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PWC Private Business Barometer

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Sales expected to increase by 13% in 2011.

62% of companies met or exceeded their set revenue targets in 2010.

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  • 1. pwc.com.au/privateclients Can changing the way you think, change the way you grow?Private ClientsPrivate Business BarometerMay 2011Edition 09Listening to Australia’sprivate businesses What would you like to grow?
  • 2. How can you kick start every day success? Carolyn Creswell founded Carman’s Fine Foods as an eighteen year old uni student with just $1000. Today, with the help from our Private Clients team, Carman’s is now a multi-million dollar business. Carolyn has grown the business by working with her Private Clients advisor to broaden Carman’s product offering, spread the customer base and number of suppliers and improve business systems. Carolyn uses us as a sounding board and as support for many of her decisions, both business and personal. With a growing international business built on muesli, it’s clearly a mix that works. What would you like to grow? Tell us at whatwouldyouliketogrow.com.au2
  • 3. Contents04Introduction 06 Highlights 08 Executive 10 Methodology summary and sample11Private 14 Impacts of the 18 Economist’s 20 Keeping upbusiness trends natural disasters overview with growth23Business growth 44 Market overview 46 People 56 Funding64Business 80 Business 84 PwC Private Clients 86 Acknowledgementsoperations demographics 3
  • 4. This PwC Private Business Barometer shows 94 per cent of businesses have a plan that is closely aligned to their growth strategy and more than half of them review this plan more than once a year. David Wills National Managing Partner, Private Clients Welcome to the ninth After consulting with our clients and Perhaps in response to this, overall we found colleagues, we decided it would be best to that businesses are cautious about the next edition of the PwC Private get the opinions of Queensland businesses 12 months but still optimistic about the next Business Barometer. using other methods including roundtable three years. sessions and online polling at existing 2011 heralded an extraordinary time in The underlying message though, is that events. We connected with business owners world and local events. Many parts of businesses are reinvesting to prepare in Queensland on a personal level, holding Australia experienced unprecedented natural themselves for long-term growth. Sales are sessions with a range of business owners to disasters including flooding, bushfires and growing faster than profits which typically capture their feelings and response to the cyclones. New Zealand and Japan were indicates that people are investing profits flooding and their plans for the future. ravaged by earthquakes and the rest of the back into their business to help generate world is still reeling from the impact. Nationally, more than half of the businesses sales and create efficiencies for growth. surveyed reported having been impacted by Businesses are on the hunt for financing. At the time the flooding hit Queensland, the natural disasters earlier this year. We During the global financial crisis we saw we were preparing to go into the field to have spoken to many Queensland private business owners looking internally for interview private business owners for the business owners, and at one particular funding but banks have now re-emerged as ninth edition of the PwC Private Business breakfast event where we had almost 100 a popular source of finance for investments. Barometer. We knew that the focus for Queensland business owners in attendance, We’ve also seen a shift in the attitude Queenslanders was on helping each other 53 per cent told us they experienced of banks towards businesses. Banks are with the clean up effort and assessing no significant impact while 26 per cent showing more understanding about the and working through the impact experienced significant disruption. needs of private businesses and want to on their businesses. support them.4
  • 5. IntroductionHowever, they are not loosening the purse aligned to their growth strategy. More than In the retail sector, e-retailing is growingstrings – so businesses need to clearly 50 per cent of businesses review it regularly – at 10 per cent per annum – howeverarticulate and demonstrate their case. more than once a year. 39 per cent of respondents told us they had no online retail plans. This area ofWe again asked, “What would you like to In this edition of the PwC Private Business the market presents a real opportunity forgrow?” and “Sales and profits” was the most Barometer, businesses again highlighted businesses and we believe it should formcommon answer. This tells us business owners their concerns in the area of attracting and part of a strong future growth strategy.are squarely focused on the future direction retaining talent. More than half of businessesand success of their businesses. indicated they intended to hire in the next The PwC Private Business Barometer is just six months and 42 per cent reported a lack of one of the ways PwC Private Clients supportsIn this edition, we had the pleasure of speaking qualified staff as a hiring restraint. the health and vitality of Australia’s privateto a private business owner who is on a business community. We hope you findphenomenal growth journey. Abigail Forsyth, We spoke to Sue Jackson, Managing this to be an insightful and useful tool forCEO of KeepCup, created a unique product that Director of Solterbeck, a private business benchmarking your current performancehas changed the landscape of coffee drinking which delivers motivating programs, and outlook for the future.in less than two years – and experienced year- conferences and events to engage workforces.on-year growth of 300 per cent. Interestingly, when we talked to Sue about If you would like to talk to me about your how Solterbeck finds qualified talent, she business or the findings discussed in thisOne of the interesting points for me has been said, the company looks for the right fit and publication, I would love to hear from you.the shift in how business strategies are being then provides training and development.used over the lifetime of the PwC Private David Wills “We tend to hire on how staff engage withBusiness Barometer. In 2007 the majority National Managing Partner our vision, their attitude, and whether theyof businesses didn’t have a plan and if they have a complimentary skill set – and then Private Clientsdid, it was to satisfy lenders. Today’s PwC train people in our expertise of performance (61 3) 8603 3183Private Business Barometer shows 94 per improvement,” she explained. pwc.com.au/privateclientscent of businesses have a plan that is closely For the first time, we spoke in depth to a private business owner who is on a phenomenal growth journey. 5
  • 6. Highlights Targeting new regions Private businesses are planning to expand domestically and internationally to complement organic growth. Investment to spark sales 46% are looking to domestic As growth returns, businesses are investing in functions such as marketing to stimulate sales. or international markets. Online retailing crucial Many retail businesses appeared not to recognise the need to invest in online retailing to remain competitive.6
  • 7. HighlightsHiring plans are up and soare wages 21% favour the banks Over half of the businesses surveyed plan to take on new people in the next six months; almost all expect wages to increase in the coming year. Banks are back Businesses are again looking to the banks for funds to fuel their growth. Short term sales targets are at 13%Cautious optimismPrivate businesses remain cautious about the short termbut are more optimistic about the three-year view. 7
  • 8. Executive summary This edition of the PwC Private Business Barometer shows signs of recovery and increased activity amongst Australian private businesses. Private businesses are moving away from self-funding their Hiring could get harder investments and have a renewed appetite for borrowing from Some aspects of this survey suggest recruiting talented banks. Their average debt as a percentage of assets climbed from staff will get harder for many companies. 17 per cent to 21 per cent since the last survey, arresting a steady decline during the global financial crisis (GFC). Fewer businesses (42 per cent – down from 52 per cent in the October 2010 PwC Private Business Barometer) said a lack of However, these signs were relatively tentative and qualified candidates was holding them back from hiring. Only businesses remained cautiously optimistic over the one-third (35 per cent) of businesses did not plan to hire in the next near-term economic outlook. six months. Furthermore, four in five businesses (83 per cent) said Near-term uncertainty, medium-term optimism they expected wage costs to increase over the next year, predicting an average increase of six per cent. Private businesses estimated their sales grew by an average of six per cent and profit by seven per cent over the previous 12 months. Despite these indications that competition for staff would increase, the These low growth rates were similar to those experienced during share of businesses planning to make changes so they were considered the height of the GFC and economic downturn. more appealing as employers fell from 82 per cent to 71 per cent. In addition, businesses remained concerned about the sales and This PwC Private Business Barometer also reveals that businesses profit outlook for the next 12 months. This caution was reflected have been reviewing business plans more frequently – 54 per cent in their approach to investment, with only 36 per cent planning reviewed them more than once a year, compared to just 12 per cent significant investments in the coming year. doing so in March 2010. Private businesses were more optimistic about the medium-term Retail weakening outlook and told us they had plans to grow and pursue acquisitions The retail sector had weaker than expected sales over the 2010 in the next three years. Christmas period – only 36 per cent of retailers met their sales Pricing and funding are growing concerns expectations. According to Roy Morgan Research, consumer confidence leading up to Christmas declined as many people As in previous surveys, private businesses’ top concern was finding .were concerned about their personal finances.1 competent staff. Their second greatest challenge was competitive pricing and its effect on margins. The share of businesses that Despite more consumers buying goods and services online, named pricing as a challenge rose from 16 per cent in the October a surprising 39 per cent of businesses had no plans to increase 2010 PwC Private Business Barometer to 38 per cent in this edition. their e-retail efforts. Only six per cent of retailers surveyed said Across most industries, companies also rated pricing as a key factor they already had an established online retail strategy. in winning new business. 1 The Roy Morgan Research Consumer Confidence Rating in December 2010 was 120.4 down from 130.1 in October 2010.8
  • 9. Executive summaryBusinesses pitch in for disaster reliefThis survey examines the impact of the natural disasters inQueensland at the start of 2011 and how willing Australianbusinesses are to pitch in and help others during times of adversity.Half (51 per cent) of respondents outside Queensland said theirbusinesses felt some impact from the natural disasters. One infive (22 per cent) experienced lower demand for their productsor services, while 10 per cent experienced higher demand.Four in ten (39 per cent) private businesses outside Queenslandsupported the Federal Government levy to help rebuild infrastructurein flood-affected areas. Other respondents said rebuilding should befinanced from existing government resources or taxpayer funds.Over half (59 per cent) of the private businesses surveyed toldus they had supported the relief effort by making donations orvolunteering. In addition, 18 per cent responded by showingcommercial flexibility and nine per cent offered wellbeingsupport for affected people.Natural disasters in Queensland – respondents outside Queensland felt some impact experienced lower demand experienced higher demand 51% 22% 10% 9
  • 10. Methodology and sample The PwC Private Business Barometer is prepared once every Table 1: Distribution of businesses by industry sector six months based on detailed questioning of a large sample of Australian-owned private businesses with revenues between % of businesses approximately A$10 million to A$100 million per year. Mar-10 Sep-10 Mar-11 To compile this edition of the PwC Private Business Barometer, Manufacturing 14 20 21 Roy Morgan Research completed telephone and online interviews Property and construction 16 17 12 with 851 businesses during February and March 2011. The market researchers interviewed the owner, chief executive officer or senior Retail trade 14 15 14 director of each business surveyed. Distribution and wholesale trade 12 11 15 Fieldwork for the May 2011 PwC Private Business Barometer Business services 18 10 10 began immediately after natural disasters had devastated Communications, transport Queensland and other parts of Australia. After consultation with 8 8 9 and storage clients and colleagues, PwC elected not to survey Queensland Agriculture, forestry and fishing 5 5 5 businesses in the formal fieldwork commissioned for this edition of the PwC Private Business Barometer, allowing businesses to Finance and insurance 3 3 3 focus on recovering and rebuilding. Other 10 10 11 The PwC Private Business Barometer questionnaire includes Total 100 100 100 set questions that do not change from one survey to the next, Base: Total businesses (n=851) and topical questions designed to obtain the private business community’s views on issues of the moment. Tables in this report may not total 100 per cent due to rounding. Figure 1: Geographic distribution of businesses More than half (52 per cent) of respondents in this survey were % of businesses business owners; 73 per cent were one of several owners of their business. As the table below shows, the sample includes strong coverage 24 NSW of the major industries. Twenty-one per cent of respondents were 9 Vic in the manufacturing industry, 15 per cent in distribution and wholesale trade, 14 per cent in retail and 12 per cent in property 12 40 WA and construction. SA ACT 33 Tas/NT Base: Total businesses (n=851)10
