Our greatest resource is the optimism of small businesses: It’s time to get behind them!

- April 10, 2024 4 MIN READ

It is often said that small business is the engine room of the economy. We want to make sure that small and family business can fire on all cylinders – not have a cylinder taken out, explains Australian Small Business and Family Enterprise Ombudsman Bruce Billson.

We need to get the risk and reward balance right, make small business and entrepreneurship a really attractive option for people, then create a supportive ecosystem to give enterprising people the best chance to be successful.

There’s a lot of things coming ‘at’ the small business community. We seem to be perpetually involved in consultation about a new imposition, a new measure, a new burden, a new complication that’s on top of the challenges and those late night compliance activities that those of us that have run a business know we are contending with right now.

It seems so often that we are there to mitigate the worst of new headwinds. That we’re trying to make something that’s not that great, a little a little less bad.

We need to shift the mindset from minimising headwinds to maximising the “wind in the sails” of our hard-working small and family businesses.

I think the greatest renewable resource in our country is the perpetual optimism of enterprising men and women.

It is quite uplifting and remarkable how optimistic our community is even when they’re facing confronting and challenging business conditions and some hard numbers that might tell a different story.

Some 43 per cent of small businesses were not profitable in the last full tax year. Three-quarters of self-employed people, for whom their business is their full-time livelihood endeavour, take home less than average total weekly earnings. There’s no rivers of gold for those people. They’re working their tails off every day.

The average age of a business owner is 50, not 45 where it was in 2006. Currently 8 per cent of our small business owning fraternity are under the age of 30, half what it was in the 1970s.

Seven out of 10 small businesses are unincorporated. So, when we think about the small business share of profit amongst a narrative about how buoyant profitability is in the business economy, we see that the profit trajectory of this 70 per cent that are unincorporated small businesses, if there is profit, is 3 per cent a year, whereas for the larger corporates annual growth is at 13 per cent.

We honour and we should celebrate the 42 per cent of private sector jobs that are made possible by the small and family business community. That is fantastic and small business continues to be the largest employer compared to large and medium sized enterprises. But in 2006 it was 53 per cent of private sector jobs coming from small business.

Small businesses contribute one-third of Gross Domestic Product, 32.4 per cent. But that is actually the lowest number since that data series began in 2006 when small businesses were contributing 41 per cent of the economy.

Small businesses are working extremely hard but the subterranean shift is that Australia is becoming a big corporate economy. This transformation is happening before our eyes. And I would suggest we need to do more to try and bring about a change if we believe, as I do, that small and family businesses will be the drivers of innovation and our best prospects for improving incomes and living standards.

Yet those underlying numbers point to a different story. Advantage being gained by large, already advantaged, well-resourced businesses.

How do we encourage the next generation of small business owners? How do we take the inspiration, support the perspiration that’s part of it, and drive the innovation that people keep talking about with the new productivity initiative. Something that will do better than what we’re doing right now? We need to shift the conversation.

For example, where are the deregulation targets? Where is the agenda that says we need right-size regulation, risk-informed, proportionate, relevant and able to be competently implemented by a party of goodwill?

Why don’t we have Regulatory Impact Statements that include a small business impact and implications area? Cabinet submissions talk about regional implications. Where’s the small business implication so that those considerations are front-of-mind and bright on the radar screen every time governments make a decision?

Where is the criteria that talks about how responsive and engaging a regulator is with the small and family businesses they are regulating? If regulators and impositions get too heavy, who can open that door to that opportunity? It won’t be a small, less well-resourced business; it will be a big business already advantaged with another avenue to exercise that advantage.

Departments and agencies boast about the resources available for small businesses and the ATO has done a great chart just on government supports. But it looked like Noodle Nation. You need to be a genius to navigate it and to find ‘actionable information’ about your area of concern or interest.  What’s a time-poor small business to do?

Take digitisation, which is a crucial challenge but also an enormous opportunity that will help businesses run more effectively, find new markets, and delight customers. How can we combine all the various programs to make it easier for small businesses to embrace those opportunities?

We celebrate arts and sports. Why not create a Prime Minister’s Small Business Awards to draw attention to how valued small business people are?

It’s time to energise enterprise.

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