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Business PSI Results Summary Mark McCrindle November 2015

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Purpose and use
The Business PSI is robust not only because the measure comes directly from a survey of business proprietors and managers, but also because it measures current performance, with metrics derived from their actual earnings, expenses, staffing numbers, as well as sentiment – their economic cost and growth forecast and expectations of the 6 months ahead.
Rather than being a national measure, the Business PSI is designed to be deployed in local and regional geographies because it measures economic conditions, regulatory settings, and infrastructure in a local context. This allows for a more nuanced understanding of business performance and conditions. It gives a good measure of local economies and allows for comparison of business performance by region, across a city, within a state, and across states.
Additionally, the Business PSI is designed as a longitudinal instrument, and so business performance can be compared by region over time to get real-time analysis of local economic conditions, and so see the impact of local policies, investment, and infrastructure development, as well as measuring the impact of state and national issues and economic conditions.

Deployment
The Business PSI is a tested and easy-to-deploy 21 question survey which can allow business chambers and local governments to survey their business stakeholders at any point in time, and compare these results to previous measures or benchmark across other areas.
It also allows industry groups and peak bodies to measure their members and so gain a PSI of specific business categories (such as hair-dressers, real estate agents, etc.) or broader business categories (i.e. retailers, B2B service providers, etc.). The Business PSI results can be compared longitudinally, city by city, or state by state.
As the Business PSI quantitatively measures business performance yet incorporates attitudes, sentiment, and forecast, it provides a comprehensive measure of actual and attitudinal measures and an index that incorporates recent performance and current forecasts.  
BUSINESS PSI DESIGN
The McCrindle developed Business Performance Sentiment Index (Business PSI) is an ongoing measure of business performance, conditions, and sentiment, developed from the input of several instruments.
It delivers a snapshot of how businesses in the region are tracking, thus capturing the current pulse of local businesses. The 2015 inaugural edition of the Business PSI features the results of businesses from across the Hills Shire.

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Business PSI Results Summary Mark McCrindle November 2015