  • 11. Private business trendsSales and profit growth rates down Pricing dominatesPrivate businesses’ average profit and sales growth rates fell Private businesses continued to find pricing the main factor in winningto levels last seen during the global financial crisis, against a new business, albeit less so than a year ago. Customer expectationsbackdrop of continued economic uncertainty. and demands also rose and margin compression re-emerged as a factor, after all but disappearing in the past two PwC Private BusinessFigure 2: Business growth in the past 12 months Barometer surveys. This may indicate businesses are vigorously discounting their products and services to secure new customers. 20 18 Figure 3: Main drivers of competition for new business 16Percentage growth rate All industries 14 12 10 50 8 6 40 4 % of businesses 2 30 0 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 20 Sales ProfitsBase: Total businesses (n=851) 10 0 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 Pricing Product innovation Entry of offshore firms Availability of HR talent Customer expectations and demands Margin compression Base: Total businesses (n=851) Sales and profit growth down to global financial crisis levels 11
  • 12. Private business trends Setting cautious targets Geographic and product expansion complements Private businesses remain optimistic about medium-term sales organic growth growth targets and are taking a slightly more conservative approach Private businesses plan to expand into new product and geographic to setting medium-term profit growth targets. However, businesses markets and grow organically to meet their medium-term targets. are setting cautious short-term targets. This is most likely due to The fact that businesses are seeking funding from banks may uncertainty over domestic and international economic conditions indicate they are already laying the groundwork to diversify into and their impact on demand. new markets. Figure 4: Set short- and medium-term business growth targets Figure 5: Medium-term (three-year) growth strategies considered 70 30 60 25 Percentage growth target 50 % of businesses 20 40 15 30 10 20 10 5 0 0 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 Organic growth Expansion into new product markets Short-term sales Short-term profits Expansion into new geographic markets Acquisition of other businesses Long-term sales Long-term profits Do not see any real growth happening Base: Businesses (n=851) Base: Total businesses (n=851) Multiple response12
  • 13. Private business trendsBusinesses take on more debt Sticking to the planPrivate businesses are starting to reverse the long-standing decline Private businesses are reviewing their plans more frequently.in their borrowings as a percentage of their assets. Owners and The share of respondents who reviewed their business planssenior executives are becoming more likely to approach banks and more than once a year increased slightly since the last survey,other external finance providers for loans to fund expansion. while the percentage of those who only dusted off their business plans every year or two continued to fall.Figure 6: Average debt ratio Figure 7: Business planning frequency 80 50 70 40 60 % of businesses 50Debt ratio (%) 30 40 20 30 20 10 10 0 0 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 More than once yearly Every year Every two years or more Total borrowings to total assets ratio Base: Total businesses (n=851)Base: Businesses that knew their debt ratio (n=584) 13
  • 14. Impacts of the natural disasters Surveys for this issue of the PwC Private Business Barometer started Businesses concerned about financial position soon after flooding and Cyclone Yasi devastated Queensland and One fifth (19 per cent) of private business owners or managers who other parts of Australia. We asked respondents from other states did not support the levy were concerned about their own financial and territories a range of questions to measure the impact of these situation. A similar percentage (18 per cent) believed there were disasters on private businesses outside Queensland. already sufficient funds available from tax revenue and government Private businesses split on levy reserves to help affected communities. Thirty-nine per cent of private businesses agreed with the then- proposed Federal Government levy to help rebuild flood-affected Figure 9: Reasons given for not supporting the flood levy infrastructure. Fifty per cent of private businesses did not support the levy and 11 per cent were not sure. Struggling financially or cannot afford to pay 19 Enough revenue is collected already in tax; there is enough in reserve 18 Many people have already donated; contributing should be voluntary 14 Figure 8: Support for Federal Government flood levy There is too much waste in the budget 12 % of businesses Cuts should be made to other areas of the budget 11 Cannot say A disaster fund should be in place 9 11 People should insure themselves and their property adequately 7 The state governments should have insurance for such events; they should pay 6 39 Support levy People will be discouraged from donating/ 5 it is not fair we are being levied as well It sets a precedent or will promote a bail-out mentality 4 Do not 50 I/we have received no assistance 4 for similar events support levy Governments should borrow or stay in deficit longer to pay for it 3 There are alternative ways of raising the money 3 Base: Total businesses (n=851) The levy will not be removed; 2 once applied it will stay There should be better regulation of the insurance industry 2 The money will not go to those that need it 1 It will push up costs of living, food, electricity etc. 1 Flood-prone areas should not be developed or built up 1 Every income level should be levied; it penalises medium and high income earners 1 Other 8 Dont know 3 0 10 20 % of businesses Base: Total businesses that would not support a levy (n=423)14
  • 15. Impacts of the natural disastersHalf of non-Queensland businesses feel impact Many Australian private businesses pitched in to help those affected by natural disasters. Over half of respondents (59 per cent)Half (51 per cent) of Australian private businesses outside supported those impacted by donating or volunteering. EighteenQueensland felt the impact of the natural disasters. Twenty-two per cent of businesses responded by showing commercial flexibilityper cent experienced a decrease in demand for their products or and nine per cent offered wellbeing support. Only a quarter ofservices and 15 per cent said their supply chain had been affected. businesses provided no support to those impacted.On the other hand, 10 per cent experienced an increase in demandfor their products or services. Figure 11: Support for those impactedWhile we did not interview Queensland-based private businessesfor the May 2011 PwC Private Business Barometer, we measuredthe impact of the natural disasters and the sentiment of Donations and/or volunteering 59Queensland businesses through surveys, events, roundtable Commercial flexibility 21focus groups and other relationship activities. Wellbeing support 9Our Master of Business interactive survey of approximately100 Queensland business owners, conducted in March 2011, found Retention and redeployment of staff 8one-third of respondents were affected by the natural disasters. Offering technical expertise 7Similarly, 29 per cent of businesses expected the Queensland economy Collaborating to achieve sustainable redevelopment 5to feel the effects of the disasters for the next 12 to 18 months. Will pay Federal Government levy 1Despite these potential setbacks, many private businesses showed the‘Queenslander’ spirit and remained confident they could grow their Other 1sales and profitability over the coming 12 months. Nothing 25 0 20 40 60Figure 10: Business impact % of businesses Base: Total businesses (n=851)Decrease in demand for my product or service 22 Supply chain issues 15Increase in demand for my product or service 10 Increased cost of sales 9 Despite the Impacts on infrastructure (roads, rail, potential setbacks, 8 communications) many private Impact to my labour force 6 businesses showed Direct property loss 4 the ‘Queenslander’ 1 Customers unable to pay or poor cash flow spirit and remainedUnder-insurance for buildings and/or contents 1 confident they Negative outcome (insurance company) 1 could grow Positive outcome (insurance company) 1 Other 1 Not impacted 49 0 20 40 60Base: Total businesses (n=851) % of businesses 15
  • 16. Impacts of the natural disasters Queensland businesses look ahead for “New retailers are moving into Australia,” said Kevin Davis. growth opportunities “If Australian suppliers don’t engage them, buyers have options. In some cases they may turn over more of their product in North In this edition of the PwC Private Business Barometer we captured America than the Australian operation turns over here. They could, the opinions and insights from Queensland private businesses at if they chose to, just bring containers in themselves from their a Master of Business event in March and at a roundtable session in overseas operations.” April. Private businesses are now four months into their recovery and what we’ve found is that the emphasis is on long-term, not The insights provided by the group at the roundtable on short-term recovery and growth. e-retailing align with the results in the PwC Private Business Barometer. Although private businesses acknowledge there is an Private business guests who attended a roundtable discussion in opportunity in this market, they are also very wary of the threat it April were: represents. Businesses are facing increasing pressure from overseas • Allan Todd, Managing • Chris Eldridge, Chairman, competitors, particularly in electronics. Director, Todds Hi Fi, 4 Impact, a project services “One of the problems is the erosion of the value of the product a sound and vision retailer consultancy by overseas competitors,” said Allan Todd. “It is amazing how • Ron Higham, Company • Craig Davison, Managing many $500 televisions from China are sold when you can buy Director of five unlisted Director, The Outdoor a Panasonic for $800.” companies Furniture Specialists During the global financial crisis, private businesses were cautious • Kevin Davis, Managing • Melanie MacDonald, about taking on debt but now they are looking back to the banks for Director, Austech Industries Director, Koringa Business funding. Private businesses are looking for a partnership with their Pty Ltd, tools and equipment Investments, private investor bank, not simply a transactional relationship. They are looking for wholesaler in online educational a partner who will support the business growth and journey from training and property. a start-up to a medium or large enterprise. From our discussion with private business owners at the roundtable session, we learnt that most were not in favour of a flood levy to support rebuilding infrastructure. Overwhelmingly, private business owners felt that the recovery should be funded by the Federal Government to prevent a slowdown in the economy. Likewise, the majority of private business owners in other states and territories One of the problems is supported the use of a budget surplus to fund the recovery and 50 per cent do not agree with the introduction of a levy. the erosion of the value More than half of the Queensland-based private businesses of the product and we spoke to have been impacted by the natural disasters. The outlook for growth is modest, particularly in the retail sector overseas competitors. where competition from new businesses and overseas competitors has put pressure on their sales, product supply and growth outlook. The larger overseas retailers are placing particular pressure on local suppliers.16
  • 17. Impacts of the natural disastersThe responses in the People section of this edition of the PwCPrivate Business Barometer correlate with what Queensland privatebusinesses told us. Queensland businesses, like their counterpartsin other states and territories, find that attracting and retainingtalent is a fundamental challenge.Employees are now more agile and prepared to change jobs, soemployers must look for different ways to retain key staff. Similarly,finding talented staff is also a challenge for private businesses.“The biggest challenge in the next 12 months will be finding goodstaff and empowering them while also making the business adestination customers want to shop,” said Craig Davidson.Queensland private businesses told us that they are facing similarpeople, funding, pricing and sales growth challenges highlightedin the PwC Private Business Barometer. Due to the impact of theflooding and Cyclone Yasi, private businesses in Queensland arecautious in their short-term approach and optimistic about long-term growth. They are looking at ways to ensure their businessescontinue to grow and are exploring options to compete by buyingbetter, retaining customers and promoting their brand. 17
  • 18. “The stronger Australian dollar – which at time of writing had just passed US$1.05, its highest level in 29 years – is exacerbating these diverging experiences.” Saul Eslake Advisor, PwC Economics & Policy At the macro level, Australia’s economy is continuing to perform The stronger Australian dollar – which at time of writing had strongly compared to most of its industrialised peers. Taking into just passed US$1.05, its highest level in 29 years – is exacerbating account the impact of the largest and most sustained upswing in these diverging experiences. Australia’s terms of trade – the ratio of the average prices received But it’s an oversimplification to characterise Australia as having a for our exports to the prices paid for our imports – in at least two-speed economy, with mining (or Western Australia) at one end 140 years, Australia’s national income is growing at around 7.5 to of the spectrum and everything (or everywhere) else at the other. eight per cent per annum in real terms. And the unemployment rate Many parts of the services sector are continuing to experience is once again below five per cent, the level conventionally regarded buoyant levels of activity; while New South Wales and Victoria, – at least since the mid-1970s – as representing full employment. which are hardly at the centre of the mining boom, have Of course, these averages conceal a substantial amount of experienced faster growth in employment than anywhere variation both geographically across different regions of Australia, else in Australia over the past six months. and between different industries or sectors of the economy. It is likewise a misreading of history to characterise the dispersion Thus the resources sector is, as one would expect, experiencing in levels of economic activity across the country, or among the especially buoyant conditions, as are firms involved in engineering different sectors of the Australian economy, as a recent development. construction. On the other hand, parts of the manufacturing, Indeed, the spread between the growth rates of the fastest and tourism and retail sectors are experiencing difficult trading slowest growing states and territories, or those of the fastest conditions. Similarly, trend unemployment is down to 4.3 per and slowest growing industry sectors, has been no greater in cent in Western Australia and 2.4 per cent in the Northern the past three years than in the previous 15. Territory, but remains at 5.6 per cent in Queensland and 5.8 per cent in Tasmania.18
