Opinion

Risk and reward: The small business balancing act

- October 10, 2023 4 MIN READ

Small and family business owners are increasingly shouldering more risk for less reward as compounding regulations and economic challenges hit businesses and profitability, writes Bruce Billson, Australian Small Business and Family Enterprise Ombudsman.

Data recently released by my office showed that 43 per cent of small businesses didn’t make a profit in the last full year of reporting. And some three-quarters of small business owners are earning less than the average total weekly, full-time earnings.

There are no ‘rivers of gold’ coming to small and family businesses as the competitive landscape is increasingly challenging.

We know shocks tend to advantage the already advantaged – big businesses with big resources are able to navigate those times. They have better access to finance and specialist expertise. Their resilience is enabled by scale. Not to mention their appalling performance in paying their small business suppliers in a timely manner.


Small businesses right now are exhausted. Their emotional and financial reserves are diminished and there are no sloppy margins to be found anywhere.

Not a day goes by when you don’t hear a regulator or a legislator saying: “Don’t get this wrong”.

One size fits all doesn’t work for small business

Even big businesses struggle at times to get all things right and there have been numerous cases of really large organisations making mistakes around payment to an employee.

So just imagine how difficult this is for small business owners. A small business isn’t a shrink-wrap version of a big corporation. There’s no regulatory team or 20 people in the dedicated HR department. There aren’t any in-house lawyers, compliance specialists or product safety experts running around.


Yet, expectations and the ‘ask’ tend to take too little account of the cumulative demands and resource-constrained circumstances of small businesses – which is why we are tirelessly urging and reminding regulators and the Parliament of the need for right-sized regulation, actionable information and appropriate support for small and family businesses.

These additional obligations, adding to the already big responsibility of owning and running a small business, send a poor message to the next generation of entrepreneurs and our country will be the poorer for it.

Small business accounts for half a trillion dollars of economic activity, or one-third of GDP.

Australia’s 2.5 million small businesses provide jobs for 5.1 million people and employ 42 per cent of all apprentices and trainees in training – nearly double the amount supported by a big business.

But the average age of small business owners is now around 50. And only 8 per cent of small business owners are aged under 30 – that’s halved since the 1970s.

Why is the next generation not seeing self-employment and their own enterprise as a pathway for the future? At a time when young people, particularly, look for purpose as well as profit in their lives, isn’t self-employment a natural fit?

I reckon the risk-reward equation has tipped to a place where it’s not as attractive as it should be.

Red tape’s stranglehold on entrepreneurship

No one starts a small business because they are excited about the paperwork involved, yet the cumulative compliance burden and fear of doing something wrong is having a chilling effect on entrepreneurship.

The tax office has pivoted from its appropriate and helpful posture of ‘support and assist’ mode during COVID to now having its ‘lodge and pay’ muscle out with a narrative, if you haven’t paid your taxes we’re coming after you. What’s a small business do? They panic, they worry, and some put their head in the sand.

Thankfully, the Reserve Bank has kept official interest rates unchanged for the past four months, but small businesses are still absorbing the impact of 12 rate rises and experts predict there could be one more before the end of the year. This is on top of continuing input pressures.

Financiers say we will lend you money but we want your house and your firstborn as collateral. The personal risks of small business can be high. And as someone who has poured your identity and your home into a small business, you lie awake at night thinking, I’ve got to pay all the bills, I’ve got to meet my obligations. It all rests with me…

Industrial relations needs to work for small business too

Plus, there’s a flurry of new industrial relations changes one after another, changes to privacy laws with the removal of the exemption for the small business community, cyber security fears and environmental, social and governance obligations.

Small businesses don’t want to ignore these important areas but need a right-sized, actionable, fit-for-purpose, and efficient approach with appropriate support and guidance.

Changes must be easy to implement with clear advice and timelines, to give confidence to small businesses and their customers.

My theory is that all this together has created disproportionate headwinds and it’s spooking people. The rewards are not as delicious in this modern economy.

Even technology, which has opened a world of possibilities for a small business to win new markets and customers is a double edge sword. Before a customer goes to support a local small business they check out the prices online and you have to match it.

Rents are going up, the costs of payroll, workers compensation, superannuation, energy costs and other key inputs but the consumer has no appetite to pay more amid the higher cost of living so margins are squashed.

It is not surprising that many small businesspeople feel overwhelmed at the moment. But there is help available such as the New Access for Small Business Owners program designed by people with small business experience that offers free one-on-one sessions with specially trained mental health coaches and the Small Business Debt Helpline provides financial counselling support.

We need to do all we can to energise enterprise and put wind in the sails of enterprising men and women.


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