health and personal care, home and building maintenance, outdoor services, retail trade, technological services, and transportation and warehousing.
Invoice2go is the top-selling invoicing app, giving small businesses control over their time and business. Bringing together all the tools needed to get the job done, Invoice2go helps people win jobs, track payments, and offer their clients the ability to pay any way. The company was started by a small business owner who came from a family of tradespeople, and wanted to help streamline their invoicing. Invoice2go’s popularity has spread around the globe, with more than 250,000 small business owners in 160+ countries using the app to send a total of $24 billion in invoices every year.
For more information, please see https://invoice.2go.com/invoice-billing-features-small-business/