  • 19. Economist’s overviewThe experience of Australia’s private businesses, as captured Private businesses are now more cautious about their sales and profitby the PwC Private Business Barometer, bears out many of the expectations for the year ahead than they were six months ago, butmessages conveyed by official statistics. Readers should regard remain optimistic about the medium-term (three-year) outlook.the fact that there are very few private businesses operating in Only one-third of private businesses have significant investmentthe resources sector, and that on this particular occasion the plans for the next six months, which is consistent with othersurvey on which the PwC Private Business Barometer is based evidence suggesting that, outside of the resources sector, capitalexcluded businesses located in Queensland to avoid the results expenditure intentions remain soft. It is encouraging that bankbeing distorted by the natural disasters that struck that State funding is becoming significantly more available for thosejust before the survey was conducted. businesses considering investment plans, suggesting that theIndeed, despite excluding Queensland, just over half the private constraints on lending imposed in the aftermath of the globalbusinesses responding to the survey reported being affected by financial crisis are now easing.those disasters, more of them negatively than positively. This backs By contrast with their cautious investment plans, almostup official forecasts that the Queensland floods and Cyclone Yasi 60 per cent of private businesses intend to hire more staff overwill detract from measured economic activity in the first half of the next six months, the highest proportion in the PwC Private2011, although it is likely that recovery and reconstruction activities Business Barometer’s history. Although more than 40 per centwill provide a stimulus to economic growth in the second half of of respondents cite a lack of qualified staff as the primarythis year and beyond. constraint on hiring, this is down around 10 per centage pointsInterestingly, 84 per cent of private businesses said they thought the from the previous survey. Businesses appear more willing, orFederal Government should have been willing to push back its plans resigned, to pay higher wages to attract and retain staff; moreto return the budget to surplus by 2012-13 to assist those adversely than 80 per cent expect wage costs to increase (by an average ofaffected by natural disasters. Half of respondents were opposed to six per cent) over the next 12 months.the Federal Government’s flood levy as a means of paying for part Probably reflecting the ongoing rise in the value of the Australianof the costs it would incur in responding to the disasters. dollar, competitive pricing represents the second most significantConsistent with the general message conveyed by official statistics, challenge facing private business operators (after shortages ofmore than twice as many private businesses reported higher sales competent staff), as nominated by 38 per cent of respondents.over the past year as reported lower sales. Those reporting higher This is likely to become an increasingly important considerationprofits outnumbered those reporting lower profits by a ratio of for businesses over the next six months.about four to three. However, overall rates of sales and (more Overall, the results are consistent with an economy that is enjoyingnoticeably) profits growth have slowed since the first half of 2010. reasonably buoyant levels of activity but with some sharplyThis is particularly apparent among private businesses in the retail contrasting experiences in different sectors and regions.sector, where more than half of the businesses surveyed failed tomeet their sales expectations during the past six months. Indeed, despite excluding Queensland, just over half the private businesses responding to the survey reported being affected by those disasters. 19
  • 20. Since starting, the business KeepCup has grown from two to twenty staff. Like many start-up private businesses in Australia, KeepCup’s growth has brought with it some people challenges.20
  • 21. Keeping up with growthAbigail Forsyth, CEO of KeepCup, credits her passion for the A key part of Forsyth’s business strategy was buy-in from theenvironment and desire to create a company to give back to corporate sector. During the prototype phase, she contacted NAB andthe world as the reasons for the success of her family business. Energy Australia, who were very enthusiastic about the KeepCup andKeepCup was the culmination of Forsyth identifying a need in purchased them to help engage staff in their sustainability campaigns.the market and wanting to reduce the disposable coffee cup waste. “I call corporate sales the ‘triple threat’ because it goes ontoSince its launch in 2009, KeepCup has experienced exponential someone’s desk and their colleagues ask: What’s that?” said Forsyth.growth of 300 per cent year on year. “They look up our website and tell their friends. They take it to aForsyth and her brother ran a café in Melbourne for a number of café and the staff say: What’s that? It’s a KeepCup.”years, and she noticed the high volume of disposable coffee cups Forsyth believes the KeepCup can help companies make theirthey went through. If customers came in with their own mugs, corporate responsibility and sustainability messaging morebaristas would roll their eyes – the mug wouldn’t fit in the machine consistent. Employees will find it harder to believe corporateand they didn’t know the right proportions to make the perfect messages about having a green supply chain and using lesscoffee. From this experience, the idea for a reusable coffee cup was electricity if they continue to use polystyrene cups.born and Forsyth developed the prototype KeepCup. “Employees are demanding their organisation become green andDuring the two-year development phase, the tooling and design corporate customers are requiring us to show evidence that ourof the product were crucial elements. business practices are green,” she said.“In its visual appearance, we wanted it to echo the disposable Since launching the product in 2009, the company has soldcup so it wasn’t too big a departure from what people were used over 800,000 KeepCups worldwide. Although it has exports toto carrying,” Forsyth explained. “KeepCup is well designed and Europe, New Zealand and the United Kingdom and a distributor inaesthetically appealing. You enjoy using it and then it becomes Taiwan, KeepCup’s international business strategy is still evolving.a lifestyle choice.” “We’re still finding our feet; we have been getting enquiries fromFrom a design perspective, the KeepCup had to be easy for baristas all over the world and we try to respond to them,” said Forsyth.to use with existing coffee machines – unless baristas and roasters “The product will be most successful where there is a vibrant espressogot behind the product, it wouldn’t be widely adopted. culture and where people are concerned about sustainability.”Environmental considerations played a major role in the design Forsyth’s growth strategy for the business is to expand through aprocess. The KeepCup is made of four single-component plastics, combination of direct sales, distribution and agency. In the Unitedto facilitate recycling. All components are interchangeable between States and Canada, it is setting up third-party warehousing tothe different sizes of cups, which are microwave and dishwasher try to gain access to the market. It has started to approach newsafe. There is enough plastic in 28 disposable cups and lids to geographic markets to get a feel for the local market and themake one KeepCup. extent to which it would adopt KeepCup. Employees are demanding their organisation become green and corporate customers are requiring us to show evidence that our business practices are green. 21
  • 22. Keeping up with growth “We’ve never engaged a public relations firm to assist us locally, as the take up has been viral, but I think we’ll engage PR on the West Coast of the United States to get some momentum behind the product,” she said. Finding a balance between work and family life is something Forsyth constantly works at, “If you’re a passionate person, who’s got the drive to start something up then your approach is very rarely balanced,” she said. When she has family time, Forsyth ensures she is always present and involved, not preoccupied replying to emails. “The jobs keep coming; you’ve got to take the time to do them but you’ve also got to be present when it’s not about work,” she explained. The jobs keep coming; you’ve got to take the time to do them Forsyth’s vision is for KeepCup to be the reusable cup of choice for but you’ve also got to be present people who regularly drink espresso coffee. What excites Forsyth about her business is the positive changes she has seen when it’s not about work. in consumers’ behaviour. “A product that is well designed, conceived and marketed can change the way people behave without top-down legislation, without being forced to do it,” she said. “People are just doing the As a new business, with expanding employee numbers, the culture right thing through word of mouth and following by example.” at KeepCup is constantly evolving. Most join the business because they’re attracted to being part of a local company that is doing Forsyth estimates that if 80 per cent of her users drink eight something positive and worthwhile. takeaway coffees per week, in one year KeepCup users will have diverted 300,000 million cups or 4,000 tonnes from landfill, and Since starting, the business has grown from two to twenty staff. saved enough energy sufficient to power 5,000 homes for a year. Like many start-up private businesses in Australia, KeepCup’s And with that, there will be more than 50,000 trees left standing growth has brought with it some people challenges. in a forest somewhere. Forsyth agrees with many respondents in this edition of the PwC “That’s a lovely thought,” she mused. Private Business Barometer, that finding people who have the right fit and skills is a challenge. After seeing a gap in the market, Forsyth’s passion for finding a creative sustainable solution has resulted in a product that is “We’re in sales, which is a dirty word for the next generation in a lot of changing the way consumers think about their impact on the respects,” she said. “To me, whatever you’re doing you’re selling – even planet. Growth to Forsyth is about doing things more efficiently if you’re an accountant. You have to sell what you do and do it well.” and what you think is right but also “having a business that is viable with your lifestyle and that people are enjoying the journey”.22
  • 23. HighlightsGrowth Sales Over the next 12 months, private businesses Sales grew by an average of six per cent expected to increase their sales by 13 per for the last 12 months, down from eight cent and their profits by 17 per cent. per cent in October 2010. Profits for the They planned to grow sales and profits past year grew by seven per cent, down by 23 per cent over the next three years. from 12 per cent. Sales expected to increase by Sales grew by an average 13% 6%Revenue targets What would you like to grow? More than half (62 per cent) of private Nearly one-third of respondents (31 businesses met or exceeded their set per cent) said they would like to grow revenue targets for the last financial year. sales and profits, while others looked to expand their markets, products and services or hire and retain more staff. 62% met or exceeded their set revenue targets 31% would like to grow sales and profits 23
  • 24. Business growth Sue Jackson Danielle Robertson Guy Griffiths Solterbeck Dial An Angel WOW Sight & Sound “Our target is to grow the business “We are cautiously optimistic. “Discretionary retailers, such as WOW by 50 per cent over the next three We like steady and organic growth Sight & Sound, have been hit very hard years. To do this we are focusing and we’re making sure we meet our by the economic climate. We are very on four key areas: new innovation, targets. Hearing what’s happening focused on increasing our profit. I don’t growth by delivering value to overseas and with the recent natural believe in the benefit of increasing sales existing clients, attracting new disasters, it could take its toll on if your profit doesn’t also increase. clients and developing the culture what is happening in Australia.” Our aim is to continue to be a profitable and our people.” company, one that will survive ups and downs in the economy.”24
  • 25. Business growthGrowth trend eases Compared to the previous two PwC Private Business Barometer surveys, the number of businesses reporting decreased profits hasAustralian businesses are still growing, but the pace of growth jumped by three percentage points. This may indicate businesseshas slowed and is once again at levels experienced during the are still discounting or investing in marketing to boost sales.global financial crisis. Once again, Victorian businesses reported the strongest averageJust over half of the businesses surveyed (56 per cent) reported profit growth (11 per cent) while NSW and Western Australiahaving increased sales over the past 12 months, whereas were below the national average (six per cent and five per cent16 per cent said sales remained the same and 25 per cent reported respectively).a decrease. The average sales growth for the 12 months leadingup to this issue of the PwC Private Business Barometer was six per Despite a brief surge in profitability in March 2010, both sales andcent, down from eight per cent in October 2010. Sales growth was profits are on a downward trend, which is concerning for privatestrongest in Western Australia (nine per cent). businesses. We expect the Australian economy to take time to fully recover from the downturn and these results indicate privateOver the same period, 44 per cent of businesses reported an businesses can expect to wait for sales and profits to rebound.increase in profits, while 31 per cent said their profits had It will be interesting to see in the next PwC Private Businessdecreased and 19 per cent said there was no change. Barometer if this decline has continued.Table 2: Business growth experienced in the past 12 months Average % growth Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Sales 15 13 14 11 8 7 5 8 6Profits 11 11 13 10 7 6 15 12 7Base: Total businesses (n=851)Table 3: Sales change experienced in the past 12 months Table 4: Profit change experienced in the past 12 months % of businesses % of businessesGrowth experienced Mar-10 Sep-10 Mar-11 Growth experienced Mar-10 Sep-10 Mar-11Increased 50 51 56 Increased 46 44 44Remained unchanged 15 19 16 Remained unchanged 13 20 19Decreased 25 25 25 Decreased 28 28 31Prefer not to answer 10 5 3 Prefer not to answer 13 8 6Total 100 100 100 Total 100 100 100Average sales growth 5 8 6 Average profit growth 15 12 7Base: Total businesses (n=851) Base: Total businesses (n=851) 25