  1. 1. BUSINESSES IN AUSTRALIA – ACTIVELY TRADING 2,100,000
  2. 2. SMALL BUSINESS NATION Non- employing 61% Employing 39%
  3. 3. SMALL BUSINESS NATION Non-employing 61.0%
  4. 4. SMALL BUSINESS NATION Non-employing 61.0% Micro (1-4) 27.0%
  5. 5. SMALL BUSINESS NATION Non-employing 61.0% Micro (1-4) 27.0% Small (5-19) 9.5%
  6. 6. SMALL BUSINESS NATION Non-employing 61.0% Micro (1-4) 27.0% Small (5-19) 9.5% Medium (20-199) 2.4%
  7. 7. SMALL BUSINESS NATION Non-employing 61.0% Micro (1-4) 27.0% Small (5-19) 9.5% Medium (20-199) 2.4% Large (200+) 0.1%
  8. 8. SMALL BUSINESS NATION Non-employing 61.0% Micro (1-4) 27.0% Small (5-19) 9.5% Medium (20-199) 2.4% Large (200+) 0.1% 99.9% of all Australian business are small to medium enterprises
  9. 9. 700,000 BUSINESSES IN NSW – ACTIVELY TRADING That’s 1/3 of Australia’s total
  10. 10. BUSINESSES STARTS AND EXITS (NSW) 385 350 New start-ups every business day New closures every business day
  11. 11. SURVIVAL RATES 3 year survival rate – all businesses 61% 3 year survival rate – new businesses 50%
  12. 12. EXIT RATES - CONTRIBUTING FACTORS Annual exit rate By sector By employment By structure By turnover 0% 10% 20% National: 12.7%
  13. 13. EXIT RATES - CONTRIBUTING FACTORS Annual exit rate By sector By employment By structure By turnover 0% 10% 20% IT: 14.7%
  14. 14. EXIT RATES - CONTRIBUTING FACTORS Annual exit rate By sector By employment By structure By turnover 0% 10% 20% Accommodation & food services: 14.9%
  15. 15. EXIT RATES - CONTRIBUTING FACTORS Annual exit rate By sector By employment By structure By turnover 0% 10% 20% Admin & support services: 15.8%
  16. 16. EXIT RATES - CONTRIBUTING FACTORS Annual exit rate By sector By employment By structure By turnover 0% 10% 20% Non-employing: 15.5%
  17. 17. EXIT RATES - CONTRIBUTING FACTORS Annual exit rate By sector By employment By structure By turnover 0% 10% 20% Unincorporated: 17.6%
  18. 18. EXIT RATES - CONTRIBUTING FACTORS Annual exit rate By sector By employment By structure By turnover 0% 10% 20% Less than $50,000: 20.3%
  19. 19. METHODOLOGY
  20. 20. METHODOLOGY • Online survey August 2015 • Survey of businesses geographically located in the Hills Shire LGA • 179 business owners and managers completed the survey • 90% owners/managers of businesses • 15 sectors represented Bu s in es s PSI Res ea rch Pa rtn ers :
  21. 21. WHO ARE THEY? 70% 30% Gender Male Female 1% 9% 41% 46% 2% 18 - 20 21 - 35 36 - 50 51 - 69 70+ Age
  22. 22. 9% 6% 6% 16% 28% 35% Year 11 or below (includes… Year 12 Certificate III/IV Diploma and Advanced Diploma Bachelor Degree Postgraduate Qualification Highest level of completed education WHO ARE THEY?
  23. 23. 26% 41% 23% 5% 2% 3% Not employing / Sole operator 1 to 4 5 to 19 20 to 50 51 to 100 More than 100 Business Size by Employees WHO ARE THEY?
  24. 24. 21% 10% 17% 53% Less than 3 years 3-5 years 5-10 years 10 years or more Length of being a business owner WHO ARE THEY?
  25. 25. CONDITIONS PERFORMANCE SENTIMENT
  26. 26. 3 Categories 9 Measures 21 Indicators
  27. 27. Economic conditions Local economy National economy Regulatory settings Red tape Policy settings Infrastructure & locale Local infrastructure Business growth Local outlook CONDITIONS
  28. 28. Earnings Revenue Profit Cash flow Expenses Operational expenses Capital expenses Employment Staffing levels Staff wages PERFORMANCE
  29. 29. Economic outlook National Revenue Cost forecast Expenses Staffing levels Growth forecast Profit Cash flow Expansion SENTIMENT
  30. 30. 5% 10% 11% 27% 14% 15% 18% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% Q. Thinking about your overall sales revenue at the moment, how do they compare to 6 months ago? Significantly worse (10%) Moderately worse (5 to 10%) Slightly worse (1 to 5%) About the same Slightly better (+1 to 5%) Moderately better (+5 to 10%) Significantly better (+10%) EXAMPLE QUESTION
  31. 31. BUSINESS PSI
  32. 32. BUSINESS PSI
  33. 33. BUSINESS PSI
  34. 34. BUSINESS PSI
  35. 35. BUSINESS PSI
  36. 36. C, P AND S SNAPSHOT
  37. 37. C, P AND S SNAPSHOT
  38. 38. C, P AND S SNAPSHOT
  39. 39. C, P AND S SNAPSHOT
  40. 40. C, P AND S SNAPSHOT
  41. 41. C, P AND S SNAPSHOT
  42. 42. C, P AND S SNAPSHOT
  43. 43. C, P AND S SNAPSHOT
  44. 44. C, P AND S SNAPSHOT
  45. 45. CONDITIONS
  46. 46. CONDITIONS OVERVIEW
  47. 47. Non employing businesses CONDITIONS BY BUSINESS SIZE -26 -24 -11 -13 Non employing businesses Micro (1-4 employees) Small (5-19 employees) Medium+ (20+ employees)
  48. 48. PERFORMANCE
  49. 49. PERFORMANCE OVERVIEW
  50. 50. -7 12 PERFORMANCE BY CLIENTS SERVED B2C: Products/services to consumers B2B: Products/services to businesses, public utilities and/or government
  51. 51. SENTIMENT
  52. 52. SENTIMENT OVERALL
  53. 53. SENTIMENT BY BUSINESS SIZE 0 8 6 12 Non employing businesses Micro (1-4 employees) Small (5-19 employees) Medium+ (20+ employees)
  54. 54. NEXT STEPS
  55. 55. • Further analysis • Longitudinal • Benchmarking • Next deployment: March 2016 Su p p o rted by: NEXT STEPS
  56. 56. +6 12 8824 3422 info@mcc rindle .com.au www. mc c rindle.c om.au Mark McCrindle

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