As we come to the end year of another year, it’s a time for reflection. It’s also a time when the government likes to remind us how well it’s doing to help small businesses. The latest effort was the State Government’s Small Business Statement for 2017 which, among other things, claims the state is “accelerating”.
As one of the directors of a South Australian SME (and an adviser to many more), I’m just not feeling the same enthusiasm expressed in Small Business Minister Martin Hamilton Smith’s latest announcement. And no number of public statements about ‘how far we’ve come’ is going to fix that.
It’s been a tough year for many in South Australia. While the official optimism is appreciated (and I understand we should try to be upbeat), we also need to acknowledge there’s still a long way to go.
If you’re ‘from government and here to help’ as the statement suggests, then we’d like you to get started with more practical solutions.
We’re not feeling all that gleeful
Surveys by Business SA illustrate how many SMEs are feeling – and it’s not that good.
In fact, only 18 per cent of respondents expect the SA economy to perform well over the next 12 months. In addition, unemployment figures, while not getting worse, are still nothing to write home about. Add to that the latest TAFE drama and many of us are now questioning the state’s ability to provide adequate training for the skilled workforce we all need.
Too much of the conversation this year has focused on ‘big picture’ issues like how to attract larger businesses, build infrastructure, and fund innovation industries. These issues are of course vitally important for our continued growth, but we seem to have forgotten about who really forms the backbone of SA’s economy.
Programs like the recently announced ‘Excellence in Business Fund’ sound like a good idea to help more businesses partner with industry groups and councils, but I have a feeling many small business owners are looking for direct policy changes that will help with cash flow.
The bottom line is overheads are rising, taxes are still too high, and profits are down.
The state’s outrageous electricity prices are a problem that’s not likely to change in the short-term, even with the new investments in energy plans.
Helping local businesses spend less on expenses so they can employ more people is important. Other states are taking this approach – why not in South Australia?
Running a small business is no picnic
A glance at the statistics (Australian Small Business and Family Enterprise Ombudsman data, 2016) will tell you the survival rate for Australian small business over a four-year period is only around 60 per cent. Just 15 per cent of these kinds of businesses receive any form of government assistance. Medium-sized businesses claim about 30 per cent, and large businesses 57 per cent.
Worse still, it’s often an owner’s personal finance and assets that are on the line if it doesn’t work out.
I can understand the anger when the State Government tried to pull a stunt like asking businesses to pay back any payroll tax savings as a threat if the bank tax wasn’t passed. That’s not a way to build trust.
Why not just raise the threshold like they have in other states? For example, Queensland’s tax kicks in at a wages bill of more than $1 million, while South Australia sets the mark at only $600,000. Changing that would make a real difference.
We need a genuine desire to create a more dynamic environment for small business to flourish. We shouldn’t wait to pivot, but rather we need to get our pollies to put it at the very top of their list.
Let’s think big
First of all, I’d like to see more incentives to make people want to stay in SA. That’s good for business, whatever way you look at it. The trouble is people are going elsewhere where opportunities seem better. Offering more training and development incentives for young graduates and apprentices might address this.
The Job Accelerator Grants are a great idea, but let’s extend that program to include provisions to employ more women (or men) who have taken time out of the workforce to care for children, and older South Australians looking for part-time or flexible work.
More than 60 per cent of all Australian small business are sole traders and they often grow to employ others. They also need a hand to move forward.
Why not establish a broader ‘small business start-up package’ which includes the potential for some funding as well? SA used to have a ‘Tailored Advisory Services Grant’ where, for every dollar spent on activity to grow the business, the government matched it with a grant of up to $20,000. They also provided a raft of business advisory services as part of this.
Packages like this could also include a rebate for small businesses to encourage take-up of digital incentives and software programs that would make operations more efficient, thereby increasing SA’s productivity.
Build SA’s army of female entrepreneurs
New kinds of start-up funding would also help to tap into the huge number of women who are choosing to go out on their own. This now represents one of the fastest segments of small business growth in Australia. More than 34 per cent of all small business owners are female.
We should be mining this potential. You only need to look at the list of state finalists in the Telstra Business Women’s Awards to see the depth of talent we have in our own backyard.
More tailored start-up hubs and co-working spaces in neighbourhoods would be great to encourage more female entrepreneurs from all kinds of industries with shared resources and facilities, especially if they also included small-scale childcare facilities.
Reduce the red tape
We should also work harder to cut that red tape that holds smaller businesses back. Everyone talks about it – can’t we do something to make it easier?
Government procurement contracts are a case in point. The time commitment and difficulty for most smaller businesses to compete for this work is overwhelming. Does it have to be that way? Shouldn’t we be opening it up and making it easier to compete?
I just hope both sides of politics will stop the talking soon and start listening. They need to hear the voices that are all around them – in the café where you buy your coffee, at the mechanic when you get your car serviced, at the hairdresser, and when you’re buying the morning paper. Times are tough. Business owners want to be heard.
If we’re not careful, we might see a new crew on the block soon like in NSW – The Small Business Matters Party.
I wouldn’t have thought that was needed here, but these days I’m not so sure. Let’s hope we’ll get it sorted by the election.
Tania Tonkin is a director at dmca advisory, an Adelaide-based business advisory firm that works with small business and SMEs in South Australia.
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