  • 26. Business growth Table 5: Business growth experienced in the past 12 months By state Australian Average % growth experienced businesses are still growing, NSW Vic Qld WA SA Other but the pace Sales 7 5 - 9 8 4 of growth has Profits 6 11 - 5 8 -2 slowed Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49) Table 6: Sales growth experienced in the past 12 months By state Average % growth Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 NSW 8 7 7 6 5 3 9 8 7 Vic 12 11 10 8 6 5 7 10 5 Qld 22 23 25 23 14 14 1 5 - WA 27 29 30 29 16 16 5 1 9 SA 13 13 13 12 11 9 3 10 8 Other 13 14 14 8 6 6 6 19 4 Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49) Table 7: Profit growth experienced in the past 12 months By state Average % growth Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 NSW 7 7 8 4 3 2 22 9 6 Vic 9 9 10 9 5 5 16 20 11 Qld 20 21 22 23 13 13 11 6 - WA 22 23 26 26 14 13 14 4 5 SA 13 12 14 11 9 8 6 19 8 Other 10 10 9 9 8 6 7 11 -2 Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49)26
  • 27. Business growthWere revenue targets too ambitious? Australia were the most likely to undershoot their revenue targets, with nearly half of businesses (48 per cent) in that state failing toMore private businesses in this survey met or exceeded their meet targets.revenue targets (62 per cent) than fell short (35 per cent). It isencouraging to see the number of businesses exceeding their However, the number of businesses failing to meet their targetstargets has grown consistently since the global financial crisis. is still much higher now than it was before the global financialAt their lowest point in August 2009, only 12 per cent of crisis. After the downturn, many businesses set ambitiousbusinesses surveyed said they exceeded their revenue goals. targets, expecting a quick rebound. These figures may indicate that economic recovery has not been as strong – or as evenlyIn another positive sign, the number of businesses that undershot distributed – as many business owners had hoped.targets (35 per cent) is slightly less than in the October 2010 PwCPrivate Business Barometer (37 per cent). Businesses in WesternTable 8: Success experienced in meeting set revenue targets % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Exceeded targets 28 28 26 24 15 12 31 29 32Met targets 59 58 60 43 39 41 34 32 30Undershot targets 14 15 14 34 46 47 34 37 35Total 100 100 100 100 100 100 100 100 100Base: Total businesses (n=851) 27
  • 28. Business growth Table 9: Success experienced in meeting set revenue targets By state % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Exceeded targets NSW 18 16 10 5 3 2 32 28 33 Vic 11 11 12 7 6 4 33 32 32 Qld 81 84 89 87 48 38 28 23 - WA 86 91 94 98 71 60 25 22 27 SA 33 34 31 Other 4 4 3 6 6 1 41 34 39 Met targets NSW 63 59 62 55 48 48 37 32 33 Vic 80 81 80 69 66 68 34 36 30 Qld 16 16 9 12 7 8 31 25 - WA 11 9 6 2 3 8 38 33 22 SA 23 26 29 Other 75 73 85 23 20 28 31 41 31 Undershot targets NSW 19 25 28 40 49 50 31 38 31 Vic 9 8 8 25 29 29 33 29 36 Qld 3 - 2 1 46 54 41 49 - WA 3 - - - 25 32 37 44 48 SA 44 38 39 Other 22 23 12 71 74 71 28 23 24 Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49)28
  • 29. Business growthSuccessful businesses take credit Of those private businesses that did not meet revenue targets, the majority said the key reason was the state of the economyBusinesses that performed well were happy to take credit for their (51 per cent), followed by lack of consumer confidence (21 per cent).success, while those that undershot their targets generally cited factors Only a small number cited internal factors, such as the business notoutside their control. Just over half (52 per cent) of private businesses being as competitive as it could have been (11 per cent), cutting backthat met or exceeded their revenue targets said their strategic direction on marketing spend (four per cent) or poorly executing their strategywas the key reason for their strong performance. Other explanations (four per cent).included the strong domestic economy (31 per cent) and new productsor services (23 per cent).Table 10: Key reasons for meeting or exceeding revenue targets in the past financial year % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Our strategic direction 22 22 20 18 13 10 56 60 52Strong domestic economy 34 34 35 32 25 27 27 35 31New products or services 25 28 23New systems or technology 12 11 10 8 4 4 15 28 10Other 33 33 35 42 57 59 23 13 17 Export successes 9 10 10 10 9 8 Large customer wins 6 6 7 7 6 6 Partnering or joint ventures 8 7 7 7 5 5 Not sure or unclear 8 9 10 16 36 39 Other 2 1 1 2 2 1Total 100 100 100 100 100 100 N/A N/A N/ABase: Exceeded or met revenue targets (n=531)Multiple response 29
  • 30. Business growth Table 11: Key reasons for not meeting revenue targets in the past financial year % of businesses Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 The economic downturn 58 53 51 Lack of consumer confidence 10 8 16 13 21 Not as competitive 1 1 8 7 11 Cut back on marketing spend 2 4 6 3 4 Impact on exports or imports 4 3 3 3 9 Couldn’t secure funding within acceptable terms 44 30 40 43 3 2 4 Couldn’t find key talent in a timely manner 45 15 5 4 2 1 4 Key partner withdrew or effected 13 4 1 1 2 1 2 Poor execution of our plan 71 31 18 16 1 2 4 Lack of product demand 9 - Increased competition 8 - Environmental or weather conditions 7 - Unclear or still in train 39 19 21 21 - - - Other 19 34 30 Base: Undershot revenue targets (n=299) Multiple response30
  • 31. Business growthOptimistic for the medium term but uncertain Business services firms also have high expectations for theabout the year to come medium term, with an anticipated 29 per cent growth in sales and a 27 per cent increase in profits over the next three years.As the Australian economy emerged from the global financial crisis,private businesses were very optimistic about their sales and profit Western Australian businesses have set themselves high short-forecasts for the 12-month and three-year periods ahead. As we have and medium-term sales targets (17 per cent and 25 per centseen, this may have contributed to the relatively high number of respectively). However, past experience shows these goals maybusinesses undershooting their targets in the current survey. In the be overoptimistic. In this survey, 48 per cent of businesses inlatest edition of the PwC Private Business Barometer, firms were more WA did not achieve their growth plans for the current period.cautious about the next 12 months, expecting an average 13 per centsales growth, but were still optimistic for the next three years.The business services sector has set an ambitious target of18 per cent sales growth for the coming year. Prospects appearless optimistic in the retail trade sector which is anticipating only10 per cent sales growth, on average, in the next 12 months.Table 12: Short- and medium-term sales and profit targets Average % growth target Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Feb-10 Sep-10 Mar-11Short term (one year)Sales 18 18 15 11 6 7 13 15 13Profits 17 17 16 10 7 7 17 20 17Medium term (three years)Sales 14 15 14 13 10 12 18 22 23Profits 12 12 14 13 11 14 25 25 23Base: Total businesses (n=851) 31
  • 32. Business growth Table 13: Short- and medium-term sales and profit targets By industry Average % growth target Distribution/ Property/ Manufacturing Business services Retail trade wholesale construction Short term (one year) Sales 12 18 10 12 14 Profits 19 16 13 17 14 Medium term (three years) Sales 25 29 14 19 24 Profits 25 27 18 24 24 Base: Total businesses (manufacturing n=182; business services n=85; retail trade n=122; distribution and wholesale n=130; property and construction n=103) Table 14: Short- and medium-term sales and profit targets By state Optimistic for the Average % growth target medium term but NSW Vic Qld WA SA Other uncertain about Short term (one year) the year to come Sales 12 13 - 17 11 14 Profits 16 16 - 21 17 18 Medium term (three years) Sales 23 23 - 25 20 22 Profits 22 24 - 24 21 32 Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49)32
  • 33. Business growthOrganic growth still number one Figure 12: Short- and medium-term growth strategiesWhen considering the source of their future growth, about half of allbusinesses surveyed said they would expand organically (51 per cent 60 51 49for the short-term and 49 per cent for the medium-term). Opening up 50 45 49 % of businessesnew product markets was the next most popular choice (40 per cent 40 40 39 35for the short term and 45 per cent for the medium term). 28 29 30 22When combined, domestic and overseas geographic expansion 20 17 20plans were the second most popular medium- term expansion 10 9 7 5 4strategy (49 per cent for the medium term and 39 per cent for 0the short term). Organic growth Acquisition of other Expansion into new Expansion into new Expansion into new Expansion into new Others Nothing businesses product geographic geographic geographicAre expansion plans on hold? markets markets within markets overseas markets (domestic Australia and overseasBusinesses are saying they want to rely on organic growth until combined) Short term Medium termthe economic situation becomes clearer before making firm plansfor acquisition or geographic expansion. Only 20 per cent of Base: Total businesses (n=851)businesses said they expected to acquire other companies over Multiple responsethe next 12 months, but 28 per cent had acquisition plans forthe next three years. Figure 13: Increasing focus and budget for online retailThe emphasis on organic growth raises questions about whetherprivate businesses will be able to achieve their expansion plans. Retail trade % of businessesThis will be especially problematic for private businesses if theircompetitors are also focused on growing organically. PwC believes 6%businesses that think outside the square and pursue alternativegrowth strategies will be better placed to achieve greater results. YesStart making online plans 39% NoSurprisingly, even though consumers are buying ever moregoods and services online, 39 per cent of retail businesses 55% Already havesurveyed told us they had no plans to increase their e-retailing online retailefforts. Only six per cent of retailers said they already had an strategyestablished e-retailing strategy. 33
  • 34. Business growth Table 15: Short-term (one-year) growth strategies considered % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Organic growth 54 54 52 59 45 45 56 53 51 Expansion into new product markets 21 22 22 17 12 11 44 47 40 Expansion into new geographic markets within Australia 9 9 10 7 2 2 31 42 29 Expansion into new geographic markets overseas 20 17 Acquisition of other businesses 9 10 12 6 3 4 23 24 20 Other: Additional capital raisings 10 9 10 11 13 15 - - - Capital investment program 7 6 5 3 1 3 - - - New headcount 5 5 5 2 - - - - - Partnering/joint ventures 8 7 7 4 1 1 - - - Not sure/unknown 7 6 7 9 18 17 1 1 2 Other reasons 3 3 3 1 2 1 3 5 Don’t see any real growth happening/nothing - - - - 31 27 11 9 9 Base: Total businesses (n=851) Multiple response34
  • 35. Business growthTable 16: Medium-term (three-year) growth strategies considered % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Organic growth 45 44 44 53 25 24 56 54 49Expansion into new product markets 14 13 13 18 14 12 49 50 45Expansion into new geographic markets within Australia 46 35 12 12 15 17 8 9 37Expansion into new geographic markets overseas 25 22Acquisition of other businesses 16 17 22 11 4 6 27 32 28Other Additional capital raisings 15 16 14 12 18 17 - - - Capital investment program 8 9 10 10 4 8 - - - New headcount 3 3 3 4 1 1 - - - Partnering/joint ventures 11 11 10 11 2 1 - - - Not sure/unknown 9 8 11 13 19 17 2 2 2 Other reasons 2 2 2 1 2 2 3 1 4Don’t see any real growth happening/nothing - - - - 17 15 8 8 7Base: Total businesses (n=851)Multiple response 35
  • 36. Business growth Table 17: Short-term (one-year) growth strategies considered By industry sector % of businesses Business Distribution/ Property/ Manufacturing Retail trade services wholesale construction Organic growth 45 61 48 52 42 Expansion into new product markets 55 41 30 62 27 Expansion into new geographic 24 38 24 35 31 markets within Australia Expansion into new geographic markets overseas 26 18 6 22 4 Acquisition of other businesses 18 28 17 25 7 Not sure/unknown 1 1 2 2 5 Other 4 4 4 5 8 Don’t see any real growth happening/nothing 5 6 11 5 18 Base: Total businesses (manufacturing n=182; business services n=85; retail trade n=122; distribution and wholesale n=130; property and construction n=103) Multiple response Table 18: Short-term (one-year) growth strategies considered By state % of businesses NSW Vic Qld WA SA Other Organic growth 50 52 - 53 55 49 Expansion into new product markets 42 42 - 37 39 24 Expansion into new geographic markets within Australia 29 28 - 28 30 33 Expansion into new geographic markets overseas 20 16 - 17 13 8 Acquisition of other businesses 21 23 - 21 17 6 Not sure/unknown 1 3 - 3 - - Other 3 6 - 7 3 4 Don’t see any real growth happening/nothing 8 8 - 6 12 20 Base:Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49) Multiple response36
  • 37. Business growthTable 19: Medium-term (three-year) growth strategies consideredBy industry sector % of businesses Business Distribution/ Property/ Manufacturing Retail trade services wholesale constructionOrganic growth 45 60 46 49 50Expansion into new product markets 59 47 33 66 30Expansion into new geographic markets within Australia 31 39 33 42 37Expansion into new geographic markets overseas 30 31 6 26 7Acquisition of other businesses 25 36 24 35 15Not Sure/unknown 2 1 2 2 4Other 5 5 6 3 6Dont see any real growth happening/nothing 3 7 10 4 12Base: Total businesses (manufacturing n=182; business services n=85; retail trade n=122; distribution and wholesale n=130; property and construction n=103)Multiple responseTable 20: Medium-term (three-year) growth strategies consideredBy state % of businesses NSW Vic Qld WA SA OtherOrganic growth 47 51 - 54 48 51Expansion into new product markets 49 48 - 41 42 22Expansion into new geographic markets within Australia 34 37 - 33 38 37Expansion into new geographic markets overseas 24 23 - 22 16 14Acquisition of other businesses 29 28 - 28 22 22Not sure/unknown 2 2 - 4 1 -Other 3 6 - 7 - 4Dont see any real growth happening/nothing 8 5 - 6 12 16Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49)Multiple response 37
