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The challenge we can't ignore about SA's start-up culture

Opinion

Relying almost exclusively on "innovation" won't solve South Australia's economic problems, argues James Orchard.

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I welcome any initiative in our state that encourages entrepreneurship and the development of new business opportunities. We have our fair share of ‘incubators’, ‘hubs’ and ‘labs’ in Adelaide – all dedicated to the birth and growth of exciting new companies, technologies and industries. There is no debating that we need to create new markets and industries and encourage entrepreneurial thinking to give the future South Australian workforce the diversity and range of employment opportunities it is currently lacking. There are many industries and opportunities to explore.

The question I have is: are we doing enough to make our good businesses great? Is there an over-reliance on the start-up movement to shape the economy of tomorrow?

Let us not underestimate the role, influence and contribution of the ‘corporate citizen’ in our economy. I am talking about medium to large firms: in South Australia, these are businesses with 20 or more employees. These businesses are the real engine of our economy.

They are not only employers of a significant number of people, they are committed consumers of a wide range of third-party goods and services. They spend money on research and development, marketing and property. They train and develop staff and have corporate social investment programs that support our substantial not-for-profit sector. They create employment opportunities and, in many cases, offer a career-path for employees to pursue.

Can the same be said about the start-up movement? How many of these start-ups have a vision of becoming a ‘corporate citizen’ of South Australia? I speak to entrepreneurs all of the time and most of them appear focussed on establishing the leanest, most agile entity possible. Many contemporary businesses are established with an ‘exit strategy’ firmly in place. This is a radical shift in mindset from probably all of the great South Australian businesses that have stood the test of time and certainly that of Accru Harris Orchard, which has been in business in SA for 50 years.

While this may be the contemporary approach to business (and Australia and the world’s economy will adapt and adjust accordingly), we need to make sure that our economy is as sustainable as it can be in the present and foreseeable future and that we can effectively ‘bridge’ to this new business environment as seamlessly as possible. If we don’t, our current challenges such as relatively high unemployment, limited job opportunities and low population growth will only worsen.

I often wonder if our government understands how hard it can be doing business in our state.

With all of the focus on creating new businesses and industries, we can’t afford to not start thinking about how we can encourage and support businesses that want to grow – to become great South Australian businesses.

We must think differently and support small businesses to transition to medium businesses and, likewise, encourage medium-sized businesses to become as big as they can be.

The key to the future of the state is investment in know-how and what makes businesses great. Becoming a great South Australian business is not easy; those businesses that have stood the test of time might need to play a bigger role in mentoring other businesses to reach their full potential.

This process could be supported by State Government in lots of ways. An obvious idea is to stop penalising businesses that employ people. The government should cap payroll tax for those businesses turning over more than $10 million. Granted, this suggestion is nothing new but the government needs to start listening instead of tuning out whenever this is raised. It has to work out how to bridge the hole it will leave in the state budget because it’s in the best interests of our future economy.

I often wonder if our government understands how hard it can be doing business in our state. How many of our politicians have significant business experience? How many of them have put their own home on the line so they can pay the wages bill each fortnight or stump up a guarantee to enable them to go for a particular contract?

Our business sector should be afforded every assistance government can give it and should not rely almost exclusively on investment in ‘innovation’ to shape the South Australian economy of tomorrow. We need to change this mentality. Our South Australian businesses are taken for granted. They are unappreciated at best and abused at worst.

Likewise, to make our good businesses great, we cannot and should not be relying on government. If we are to address the issue, it will require a collaborative approach involving all sectors.

James Orchard is managing director of Adelaide-based accountancy firm Accru Harris Orchard.

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