Sometimes a small business can find itself in a dispute or having trouble it can’t resolve. That is where the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) is often able to help navigate a pathway to a solution. ASBFEO Bruce Billson explains how his office can help you come to a resolution.
It’s a challenging time right now for small and family businesses coping with cost of doing business, interest rate and inflation pressures – just like those confronting their customers.
Despite a seemingly never-ending series of challenges over recent years, small businesses continue to make a massive contribution to our nation and our communities. These are great people in plain sight, and we see them everywhere, every day.
Disputes about being paid, trouble with a digital service provider, contract battles and franchise disagreements are the top four issues where small business have sought our help over the past six months.
Since being established in 2016, we’ve helped more than 40,000 small and family businesses with no cost or low-cost solutions to disputes. Court-based remedies are rarely suitable for these kinds of disputes due to the significant costs, delays, risks and difficulties accessing affordable justice.
It’s not our gift to guarantee any business will be a success, but we hope to make sure no one fails because they didn’t know about something that would help.
Payment issues top disputes list
Two out of every five requests for help from a small business relate to a payment dispute. Cash flow is the oxygen of enterprise, but difficult conditions mean when one party is late in paying, it can cascade through the supply chain. Sadly, too often, the first party that is slow to pay its suppliers is a big business or a government department.
Power imbalances make it difficult for a small business to pursue timely payment for their services. In one case a government department was three months late in paying their bills, despite multiple reminders from the small business. In another case, a sub-contractor in the construction industry came to us after he had not been paid for many months and became homeless.
For small and family business owners, their identities are interwoven into their business and the stakes are so much higher than just a job. Many have invested a lifetime – and put their life’s savings and family home on the line to build up their business. Nearly half of outstanding small business debts are secured by residential property.
When a small business is not paid, it puts extreme pressure on all aspects of their lives. These pressures are amplified with higher interest rates and businesses facing challenges are drawing on their cash buffers to keep their business afloat. And let’s never forget that the business owner will pay themselves last after paying their bills and staff, so slow payment can needlessly amplify the risks of business ownership.
Research by my office shows 43 per cent of small businesses do not make a profit while 75 per cent of self-employed small business owners working full time earn less than average full-time adult weekly earnings.
Managing contract issues
Contract disputes are another common problem. Recently a family-owned cinema in a coastal town came to us about a dispute with a beverage supplier that had escalated to the point where they had broken fridges and could not meet their contract to sell a set quantity of drinks, which in turn was causing financial hardship.
Our case manager contacted the head office of the beverage company and helped not only to resolve the dispute but assisted both parties to improve their processes. The cinema has decided to keep that beverage supplier for a new contract supported by better mutual understanding.
This is a great result. Most small businesses in a contract dispute do not want to end the business relationship. They want to keep doing business, but they often struggle to fix problems when they arise.
We can help small businesses with the know-how – and sometimes case management – to resolve the dispute without ending the business relationship.
There has also been a sharp rise in the number of disputes involving digital platform providers.
Digital platforms have fundamentally changed the way in which small and micro businesses connect and sell to their customers yet when there is a problem – such as having your account shut down after being hacked – solving it can be a nightmare.
Often there is no real person you can speak to, and the automated systems prevent you being able to escalate the issue. One of the absurdities is after being locked out of your account, you need to access your account to make a complaint. It’s the ultimate run around.
Some people have built their entire businesses on social media and digital platforms and having someone else access and control their account is devastating for their business and their reputation. They watch the financial and emotional damage occur in real time with no ability to stop it.
Hundreds of small businesses have sought our help in dealing with their digital provider to unlock their accounts so they can get back to doing business.
Franchisees have rights too
In the franchise sector, cases have involved managing disputes about the sale of a business, fees and charges associated with the franchise, helping parties to amicably terminate agreements and organising Alternative Dispute Resolution when other efforts had failed.
Many other disputes involving small business such as those about insurance, telecommunications, banking and finance, cyber security and workplace issues such as health and safety, we refer to other relevant dispute resolution agencies because the Ombudsman’s legislation prevents the office from duplicating the functions of other Commonwealth, State or Territory agencies.
We happily provide a type of triage service to receive the dispute and then assess whether we are best equipped to help or whether the small business will be best served by sending their case, with their permission, to the most appropriate federal or state agency.
We have a range of checklists, resources, tools and guides to help small businesses on our website or if you need help reach out to us at www.asbfeo.gov.au
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