  • 38. Business growth Less emphasis on impediments to growth While businesses still view macroeconomic factors as the major potential impediments to meeting their growth targets, these issues are now considerably less of a challenge than they were in the October 2010 PwC Private Business Barometer. Businesses nominated consumer confidence as the primary impediment to growth (44 per cent of respondents, down from 61 per cent in October 2010). The global economic condition was a close second (42 per cent, down from 63 per cent). In general, respondents nominated growth constraints less frequently in the current PwC Private Business Barometer than in the October 2010 edition, which might indicate businesses are more optimistic and less worried about the state of the economy. Approximately one in seven businesses (14 per cent) said the natural disasters across the country in early 2011 would be an impediment to meeting targets. This edition of the PwC Private Business Barometer did not include Queensland-based businesses, which were most affected by natural disasters at the time of the survey. Figure 14: Potential impediments to meeting targets in the next year 50 45 44 42 40 38 % of businesses 35 32 30 27 25 21 20 20 15 14 15 10 5 0 Consumer Global Business Interest Currency Availability Cost of Terms and Australian confidence economic confidence rate fluctuations of credit funding conditions natural conditions increases of available disaster credit (e.g. floods) Base: Total businesses (n=851) Multiple response38
  • 39. Business growthTable 21: Potential impediments to meeting targets in the next year % of businesses Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Global economic conditions 21 19 56 63 42Consumer confidence 5 4 54 61 44Business confidence 50 60 38Interest rate rises 14 17 24 26 40 46 32Cost of funding 27 31 37 37 20Currency fluctuations 15 12 16 13 32 34 27Availability of credit 51 67 79 82 32 37 21Terms and conditions of available credit 29 33 15Australian natural disasters 14Other 39 51 - - 13 11 15None 18 11 3 3 - - -Base: Total businesses (n=851)Multiple response Less emphasis on impediments to growth Approximately one in seven businesses (14 per cent) said the natural disasters across Australia in early 2011 would be an impediment to meeting targets. This edition of the PwC Private Business Barometer did not include Queensland-based businesses, which were most affected by natural disasters at the time of the survey. 39
  • 40. Business growth Table 22: Potential impediments to meeting targets in the next year By industry sector % of businesses Business Distribution/ Property/ Manufacturing Retail trade services wholesale construction Global economic conditions 47 40 31 46 36 Consumer confidence 40 34 63 56 41 Business confidence 37 53 37 42 46 Interest rate rises 25 25 45 39 36 Cost of funding 16 13 20 19 29 Currency fluctuations 38 12 20 49 8 Availability of credit 18 20 22 16 35 Terms and conditions of available credit 11 14 16 15 23 Australian natural disasters 15 7 16 17 15 Other 15 14 14 14 17 None - - - - - Base: Total businesses (manufacturing n=182; business services n=85; retail trade n=122; distribution and wholesale n=130; property and construction n=103) Multiple response40
  • 41. Business growthTable 23: Potential impediments to meeting targets in the next yearBy state % of businesses NSW Vic Qld WA SA OtherGlobal economic conditions 39 44 - 56 44 29Consumer confidence 44 45 - 39 43 41Business confidence 36 40 - 41 39 41Interest rate rises 30 33 - 34 32 41Cost of funding 20 17 - 21 17 29Currency fluctuations 24 33 - 26 21 20Availability of credit 19 21 - 29 25 14Terms and conditions of available credit 16 13 - 16 21 12Australian natural disasters 14 15 - 14 12 14Other 17 13 - 11 16 27None - - - - - -Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49)Multiple responseSale to private equity a growing option or private-equity consortium. The proportion of business owners looking to sell to private equity increased from seven per cent inAlongside other indicators of cautious optimism in the private October 2010 to 13 per cent in March 2011.business community, the share of respondents looking to exit theirbusiness grew slightly to seven per cent, up from a low of five per At the same time, a sharp drop in business owners looking to sell tocent throughout 2010. This could indicate business owners are a third party (down from 31 per cent to 16 per cent) correspondedlooking to realise value by selling their businesses to a third party with a jump in those considering other exit strategies.Table 24: Exiting business in next two years? % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Yes 16 16 16 21 8 14 5 5 7No 78 77 75 68 79 74 91 90 87Not sure 7 7 8 12 13 11 4 5 7Total 100 100 100 100 100 100 100 100 100Base: Total businesses (n=851) 41
  • 42. Business growth Table 25: Business exit strategies considered in the next two years % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Sale of business to a competitor 23 27 32 32 - 9 27 26 25 Sale of business to a 3rd party 27 27 32 27 9 14 19 31 16 Sale to current employees 18 14 14 17 9 5 Sale to a private equity consortium - - 5 14 7 13 Sale to a family member 9 14 18 9 7 9 Initial public offering 18 18 14 5 5 9 3 4 2 Venture capital 5 - - - - - Not sure/unclear 32 32 36 55 59 50 - - 9 Other - - - - - - 11 15 21 TOTAL 100 100 100 100 100 100 100 100 100 Base: Businesses planning to exit business (n=56)42
  • 43. Business growthWhat would you like to grow? Table 26: What do you want to grow?At PwC Private Clients, we enjoy having conversations with % of businessesbusiness owners, directors, senior managers and the broadercommunity about what they would like to grow. Growth is Sep-10 Mar-11not just about sales or personal wealth; it’s also about growing Increase sales or profit 30 31as a person and – at a company level – becoming a more Improve staff benefits or working environment 19 4sustainable and involved corporate citizen. Organic growth 10 2As in the October 2010 PwC Private Business Barometer, nearly onethird of respondents (31 per cent) said they would like to grow sales Expand into other markets or a wider range 5 10and profits. An increasing number of surveyed business owners and of servicesmanagers were looking to grow the businesses in other ways, such Sustainable business or financial security 5 1as expanding into other markets and services (10 per cent, up from Greater efficiency 4 4five per cent in October 2010) and hiring or retaining more staff(10 per cent, up from three per cent). More clients or customers 3 4However, private businesses are likely to encounter problems Hire or retain more staff 3 10with staff retention, given the share of respondents who said they Increase market share 3 5wanted to improve staff benefits and working environment droppeddrastically from 19 per cent in October 2010 to just four per cent in Customer satisfaction and retention 3 3the current survey. This may still reflect the post-global-financial- Brand awareness and image 2 2crisis sensibility of belt-tightening and focusing on fundamentals. Everything 2 1This question elicited a wide range of responses, with several Refurbish or replace offices 2 2suggestions around the operational side of the business such asgreater efficiency, new technology, refurbishing the office and Succession planning 2 -increasing customer satisfaction and retention. New technology 2 3 Other 15 23 None 11 11 Can’t say 15 20 Base: Total businesses (n=851) Multiple response Business owners would like to grow their sales and profits 43
  • 44. Businesses are realising that they cannot rely purely on organic growth as their sole growth strategy. Gregory Will Partner PwC Private Clients The May 2011 edition of the PwC Private Likewise, 17 per cent nominated expansion into new geographic markets overseas as one of their growth strategies. Business Barometer revealed that private Private businesses told us they reviewed their business plans more business owners are reinvesting in their frequently. Half of businesses (54 per cent) review them more than businesses to prepare for long-term growth. once a year. This edition shows 94 per cent of businesses have a plan Three in five (62 per cent) private businesses exceeded or met their that is closely aligned to their growth strategy. This is pleasing to see revenue targets for the last financial year. More than 50 per cent and a good business practice to maintain. of these businesses attributed commitment to their strategy as the We encourage private business owners to ensure their business plans reason for their success. have the necessary elements to enable them to stay on their growth Private businesses are planning for the future. Businesses are realising path. At PwC, we believe the core elements of a strategic plan include: they cannot rely purely on organic growth as their sole growth • An ultimate goal • People strategy. They are now looking at acquisitions, new product markets • Market analysis • Financial goals and forecast and geographic expansion to help them achieve their growth targets. Two in five (40 per cent) private businesses are planning to expand • Competitor review • Systems into new product markets and 29 per cent plan to expand into new • Sales and marketing • Critical issues and risk geographic markets within Australia. • Products and services assessment.44
  • 45. Market overviewIt’s essential that you keep yourself accountable and that everyone in The primary challenge for businesses is finding competent staff.the business knows what the plan is and their role in supporting it. Four out of five private businesses expect wage costs to increase over the next 12 months by an average 6 per cent.In the retail sector, 39 per cent of businesses have no plans toengage in e-retailing. Australia has experienced rapid growth in As a result, private businesses are executing strategies to attractonline shopping and we believe there is an opportunity for retailers and retain talented staff. In addition, nine in ten (92 per cent)to engage their customers online. We believe an investment in the businesses have a mix of retention strategies in place for key staff.technology and tools to market products and services online makes Pay-related strategies and flexible working hours rate highly asgood business sense and is the way of the future. practices to attract and retain staff in private businesses rather than their competitors.The hunger for growth is evident by private businesses reinvestingprofits back into their businesses to prepare for long-term growth. The PwC Private Business Barometer revealed that competitiveMany private businesses are investing in marketing, sales and pricing is a growing challenge for private businesses, behindoperational efficiencies. More than half (56 per cent) of private funding and finding competent people. More than one-thirdbusinesses reported their sales increased over the past 12 months (38 per cent) of private businesses reported that in an increasinglywhereas one quarter (25 per cent) experienced a decrease in sales. competitive environment, pricing is a key challenge for them.The PwC Private Business Barometer has revealed that attracting and The PwC Private Business Barometer highlights that privateretaining talent remains a challenge for private businesses. More businesses are cautious about how they spend their money andthan half (59 per cent) of private business said they intended to hire are steadily reinvesting to create growth to help them achievenew staff in the next six months. The number of private businesses their future targets. There is an immense opportunity for privatenot hiring has decreased from 64 per cent in 2008 to a new businesses to plan and execute an investment strategy and bylow of 35 per cent. doing so, create change and long-term growth.Cautious optimismPrivate businesses remain cautious about the short termbut are more optimistic about the three-year view. 45
  • 46. People Solterbeck46
  • 47. PeopleSolterbeck delivers powerful, motivating programsdesigned to increase engagement and improvediscretionary performance. Our engagement solutions are strategic, clever, proven and practical. Carefully designed and meticulously implemented our incentive, reward and recognition programs, conferences and events ensure a greater level of engagement with corporate objectives by recognising and rewarding employee and channel-partner contributions. Whether you’re trying to entrench particular behaviours or increase sales, powering great performance is the first step to improving profits. We stimulate success We drive engagement and discretionary employee and partner behaviour in three key areas: • The right incentive will generate significant return on investment by encouraging improved levels of discretionary performance from employees and channel partners. • The right communication combines strategic focus and creative impact to ensure employees and channel partners are informed, educated, and inspired to achieve exactly the right outcomes. • The right reward may be merchandise, experiences, vouchers, group or personal travel, events or sometimes even cash. We tailor rewards that motivate each different audience, complement business strategy and work within budget. • Align employees with corporate values. • Improve a company’s brand image both internally and externally. • Create an ongoing culture of productivity and pro-activity. solterbeck.com 47
  • 48. Highlights New staff Recruitment More than half of the respondents A lack of qualified staff was the most surveyed (59 per cent) said they commonly cited impediment to recruiting intended to hire new staff in the new staff but this is less of a problem now next six months. (42 per cent of businesses) than it was six months ago (52 per cent of businesses). 59% plan to hire in the next 42% are concerned about a lack six months of qualified staff Wages Battle for talent A wage increase seems almost The share of employers planning inevitable – 83 per cent of private changes to make them more competitive businesses expect wages to rise. in the war for talent fell from 82 per cent to 71 per cent. 83% expect wages to rise The desire to stand out as employer of choice is falling48
