15 April 2024

Originally published in The Canberra Times.

By Bruce Billson.

It is often said small business is the engine room of the economy. We must ensure small and family business can fire on all cylinders - not have a cylinder taken out.

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 those of us that have run a business know we are contending with right now.

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

Everyone asks, what can we do to make things easier? Well, we could stop making them harder. There's a tip.

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 narrative about how buoyant profitability is in the business economy is not the profit trajectory of the 70 per cent of small businesses who are unincorporated. If there is profit, it is 3 per cent a year, whereas for the larger corporates annual profit growth is at 13 per cent.

And our small business owners are getting older and having fewer succession options. The average age of a business owner is now 50, up from 45 in 2006. Only 8 per cent of our small business-owning fraternity are under the age of 30, half what it was in the 1970s.

We honour and celebrate the 42 per cent of private sector jobs 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.

The vast majority - 94 per cent - of employing businesses are small. But does anyone believe the workplace relations system is designed for this vast majority?

And while we cheer that small businesses contributes one-third of GDP (32.4 per cent), that is actually the lowest proportion 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 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, small and family businesses will be the drivers of innovation and our best prospects for improving incomes and living standards.

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 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 good will?

You don't hear a word about targets for reducing compliance costs. And why are some of the worst offenders other businesses? We call it white tape. You want to become a supplier to a major supermarket chain, you have to jump through a mountain of hoops. Does that improve the return? No. It's a right to play!

Why don't we have Regulatory Impact Statements that have to have a small business impact and implications area in them? 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 businesses. 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 really crucial challenge but also an enormous opportunity that will help the business of running the business, as well as finding new markets and new ways to delight customers. How can we join up all the various programs to make it easier for small business to embrace those opportunities?

We celebrate arts and sport. 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.