Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Nadia Mitsopoulos.
ABC Radio Perth
26 June 2023
Subject: Small Business Matters
Now, small businesses are the lifeblood of the Australian economy. They make up about a third of our GDP. But there is a fundamental problem facing the sector at the moment. The people running those businesses are getting older. Not that there's anything wrong with that, but I guess the question is why aren't younger people taking up the challenge of running a small business? Are they staying away? I want to go to Bruce Billson, who is the Australian Small Business and Family Enterprise Ombudsman. Bruce, good morning.
Nadia, fab to be with you and your listeners.
Thank you for joining me. Now statistically, what does the average small business owner look like?
Well, increasingly they're maturing. The average age is around 50 now. They work in particular sectors of the economy that probably don't come as a great surprise to many of your listeners, in construction, in retail, in professional services, and increasingly, in caring roles.
They're not earning megabucks, though, Nadia. That's something that's not well understood, that the average income of a small business owner’s a bit below average weekly total male earnings. So that's might come as a surprise to many.
And in Western Australia they’re pretty much going to be in the greater Perth area. They may be in Bunbury, Albany and the Wheat belt, which is the next highest area.
And pleasingly, though, they're increasingly women, which is really quite encouraging. Twice the number of women now are owning and leading small businesses than they did in the Seventies.
But using the Seventies as a hook point, 8% of business owners are under the age of 30. That used to be 17%.
So it's quite an interesting picture and one that we're keen to probe more because, as you opened with, this is energising enterprise. The small and family businesses are a real heartbeat, the driving force, the the engine room of the economy. And we want to make sure it's it's vibrant, it's interesting, it's exciting and it's appealing.
Those statistics are interesting. I know you say you want to probe more into them, but what are your thoughts as to that drop out, particularly with younger people taking up small business? I mean, because I guess times are very different. Do you have any idea as to why you're seeing that decrease?
Yeah, it's interesting. We believe, and it's just a hypothesis at this stage and you would have seen some of the numbers recently around the strength of the labour market, for a lot of young people there is a delicious array of possibilities out there that may well attract them more than what is a big responsibility, Nadia.
I know your listeners would appreciate that owning and running a business has a range of responsibilities and accountabilities with it. That's not everyone's cup of tea and we get that. I suppose COVID and other economic challenges have made that even a more complicated thing.
So there's possibly other options that are available for younger people that are maybe more attractive, give them some flexibility.
But that's also why we’re releasing this data Nadia, just to highlight the fact that for a young person wanting to, you know, march to their own beat, to have a purposeful life, have an impact, have a range of interests, self-employment in your own business may well be a way of pursuing that. And for many young people, you know, they start with a bit of a side hustle and they just see the business grow and grow and we've seen examples of that as well.
Bruce Billson is my guest this morning. He's the Small Business Ombudsman. And I'm wondering if you've ever run a small business and still are. I would like to hear from you on 1300 222 720. The pros and cons of running a small business. Is it worth it? You let me know. You can text as well on 0437 922 720.
Interesting too, Bruce, did I interpret your statistics correctly at the beginning of this interview, that they’re earning less money than they used to?
It’s been under average total weekly earnings for a while, but as you’d be aware we've seen some growth in those numbers. The thing that a lot of small businesses face though is their revenue might be going up, but so are their costs. So the actual income that they can take home and used to meet, you know, their own housing requirements and their own cost of living, a bit of a squeeze on that, Nadia. Bit of a margin squeeze.
Small businesses are sometimes less able to push through cost pressures that they're feeling within their business because they may have other customers that maybe a little reluctant to pay a bit more.
Another allied piece of work we've been doing is around payment times - another example where too often small businesses are not getting the respect that they deserve from big business customers taking a long time, in some cases, one in four big businesses taking a 120 days to pay their small business suppliers. So that's just an example of that market pressure playing out.
But pleasingly still quite a growth in the number of businesses. A 7% increase nationally over the last financial year, 5% in WA, so still quite impressive there. But that was also a reflection of how COVID was landing on the east coast and many people were changing their mode of livelihood. And we think that certainly added to the the growth in the actual number of businesses.
I'm going to go to calls in a moment. Just a final question for you, Bruce Billson. The problem with this going forward then, what is it?
Well, for us we need those new entrepreneurs generating new ideas and new ways of creating jobs, wealth and livelihoods for our nation.
Some of the other statistics that we've seen Nadia, point to scope to improve the degree of digital engagement, you know how technology is being used in businesses. That in some people's eyes is linked to the aging, the maturing. I'm sure you and I are very tech funky and, you know, feel like we're at the leading edge of it.
But we know some younger people are very comfortable with emerging technologies, AI, the digital businesses, the way of engaging with their customers using that technology. That's another part of that story.
Why we keep needing to energise enterprise, bring new enterprising men and women into this space and also recognise that small business is a way for mature age people having a livelihood and also for many women, balancing multiple objectives for their lives.
All right, good to talk to you Bruce Billson, really appreciate your time this morning and quite a few people want to have a chat about this.