  • 49. PeopleSue Jackson Danielle Robertson Guy GriffithsSolterbeck Dial An Angel WOW Sight & Sound“Our strategy when it comes to “Lack of qualified staff is a big issue for “WOW Sight & Sound has a verypeople is personalisation. We go the ‘Angel’ side of our business. This entrepreneurial culture and that cultureto great lengths to accommodate has been an issue for us for 44 years. translates onto the sales floor. Youeach person’s goals and desires and When we find good people, we grab can’t buy something like that. Our storeunderstand what it is that makes each them and try to work with them in managers and staff have the flexibilitystaff member happy. We focus on the long term. We have staff who have to design their merchandising to theirtheir strengths and offer them every been with Dial An Angel for many own advantage. Our stores aren’t asupport to help them be the best years. Our culture is family oriented; replica of each other. This gives ourthey can be.” we are a family business and that people the opportunity to take ownership ethos of family values comes through.” of the store they work in and design a merchandising plan that works for them.” 49
  • 50. People Hiring intentions gather pace The optimism of private business owners and managers is demonstrated by their intention to recruit. More than half of private businesses surveyed (59 per cent) said they intended to hire new staff in the next six months. Table 27: Hiring intentions in the next six months % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Full time or part time 57 57 59 Full time 37 40 32 20 12 9 Part time 41 45 32 25 9 12 Not hiring 54 50 58 64 41 41 40 39 35 Not sure 5 4 7 9 32 31 4 4 6 Total N/A N/A N/A N/A N/A N/A 100 100 100 Base: Total businesses (n=851) Qualified people slightly easier to find Figure 15: Major hiring constraints Finding qualified staff was the most common constraint in hiring 60 new people according to 42 per cent of private businesses. However, 50 this figure is down from 52 per cent only six months ago, providing 42 40 % of businesses evidence that people are more willing to change jobs. 30 27 27 Other hiring constraints include general economic concerns 24 19 (up from 0 per cent six months ago to 27 per cent) and government 20 16 regulations (up from three per cent to 19 per cent). This reflects 10 5 ongoing uncertainty about issues such as the Federal Government’s 0 proposed mining and carbon taxes. Lack of High wage General Lack of Government Other Not hiring qualified costs economic business regulations at present talent conditions demand Base: Total businesses (n=851) Multiple response50
  • 51. PeopleTable 28: Major hiring constraints % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Lack of qualified talent 55 57 55 53 22 16 41 52 42High wage costs 31 31 34 40 51 53 20 32 27Lack of business demand - - - - - - 12 4 24Government regulations - - - - - - 4 3 19General economic unknowns - - - - 4 7 2 - 27Removal of Work Choices - - - - 20 22 - - -Other 2 2 3 2 1 - 4 5 5None really 12 10 8 6 3 2 29 2 -Total 100 100 100 100 100 100 N/A N/A N/ABase: Total businesses (n=851)Multiple responseTable 29: Major hiring constraintsBy industry sector % of businesses Distribution/ Property/ Manufacturing Business services Retail trade wholesale constructionLack of qualified talent 37 45 52 32 41High wage costs 29 25 30 25 32Lack of business demand 30 29 21 27 29Government regulations 16 11 25 26 19General economic unknowns 31 20 34 28 29Removal of Work Choices - - - - -Other 5 2 5 5 6None really - - - - -Not hiring at present 16 15 11 20 17Base: Total businesses (manufacturing n=182; business services n=85; retail trade n=122; distribution and wholesale n=130; property and construction n=103)Multiple response 51
  • 52. People Wages growth almost inevitable More than four in five businesses (83 per cent) said they expected wages to increase over the next 12 months. The average expected increase was six per cent. This is consistent with figures from March and October 2010, when businesses expected wages to rise after minimal increases during the global financial crisis. Table 30: Expected change in wage rates during the next year % of businesses Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Increase 62 44 35 30 89 86 83 Average increase expected 7 5 8 8 7 7 6 Decrease/remain the same 6 15 42 53 11 9 5 Average decrease expected 5 4 7 8 N/A N/A N/A Unsure/Don’t know 32 41 24 17 0 0 13 Total 100 100 100 100 100 100 100 Base: Total businesses (n=851) Businesses refocus on salaries and bonuses Figure 16: Changes to position businesses as more competitive employer Despite concern about skills shortages, private businesses are making slightly less effort to position themselves as attractive 60 employers. The number of businesses reporting they were 50 44 planning changes to position themselves as a more competitive % of businesses 40 employer decreased from 82 per cent six months ago to 30 30 30 27 71 per cent in this survey. 20 15 Respondents most commonly used pay-related strategies such as 11 10 9 bonuses (44 per cent) and higher salaries (30 per cent) to appeal 10 4 to current and prospective employees. Employers are still offering 0 Greater pay for performance Competitive salaries Flexible working practices Paid parental leave Working from home Employee share ownership Unpaid or lifestyle leave Other None planned non-financial inducements such as flexible working hours (27 per cent), working from home (11 per cent) and unpaid or lifestyle leave (nine per cent), but these benefits have declined in use since the October 2010 PwC Private Business Barometer. Base: Total businesses (n=851) Multiple response52
  • 53. PeopleTable 31: Planned changes to position business as more competitive employer % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11None really planned 36 38 43 57 67 68 19 18 30Greater pay for performance 28 29 31 33 32 33 50 52 44More competitive salaries 37 38 37 31 15 12 41 45 30More flexible working practices 26 24 23 22 25 28 41 40 27Unpaid or lifestyle leave 16 20 9Allow working from home 19 11Paid parental leave 17 15Employee share ownership 7 7 8 6 4 3 12 12 10Increased part-time options 12 12 13 - 9 10 - -Other 2.3 3.2 3 1 1 - 4 2 4Base: Total businesses (n=851)Multiple responseTeam spirit a plus for private businesses Figure 17: Attributes that would attract new employees private businessesWe asked private businesses to nominate some less tangibleattributes that allow them to compete against large businesses 100and enterprises in the employment market. Only eight per centof respondents said competition from large enterprises was 80 76 % of businessesnot an issue for them. 62 63 62 61 60 57 54 50Most private businesses said the feeling of being connected to 44 43a team (62 per cent) was their greatest competitive advantage 40 36 36amongst potential employees. Half (50 per cent) said beingpart of a dynamic business was an attractive attribute, while 20 7 6 7 844 per cent nominated their flexible working arrangementsas their key differentiator. 0 Feeling connected to a team Flexible arrangements Dynamic, fast business In-depth overall understanding Broadening skill base Shaping business success Other Not an issue for business like mine Sep-10 Mar-11 Base: Total businesses (n=851) Multiple response 53
  • 54. People Strategies to retain people Table 32: Strategies to retain key people In line with the trend in this survey, private businesses also appear % of businesses to have reduced their focus on retaining key staff. The number of respondents who explicitly said they had no retention strategies Sep-10 Mar-11 rose from five per cent in October 2010 to eight per cent this survey. Regular career and salary reviews 78 65 In addition, the proportion of businesses using these two retention Training and development of work- strategies was lower in this survey than in the previous ones. 76 62 related skills Most private businesses (65 per cent) said they conducted Clear career advancement opportunities 50 35 regular career and salary reviews for key staff. Many also Training and development of personal or provided professional and personal skills training (62 per general life skills 45 31 cent and 31 per cent respectively), and offered clear career advancement opportunities (35 per cent). Just under Work-life balance programs 36 31 a third of businesses (31 per cent) said they offered Other 3 5 work-life balance as a retention strategy. No staff-retention strategies in place 5 8 Pay-related strategies were most prevalent in the distribution Would rather not say 1 3 and wholesale (65 per cent) and property and construction (63 per cent) sectors. Business services firms made the Base: Total businesses (n=851) most use of flexible business practices (40 per cent). Multiple response Figure 18: Strategies to retain key people 100 80 % of businesses 65 62 60 40 35 Private 31 31 businesses are 20 5 8 making slightly 0 Regular Training and Clear career Training and Work-life Other No strategies less effort to career and salary development of advancement development work-related opportunities of general or balance programs retain key staff reviews skills personal skills Base: Total businesses (n=851) Multiple response54
  • 55. PeopleTable 33: Strategies to retain key peopleBy industry sector % of businesses Distribution/ Property/ Manufacturing Business services Retail trade wholesale constructionRegular career and salary reviews 63 72 56 66 67Training and development of 57 73 59 57 63work-related skillsClear career advancement 26 49 30 32 45opportunitiesTraining and development of 24 39 30 25 36personal or general life skillsWork-life balance programs 23 46 25 31 34Other 4 8 7 5 6No staff-retention strategies 11 6 7 9 8in placeWould rather not say 4 1 3 2 3Base: Total businesses (manufacturing n=182; business services n=85; retail trade n=122; distribution and wholesale n=130; property and construction n=103)Multiple response 55
  • 56. Funding Dial An Angel56
  • 57. FundingDial An Angel is the only national agency that has been committedto serving busy Australians and visitors to Australia since 1967. Dena Blackman established Dial An Angel on 15 March 1967. No private home services agency existed at that time. Even the government- subsidised Emergency Housekeepers imposed a nine-month waiting period for home-based assistance. The fledgling Dial An Angel office was established at Lindfield on Sydney’s north shore. Since that time, the company has been recognised as Australia’s leading home and family care agency. It has become “a household name – a family business”, as four generations of Dena’s family have been involved in its operation over four decades. This was acknowledged in 2002 when Dial An Angel was awarded the NSW Family Business of the Year Award – First Generation. “We build the service to meet the need” became the company motto. In 2003, Danielle Robertson – Dena’s third daughter, business partner and confidante – assumed the role of CEO for the Dial An Angel group. After spending 17 years in the family business, Danielle had made a significant impact on the company’s development and encouraged expansion in her role as financial director. Dena will tell you that her role as confidante and sounding board was priceless. In her new role, Danielle has ensured that Dial An Angel has maintained its position as leader in this field of expertise. The group is decades ahead of any aspiring competitors. dialanangel.com 57
  • 58. Highlights Investment plans Bank funding About one-third (36 per cent) One-fifth (21 per cent) of of private businesses surveyed respondents are looking to banks planned to make significant to fund major investments. investments in the short term. 36% Banks back in favour are making significant investments Debt ratio Retail debt Private businesses have increased The retail sector had the highest their average debt levels to 21 per debt ratio at 27 per cent of assets. cent of assets. Debt levels on the way up Retail debt at 27% of assets58
  • 59. FundingSue Jackson Danielle Robertson Guy GriffithsSolterbeck Dial An Angel WOW Sight & Sound“We will be looking at a couple of “Dial An Angel has recently invested “We will start to grow our storemajor projects over the next 12 in a major IT infrastructure database. numbers over the coming year.months, all of which will require We are also looking at renovating our The first store will be funded throughan investment. We will fund these Sydney office over the next 12 to 24 working capital and future storesinvestments from our working months, which is part of our strategic using cash reserves. Our expansioncapital, which has been our plan to merge our two Sydney sites. plans are timed to coincide with anstrategy in the past.” We will require some funding in the upswing in the economic climate, short to medium term and will look which we believe we will start to see to the bank to secure this. We have within the next 12 to 18 months.” a great relationship with our bank.” 59
  • 60. Funding Private businesses cautious on investments Most private businesses are not considering significant investments in the near term. Only 36 per cent had plans to make significant investments within the next 12 months. Businesses in South Australia seemed more inclined to invest than their counterparts in other states. These results have remained largely static since March 2010, indicating businesses continue to be cautious. Table 34: Planning major investments in the next year % of businesses Sep-10 Mar-11 Yes 36 36 No 58 56 Can’t say/not sure 6 8 Total 100 100 Base: Total businesses (n=851) Table 35: Planning major investments in the next year By state % of businesses NSW Vic Qld WA SA Other Yes 36 34 - 38 44 35 No 57 58 - 53 49 61 Can’t say/not sure 7 9 - 9 7 4 Total 100 100 - 100 100 100 Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77; other n=49)60
  • 61. FundingBanks in favour as economy recoversBusinesses planning a major investment in the next year were much more likely to seek funds from banks than from internal or other sources.Bank funding has remained the most popular source of cash for investments since March 2010, when private businesses started to recover inearnest from the global financial crisis and economic downturn. These findings lend weight to the view that businesses are seriously lookingagain at how to achieve growth.Table 36: Sources of funding for major investments in the business % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11No major investment plans/ Not sure 42 45 57 58 49 61 64 64Already have funding - - - - - 3 4 4Bank funding 9 9 8 4 7 19 19 21Internally generated - - - 16 18 7 8 12Private equity/venture capital 6 5 5 1 1 3 2 3Existing shareholders 13 7 6 7 9 1 1 3New shareholders 4 3 2 4 3 1 1 2Combination of above 13 14 11 6 8 - - -Broker - - - 3 3 1 0 2Other 5 7 4 1 1 5 6 1Don’t know/unsure 8 10 9 - - - - -Total 100 - 100 100 100 100 100 N/A N/ABase: Total businesses (n=851)Difficulties finding access to capital and credit – for someHalf (49 per cent) of private businesses said they had not encountered any recent or long-term difficulties in raising funds. However, thePwC Private Business Barometer revealed many businesses were finding it hard to access credit and equity capital. One in eight businesses(13 per cent) said they could not get any credit. Another 10 per cent of respondents had trouble finding the equity required for fundingand a further 10 per cent felt they could not meet the cost of debt capital. 61
