Today I attended the Small Business Summit on the Global Financial Crisis hosted by the Council of Small Business and the Chamber of Commerce. Businesses from my local community were well represented; marketing consultants, graphic designers, research specialists, website designers to name a few.
Prime Minister Rudd told us that there are 2 million small businesses in Australia and they employ 4 million people. My mathematics tells me that the average number of people working in a small business is 2. This was discussed at the forum, and we were told that a business of that size, even though it very clearly was an average small business size, was in fact a micro business. Let me repeat that – the average sized small business – was not referred to as a small business at all – instead it was referred to as a MICRO business.
Interesting when you think about that, the average size woman is considered large when she buys clothes, yet businesses are labelled just the opposite.
The small business arena has changed and evolved and there are many very successful home based and small businesses who I sometimes feel fall under the radar of the “Small Business Leaders”
It is interesting to note, that on the application form to join the Council of Small Business Organisations of Australia Chamber of Commerce they tell us they are proudly supported by Phillip Morris, who are surely one of the largest business organisations in the world.
Back to the summit, COSBOA told us they were committed to developing and implementing policies to assist small business.
Prime Minister Kevin Rudd said that his government was committed to paying invoices up to $1M within 30 days, and after that you are welcome to charge interest on them. He went on to tell us they would standardise the procurement documents. This is good news. As someone who has actually sat down and read the government procurement policies for small business from cover to cover, they left feeling completely bewildered. I get a similar sense of bewilderment reading a John Le Carre novel. To the governments credit when I contacted them about this, they directed me to their tendering websites https://www.tenders.gov.au and for Queensland businesses https://tenders.nsw.gov.au/queensland/. Neither of them has provided my business with an opportunity that I have capacity to serve, but I read them with interest, and they provide focus and direction for my growing my business.
Prime Minister Kevin Rudd went on to tell us about a $4M cash injection into existing Business Enterprise Centres. Well I am subscribed to umpteen newsletters, and pore over all small business articles I can lay my hands on, and I have never heard of a ‘Business Enterprise Centres’. I asked the other small micro business owners at the table had they heard of a ‘Business Enterprise Centres’? None of them had. So now I am mad that $4M of my taxes is going to something that I have never heard of – more taxes for me to pay. I got home and googled ‘Business Enterprise Centres’ and I found a very unattractive website – that does not jump out and say we are a government initiative, instead it looks like slimy networking organisation trying to suck money out of me. I flicked through the website and it appears that there is no centre in Brisbane, and there is no newsletter to subscribe to, so I do not feel that I or any of the other small micro business representatives at my table will benefit from that cash injection.
The summit went on to talk about banks, and some of the bank managers gave us a polished speech, and small business owners grumbled about customer service and communication. Personally from my perspective, I am with ANZ and have always been extremely happy with them. My bank manager at the Carindale branch is an exceptional lady, whose dedicated service makes me feel like I am the only customer whom she has. Note to self I do need to make an appointment with an ANZ dedicated Small Business Specialist and see what else they have to offer. As far as credit goes, for my small business, other than a credit card with a very low limit that I use for convenience, and to assist when I do my reconciliations I have no need to loan money from the banks, and I see no need to over the foreseeable future.
Many of my clients who are defined as micro business are in a similar situation as I; they have very restricted credit and no plans to take loans out. Yes some of the larger businesses do have loans, but they have not yet grumbled to me about that.
Prime Minister Kevin Rudd did make one comment that I have to disagree with. He suggested and I am not quoting him ~ that the micro businesses of today are the small businesses of tomorrow and the large business of our future. I disagree with this. Yes of course some entrepreneurs have dreams of global domination, yachts and leer jets. But I also think many solo businesses are extremely happy in the niche they have carved for themselves, as demonstrated by the many followers of the FLYING SOLO community. Lack of growth should not be seen as a failure. Solo or Micro businesses does not translate to small profits, it translates to less hassles, less politics, more flexibility, more work/life balance and while I am on my soap box the very very small businesses tend to be greener, using less fuel, less infrastructure and utilising virtual services.
The question and answers session provided for some interesting comments. Someone complained about fines on late payment for GST. Minister Craig Emerson told the audience about BAS Easy, a policy that I as a Chartered Accountant am completely opposed too. I liken a small business owner’s attraction to BAS Easy, equivalent to Homer Simpson’s attraction to doughnuts. Of course a hot sugary cinnamon flavoured doughnut is easy to like, but it provides you with no nutritional benefit, and we all know where too many doughnuts will lead. Relying on BAS Easy will send your financial reports and your ability to financially manage your business spiralling out of control.
Using suitable accounting software (as a MYOB Certified Consultant I have to plug MYOB here!) and skilled staff, preparation of the BAS should literally take 2 minutes. Every other task that you undertake, that you may label as BAS preparation, you should and you need to be doing on a regular basis. If you are not doing them, you can not rely on your financial reports and you can not use your financial information to manage and drive your business.
My comment to the small business owner complaining about GST late fees is the GST was never yours in the first place. With the introduction of GST, your business took on the role as tax collector for the government, you collect tax and you pay tax in the form of GST, and the difference you reimburse or collect from the government. If you are paying your GST late it suggests that you may be using the cash flow from GST to finance your business. This is not a good habit to get into.
The comments from the audience went on; some were simply too micro level to be brought to a summit of this nature. At one stage Prime Minister Rudd threw his arms out to the audience embracing us and explaining that he was here to help on a macro level. He should not really have needed to tell us this, to define his role, but it was good, in fact it was one of the highlights’ of the summit for me. You could feel a hush fall over the audience as some of the members digested this information.
In my opinion a really valid comment from the audience came from Goldstein’s Bakery – a bakery and pie shop from the Gold Coast. They have been at Pacific Fair as long as I remember, and from reviewing their website it seems they have been busy, 17 stores on the Gold Coast. Mr Goldstein (I am not sure if that is his real name) explained that the superannuation funds owned the shopping centres, and that they would only provide the shop owners with short term leases, and that the rent would always go up about 2% above CPI. He asked for transparencies in the area of Retail Tenancy. One wonders if a rental fixing system like they have in New York should be explored here in Australia.
So as a micro business owner what am I concerned about with this global credit crisis? I am worried that people will take longer to pay outstanding invoices and that they may result in bad debts. As a small business investing in a debt collection service is expensive, and we are simply vulnerable. Though I do see opportunities coming out of this crisis; I like many at the table I sat with are finding it very difficult to find suitably qualified staff. Increased retrenchments may release high calibre staff into the workforce that the small businesses can absorb. As a business owner who provides on-site MYOB training, I am marketing the cost effectiveness of job specific training to retain staff and grow your business.
What would I like to see the government do? Disseminate information through one source, take the small business forum online, provide a web-based forum for small business owners, to easily find information, and connect with businesses, without having to work our way through all the filters. Secondly, improve the search and navigation features on the Australian Taxation website.