  • 62. Funding Table 37: Main difficulties encountered in raising capital % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Haven’t encountered any recent difficulties 13 11 10 6 2 1 28 20 21 Haven’t encountered any difficulties for some time - - - - - - 25 30 28 Red tape and rates at banks - - - - - - 12 7 6 Availability of any credit - - - - 24 24 10 11 13 Availability of equity capital 12 11 9 7 4 4 7 7 10 Investment required in securing funding 22 23 21 25 15 14 4 4 8 Costs to the business of debt capital 14 12 18 24 37 39 3 6 10 Uncertainty in lending to my business type or - - - - - - 2 5 2 getting approval Haven’t had to raise funding for some time 26 28 28 25 15 14 1 2 1 Educating and marketing the business’s value 11 12 13 12 3 4 1 4 3 Ability to repay loans - - - - - - 1 1 1 Other 2 3 2 - 1 - 7 4 1 Total 100 100 100 100 100 100 100 N/A N/A Base: Total businesses (n=851) Multiple response Private businesses increase borrowings Of those businesses that provided a debt ratio, 21 per cent reported no borrowings and only 1 per cent reported a ratio Private businesses estimated their borrowings added up to of 100 per cent or higher. 21 per cent of total assets, up from 17 per cent in the October 2010 edition. This reverses a long-term downward trend, The retail trade sector had the highest average debt ratio accelerated during the global financial crisis as businesses at 27 per cent, while business services firms had the lowest. paid down debt and reined in expansion plans. It also Businesses in Western Australia had the lowest ratio at reinforces that business activity is starting to pick up as 18 per cent, while their South Australian counterparts had owners and senior executives regain confidence in the market. the highest at 24 per cent.62
  • 63. Funding Table 38: Average debt ratio Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Total borrowings to total 41 41 39 38 36 31 26 17 21 assets ratio (%) Base: Businesses that knew their debt ratio (n=584) Table 39: Average debt ratio By industry sector Distribution/ Property/ Manufacturing Business services Retail trade wholesale construction Total borrowings to total 20 15 27 18 21 assets ratio (%) Base: Total businesses that knew their debt ratio (manufacturing n=123; business services n=61; retail trade n=82; distribution and wholesale n=89; property and construction n=73) Figure 19: Average debt ratio Table 40: Average debt ratio By state 50Total borrowings to total assets ratio (%) NSW Vic Qld WA SA Other 41 41 39 38 40 Total borrowings to total 36 20 22 - 18 24 19 assets ratio (%) 31 30 Base: Businesses that knew their debt ratio (NSW n=234; Vic n=191; 26 21 Qld n=0; WA n=74; SA n=53; other n=32) 20 17 10 0 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 Base: Businesses that knew their debt ratio (n=584) Private businesses estimated their borrowings added up to 21 per cent of total assets, up from 17 per cent in October 2010 63
  • 64. Business operations Guy Griffiths CEO, WOW Sight & Sound64
  • 65. Business operationsSince 2003, WOW Sight & Sound has grown from a single Queenslandstore to 15 locations throughout New South Wales, the Northern Territory,Queensland and Victoria.Thanks to our awesome online store and many more superstores in variousstages of development throughout Australia, all Australians can now getwicked deals in home entertainment, home office, cameras, car audio, mobilephones, DVDs and CDs. If a WOW superstore hasn’t landed in your town or suburb yet, you can always jump on 1wow.com.au to get all the latest electronics at low prices. Best of all, we will deliver them straight to your home or office! The WOW factor is what it’s all about. We are driven to deliver the greatest deals on all the best electronics in an exciting environment. Everything about our retail experience is designed to be fun. WOW Sight & Sound stores are full of helpful staff who know their stuff, plus a chance to interact with our products, listen to great music and see the awesome store fitout. The WOW experience is also on show at any WOW Brisbane Broncos game, and at Australia Zoo. shop.1wow.com.au 65
  • 66. Highlights Top challenges Finding staff Sixty-two per cent of private Forty-four per cent of private businesses reported one or more businesses said finding competent people challenges. Low margins staff was among their top three issues. and competitive pricing were growing concerns. 38% worry about low margins Finding staff amongst the top three issues Planning review New competition More than half (54 per cent) More than one-fifth (22 per cent) of respondents said they now of businesses nominated pricing as reviewed their business plans more their main driver of competition for than once a year. new business. 54% review their business plans Pricing the main driver of competition for new business more than once a year66
  • 67. Business operationsSue Jackson Danielle Robertson Guy GriffithsSolterbeck Dial An Angel WOW Sight & Sound“We do have a business plan – we call “I look at our strategic plan on a “As a retailer, we live by changing.it our Painted Picture. It articulates regular basis, usually weekly or We need to constantly evolve andexactly what we want our business fortnightly, just to see that we are constantly change what we are doingto look like in 2013, and details the on track. Having a formal plan has to be relevant to our customers.objectives and strategies required to pushed the business forward quite We are driven by two areas for change:achieve our goals. We deliberately quickly without losing the family technological innovation and the needwrote Painted Picture in a way that values and ethos of the business. to change for our customers. If weensured our plans were openly I share the overall picture with the continued to do the same as we didshared and very clear for everyone staff, so that they have a very clear three or four years ago, we wouldin the business.” picture of my vision for the business.” probably be out of business now.” 67
  • 68. Business operations Funding and people are common challenges This increase is consistent with slowing sales and reduced prices leading to tighter profit margins. Private businesses most often reported struggling with funding and people issues in their day-to-day operations. Growing concerns More than one-quarter (28 per cent) of businesses said funding and were finding competent staff, reported by 44 per cent of businesses cash flow were key challenges, while nearly one-fifth (18 per cent) (up from 37 per cent in the last PwC Private Business Barometer), nominated cost controls. Almost 30 per cent said competition – and competitive pricing, nominated by 38 per cent of respondents either domestic or international – presented a challenge. (up from 16 per cent). PwC believes these results reflect the impact on businesses of the recovering Australian economy and robust dollar. Table 41: Key challenges faced by businesses % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Feb-10 Aug-10 Mar-11 Securing the right talent: finding competent staff 58 59 51 39 16 14 50 37 44 Securing the right talent: staff retention 16 14 13 Developing the business and driving sales 36 18 24 Funding the business and cash flow 90 91 100 99 100 100 30 26 28 Overseas and domestic competition 26 25 28 Compliance and regulations 28 26 20 18 13 12 24 21 25 Cost control 18 16 18 Low margins and competitive pricing 57 56 54 51 16 21 17 16 38 Exchange rate fluctuations 8 3 - General state of economy 7 9 15 Planning and forecasting 63 64 56 64 51 50 6 2 - Customer service and retention, and meeting 10 10 clients’ needs Availability and price of inputs and price of 8 9 raw materials Good people management and looking 5 12 after staff Staff costs 5 9 Consumer and business confidence 12 Other 4 4 3 2 - 1 - 56 4 Base: Total businesses (n=851) Multiple response68
  • 69. Business operationsTable 42: Key challenges faced by businessesBy industry sector % of businesses Distribution/ Property/ Manufacturing Business services Retail trade wholesale constructionPeople 53 74 48 66 65Funding 73 72 69 72 79Business operations 60 39 55 61 57Growth 46 47 58 43 37Base: Total businesses (manufacturing n=182; business services n=85; retail trade n=122; distribution and wholesale n=130; property and construction n=103)Multiple responseTable 43: Key challenges faced by businesses Businesses scrutinising strategic plans more carefullyBy state Almost all (94 per cent) of private businesses told us they % of businesses relied on a business or strategic plan to guide decision making. Total NSW Vic Qld WA SA Other They review their plans more regularly than in previous editions of the PwC Private Business Barometer, with 54 per cent ofPeople 62 58 62 - 71 65 73 respondents examining these documents more than once a year.Funding 71 71 74 - 66 66 65 One third (33 per cent) review their plans annually, while onlyBusiness operations 56 59 56 - 49 60 53 six per cent review their plans every two years or more.Growth 45 46 44 - 43 45 45 Businesses need to consider what a robust business plan should include. We believe some of the core elements of a business plan should address:Base: Total businesses (NSW n=343; Vic n=284; Qld n=0; WA n=98; SA n=77;other n=49) • Financial targets and key performance indicatorsMultiple response • A definition of the market • What makes the business’s product or service different from those offered by competitors • A statement about people, culture and values • Marketing strategy • How the company will grow. 69
  • 70. Business operations Table 44: Frequency of business plan review % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Continuously 2 13 15 Monthly 2 11 11 Quarterly 4 3 5 6 15 15 4 13 13 Six monthly 13 12 11 12 19 19 4 11 15 Every year 27 27 28 29 32 32 69 38 33 Every two years or more 17 16 17 16 9 8 14 8 6 No formal business plan 40 41 39 37 26 25 6 5 6 Total 100 100 100 100 100 100 100 100 100 Base: Total businesses (n=851) Figure 20: Frequency of business plan review Plans help keep businesses focused Private businesses are using business plans to develop strategies 80 and grow rather than as a tool to obtain finance. Just one per 70 cent of businesses said they primarily developed a plan to meet 60 bank or credit application requirements – down from 75 per cent % of businesses 50 during the financial crisis in August 2009. More than one quarter 40 (27 per cent) of businesses surveyed developed a plan to remain 30 focused on goals while 23 per cent said a business plan helped 20 them maintain growth. 10 0 Feb 07 Aug 07 Feb 08 Aug 08 Mar 09 Aug 09 Mar 10 Sep 10 Mar 11 More than once yearly Every year Every two years or more Base: Total businesses (n=851)70
  • 71. Business operationsTable 45: Primary reasons for developing a business plan % of businesses Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Keeps us focused on our goals 7 7 2 2 45 39 27Makes good business sense 24 23 20 16 26 15 8To support bank or credit applications 56 56 70 75 3 2 1Advisor or accountant recommended it 6 5 4 6 1 1 0Other 7 10 4 1 25 57 63 To identify opportunities and market changes 5 10 6 To maintain growth 5 29 23 To remain profitable 4 12 11 To remain focused 3 - - To remain competitive 7 6 Due to obligations 3 1 Other reasons 8 11 17Total 100 100 100 100 100 N/A N/ABase: Businesses that currently have a business plan (n=804)Multiple response 71
  • 72. Business operations New Zealand and United States lead overseas Table 46: Overseas revenue sources revenue sources % of businesses Of those private businesses that generated revenue from overseas Sep-10 Mar-11 sources, nearly half (45 per cent) did so from New Zealand and one-third (30 per cent) did so from the United States. The share New Zealand 42 45 of private businesses that generated revenue from South East Asia United States 27 30 fell six percentage points (Southeast Asia includes the Philippines, South Korea, Taiwan, Thailand and Vietnam). This suggests some Europe 15 22 businesses have shifted their focus away from regional markets Southeast Asia 28 22 and towards culturally similar countries. United Kingdom 14 20 Singapore 15 18 Japan 14 11 China 24 20 Pacific Islands 12 11 Indonesia 8 13 Private businesses Malaysia 13 14 ranked pricing as Hong Kong 3 8 the main driver of Canada 6 10 competition for Middle East 11 11 new business Africa 6 6 India 8 6 Other 18 10 Businesses that generate revenue overseas (n=207) Multiple response72
  • 73. Business operationsPricing the primary driver of competitionPwC Private Business Barometer respondents ranked pricing as the main driver of competition for new business. More than one-fifth(22 per cent) of businesses mentioned this issue, well ahead of increasing demand (17 per cent) and customer expectations and demand(14 per cent). However, the percentage of businesses that mentioned pricing is well down from the peak of 35 per cent in the March 2010PwC Private Business Barometer. This would indicate that pressure on pricing has eased somewhat after the period of soft demand duringthe global financial crisis.Businesses in transport, storage and communications ranked customer expectations and demand – and increasing demand – as theirsector’s greatest drivers of competition. Finance and insurance companies recorded a similar result – possibly reflecting the risingdemand for these services as Australian businesses look to grow following the economic downturn and global financial crisis.Table 47: Main drivers of competition for new businessAll industries % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Pricing 12 11 12 15 28 30 35 23 22Product innovation 14 14 15 14 12 13 11 8 9Entry of offshore firms 7 7 6 6 3 2 3 5 4Availability of HR talent 16 16 17 15 9 6 2 1 -Customer expectations and demands 19 21 21 20 24 28 - 11 14Margin compression 8 8 9 9 13 18 - 1 6Other 4 4 2 3 1 1 49 38 40 Increasing demand 9 5 17 Maintaining growth levels 9 - 3 Increasing profits and decreasing costs 8 1 0 Maintaining service and quality 6 1 0 New technologies 4 2 0 Government policies 4 1 0 Other reasons 9 25 19None specifically 21 19 19 18 10 2 - 12 4Total 100 100 100 100 100 100 100 100 100Base: Total businesses (n=851) 73
  • 74. Business operations Table 48: Main drivers of competition for new business Construction and property services % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Pricing 13 10 5 14 51 57 32 16 19 Product innovation 3 5 8 7 3 2 7 8 6 Entry of offshore firms 3 3 2 - - - 2 5 4 Availability of HR talent 28 22 15 5 3 - 2 1 4 Customer expectations and demands 7 8 15 10 28 22 - 11 6 Margin compression 5 6 13 9 15 20 - 1 8 Other 5 6 3 7 - - 56 41 47 Increasing demand 15 6 17 Maintaining growth levels 10 - 2 Increasing profits and decreasing costs 11 3 0 Maintaining service and quality 1 1 0 New technologies 4 1 0 Government policies 2 3 0 Other reasons 13 28 28 None specifically 36 40 39 49 - - - 19 7 Total 100 100 100 100 100 100 100 100 100 Base: Construction and property services businesses (n=103)74
  • 75. Business operationsTable 49: Main drivers of competition for new businessBusiness services % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Pricing 7 5 2 2 6 7 29 20 26Product innovation 16 17 21 19 16 15 9 8 8Entry of offshore firms 4 3 2 2 1 1 3 4 4Availability of HR talent 38 36 37 40 25 19 1 6 0Customer expectations and demands 21 23 24 20 40 49 - 9 12Margin compression 6 4 2 1 1 7 - - 1Other 3 2 1 2 2 2 58 43 47 Increasing demand 11 8 20 Maintaining growth levels 9 - 5 Increasing profits and decreasing costs 10 2 - Maintaining service and quality 9 2 - New technologies 3 3 - Government policies 4 5 - Other reasons 13 26 22None specifically 6 11 11 15 10 1 - 10 2Total 100 100 100 100 100 100 100 100 100Base: Business services businesses (n=85) 75
  • 76. Business operations Table 50: Main drivers of competition for new business Retail trade % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Pricing 21 19 23 29 49 52 39 26 23 Product innovation 2 4 7 9 10 7 14 9 6 Entry of offshore firms 10 11 9 7 6 4 4 4 2 Availability of HR talent 3 5 6 3 2 1 - - 2 Customer expectations and demands 33 36 38 40 22 19 - 15 21 Margin compression 6 7 2 6 11 15 - - 10 Other 4 3 2 1 1 1 43 36 30 Increasing demand 10 7 13 Maintaining growth levels 7 - 3 Increasing profits and decreasing costs 6 2 - Maintaining service and quality 5 1 - New technologies 6 2 - Government policies 5 1 - Other reasons 3 23 14 None specifically 20 15 12 6 1 - - 9 6 Total 100 100 100 100 100 100 100 100 100 Base: Retail trade businesses (n=122)76
  • 77. Business operationsTable 51: Main drivers of competition for new businessManufacturing % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Pricing 9 11 16 18 31 37 38 25 21Product innovation 20 22 25 24 22 22 14 10 12Entry of offshore firms 10 11 12 14 6 4 5 13 9Availability of HR talent 18 17 19 13 6 1 1 1 1Customer expectations and demands 7 6 10 8 10 14 - 9 9Margin compression 13 15 17 19 24 22 - 2 8Other 1 2 1 5 1 1 43 29 37 Increasing demand 7 4 15 Maintaining growth levels 14 - 3 Increasing profits and decreasing costs 7 - - Maintaining service and quality 3 0 - New technologies 4 1 - Government policies 4 1 - Other reasons 4 21 19None specifically 22 17 1 1 1 - - 12 3Total 100 100 100 100 100 100 100 100 100Base: Manufacturing businesses (n=182) 77
  • 78. Business operations Table 52: Main drivers of competition for new business Distribution and wholesale % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 Pricing 19 16 21 25 34 35 38 27 25 Product innovation 7 5 5 4 2 2 14 17 15 Entry of offshore firms 2 4 4 4 3 2 3 3 6 Availability of HR talent 5 5 7 4 2 1 2 - 2 Customer expectations and demands 37 38 39 37 37 39 - 11 18 Margin compression 9 11 13 16 20 22 - 1 4 Other 5 4 2 3 3 - 43 36 30 Increasing demand 8 7 18 Maintaining growth levels 7 - 2 Increasing profits and decreasing costs 5 - - Maintaining service and quality 2 2 - New technologies 3 2 - Government policies 4 1 - Other reasons 14 24 10 None specifically 18 17 8 9 - - - 5 1 Total 100 100 100 100 100 100 100 100 100 Base: Distribution and wholesale trade businesses (n=130)78
  • 79. Business operationsTable 53: Main drivers of competition for new businessAll other businesses % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11Pricing 24 21Product innovation 4 6Entry of offshore firms 3 1Availability of HR talent 0 -Customer expectations and demands 12 15Margin compression 1 4Other 44 46 Increasing demand 9 18 Maintaining growth levels - 5 Increasing profits and decreasing costs 1 - Maintaining service and quality 0 - New technologies 4 - Government policies 3 - Other reasons 29 23None specifically 11 6Total 100 100 100 100 100 100 100 100 100Base: Total agriculture, forestry and fishing; communications, transport and storage; finance and insurance; and other businesses (n=229) 79
  • 80. Business demographics Almost three-quarters (73 per cent) of businesses that The largest single industry sector represented was manufacturing responded to the May 2011 PwC Private Business Barometer (21 per cent of businesses). Distribution and wholesale trade were based in New South Wales or Victoria, while 12 per (15 per cent), retail trade (14 per cent) and property and cent were based in Western Australia. construction (12 per cent) were also strongly represented. Table 54: Geographic distribution of businesses Table 55: Distribution of businesses by industry sector % of businesses % of businesses Aug-09 Mar-10 Sep-10 Mar-11 Mar-10 Sep-10 Mar-11 NSW 35 37 33 40 Manufacturing 14 20 21 Vic 26 27 30 33 Property and construction 16 17 12 Qld 12 17 14 - Retail trade 14 15 14 WA 8 10 12 12 Distribution and wholesale trade 12 11 15 SA 6 6 7 9 Business services 18 10 10 Other 13 3 4 6 Communications, transport and storage 8 8 9 Total 100 100 100 100 Agriculture, forestry and fishing 5 5 5 Base Total businesses (n=851) Finance and insurance 3 3 3 Other 10 10 11 Total 100 100 100 Base: Total businesses (n=851) More than half of respondents were business owners. Of those, about one-quarter (27 per cent) were the sole owner of the business, while the remaining 73 per cent were one of multiple owners. Table 56: Business owner % of interviewees Aug-09 Mar-10 Sep-10 Mar-11 Business owner 44 42 34 52 Sole owner 22 21 27 Multiple owners 78 79 73 Total N/A 100 100 100 Base: Total businesses (n=851), business owners (n=444)80
  • 81. Business demographicsAlmost three-quarters of businesses surveyed (70 per cent) were founded before 1996, while only 18 per cent had been founded after 2000.Table 57: Distribution of businesses by year of establishment % of businesses Aug-09 Mar-10 Sep-10 Mar-11Before 1996 11 73 67 70 Before 1950 9 9 9 1951–1970 15 11 11 1971–1980 14 13 14 1981–1990 21 21 24 1991–1995 14 13 121996–2000 48 12 13 12After 2000 41 15 19 18Total 100 100 100 100Base: Total businesses (n=851)Sixty one per cent of respondents had up to 50 full-time employees, while only 13 per cent had more than 100 full-time employees.More than half (53 per cent) had up to 50 part-time employees while 43 per cent had up to 50 casual workers.Table 58: Number of full-time employees by business % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11No full-time employees 1 0Up to 50 54 61 6150–100 26 22 24More than 100 19 16 13Total N/A N/A N/A N/A N/A N/A 100 100 100Average full-time employees 179 180 173 170 156 151 81 65 63Base: Total businesses (n=851) 81
  • 82. Business demographics Table 59: Number of part-time employees by business % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 No part-time employees 43 41 Up to 50 84 51 53 50–100 8 2 3 More than 100 8 1 1 Total N/A N/A N/A N/A N/A N/A 100 100 100 Average part-time employees 23 23 34 39 37 40 37 12 10 Base: Total businesses (n=851) Table 60: Number of casual employees by business % of businesses Feb-07 Aug-07 Feb-08 Aug-08 Mar-09 Aug-09 Mar-10 Sep-10 Mar-11 No casual employees 51 50 Up to 50 41 43 50–100 4 3 More than 100 2 2 Total N/A N/A N/A N/A N/A N/A N/A 100 100 Average casual employees 13 12 Base: Total businesses (n=851)82
  • 83. Business demographicsPrivate businesses in the survey turned over an average ofA$27 million per year, while about one-quarter (26 per cent)turned over between A$10 million and A$15 million per year.Table 61: Distribution of businesses by turnover range % of businesses Aug-09 Mar-10 Sep-10 Mar-11A$8m–$10m 23 17A$10m–$15m 32 24 26A$15m–$20m 16 12 16 63A$20m–30m 21 16 15A$30m–$50m 14 12 12A$50m–$75m 10 6 8 37A$75m–$110m 7 7 7Total 100 100 100 100Base: Businesses that provided turnover (n=771)Table 62: Average annual turnover across all businesses Average annual turnover (A$ million)Feb-07 46Aug-07 48Feb-08 49Aug-08 49Mar-09 49Aug-09 50Mar-10 30Sep-10 26Mar-11 27Base: Businesses that provided turnover (n=771) 83
  • 84. PwC Private Clients Could you possibly find a trusted partner who is Why us? as passionate about your success as you are? Our mission is to help the people we work with grow PwC Private Clients. It’s who we are. their business and family wealth. We do this by: We work with private companies and clients – just like you – every day. • Understanding what your needs are, at a business and personal levels: because it’s not all about work. It’s what we do. It’s what we love. It’s what we’re good at. • Telling it like it is, by giving you the honest insights you It will come as no surprise to you that we do audits. Provide tax advice. expect from a trusted business partner. You didn’t get where Can help with a raft of business advisory services. What’s different you are by surrounding yourself with yes people. about PwC? You. • Bringing you the very best ideas and fresh thinking on a You’re the reason we’re in business. We know what it means to run host of business issues. your own show. So much of the business landscape and economic We have more than 49 partners and 600 people focused on fortune of this country is shaped by the entrepreneurs and owners working with private companies, entrepreneurs and financially of private business – and we want to work with you to grow successful individuals. this market. They bring you all the talent and skill that come with being part We believe that together, we can create conversations and ideas of PwC – coupled with a passion for the unique challenges and that will help you realise your business and personal ambitions. opportunities you face. You might be an energetic start-up with a great idea that’s going to take you places. You might have been in business for a number And because our people have business and commercial skills – of years and are looking at your next steps. Or maybe you’ve as well as qualifications in fields as diverse as botany, engineering, made your wealth and want to know how you can grow and communications and of course accounting – we see the whole preserve it - and pass it on to the next generation. picture. PwC Private Clients has more than 600 people who want to work with businesses just like yours. Why don’t you meet one of them today? pwc.com.au/privateclients We have more than 49 partners and 600 people focused on working with private companies, entrepreneurs and financially successful individuals.84
  • 85. PwC Private ClientsFor further information about our services in your state or territory, please contact:Adelaide NewcastleMichael Browne John Campion Partner Partner(61 8) 8218 7459 (61 2) 4925 1154michael.browne@au.pwc.com john.campion@au.pwc.comBrisbane NorwestJason Daniels John Shim Partner Partner(61 7) 3257 8536 (61 2) 8860 7737jason.daniels@au.pwc.com john.shim@au.pwc.comCanberra PerthGlenn O’Sullivan Cesare Scalise Partner Partner(61 2) 6271 9546 (61 8) 9238 3417glenn.osullivan@au.pwc.com cesare.scalise@au.pwc.comGold Coast SydneyTrevor Mahony Gregory Will Partner Partner (61 7) 3257 8807 (61 2) 8266 3344trevor.mahony@au.pwc.com gregory.will@au.pwc.comMelbourne TownsvillePaul Lewis Phil Clarke Partner Partner(61 3) 8603 3678 (61 7) 3257 5773paul.r.lewis@au.pwc.com philip.j.clarke@au.pwc.com 85
  • 86. Acknowledgements Roy Morgan Research Editor Group Roy Morgan Research, Australia’s best known and longest Editor Group provides writing, editing, proofreading and video established market research and public opinion polling company, production services to business and government clients in Australia was founded in 1941 by Roy Morgan. Roy Morgan Research has and across the Asia Pacific region. The firm has enjoyed a long grown to become a company providing a wide range of different association with PwC, assisting with the production of the Private research facilities. The company is 100 per cent Australian owned. Business Barometer and other high-quality thought leadership and business development publications. It also helps clients to create Roy Morgan Research has considerable experience in conducting reports, case studies, brochures, websites, speeches, tenders and all forms of research, particularly public opinion polling, attitude other forms of sales, marketing and investor relations material. studies, social surveys, and large consumer and industrial market surveys. We are able to conduct a broad spectrum of traditional Editor Group was founded by Grant Butler, a former journalist at and market research methods to provide the best service to and The Australian Financial Review, and now employs a team of expert help clients stay ahead of their competitors. writers, editors and producers based in central Sydney. The firm also provides a suite of writing training courses – spanning the Today Roy Morgan Research has the most extensive research basics of proofreading and grammar through to advanced writing facilities in Australia, and is indeed, one of the most comprehensive skills for executives – and publishes PSF Journal for members of market research companies anywhere in the world. Roy Morgan the Asia-Pacific Professional Services Marketing Association. Research combines methodology, technology, experience and know how into one comprehensive integrated system. Techniques and To learn more, visit editorgroup.com or contact Grant Butler services developed by Roy Morgan Research are now used in many directly. He can be reached at gbutler@editorgroup.com countries throughout the world. or on (61 2) 8912 9501. Roy Morgan Research employs over 350 full and part time www.editorgroup.com employees in Australia and over 400 employees world-wide, with an annual turnover is more than $50 million. In Australia Roy Morgan Research is located in Melbourne, Sydney, Perth and Brisbane and internationally in Auckland, London, New York, Princeton and Indonesia. www.roymorgan.com86
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  • 88. whatwouldyouliketogrow.com.auPwC PwC firms provide industry-focused assurance, tax and advisory services to enhance value for their clients. More than 161,000 people in 154 countries in firms201 Sussex Street across the PwC network share their thinking, experience and solutions to develop fresh perspectives and practical advice. See pwc.com for more information.Sydney NSW 1174+61 (2) 8266 0000 © 2011 PricewaterhouseCoopers. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers, which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity. WL – 182186Sovereign Silk A2 is proudly made FSC certified by Hankuk paper whom also carry the ISO 14001 EMS accreditation.Manufactured with elemental chlorine free pulps.