City of Gosnells: Voice of Australian Business
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This document provides the results of a survey of Australian small and medium enterprises (SMEs). Some key findings include: - Confidence in business prospects is growing overall, with larger SMEs feeling more confident than smaller ones. - Cash flow and growing revenue are the top concerns for SMEs. - Larger businesses are more likely to look to external advice and guidance, while outsourcing and technology adoption is increasing overall. - Most SMEs want to improve profits and cash flow in the coming year through actions like acquiring new customers and growing revenue.
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City of Gosnells: Voice of Australian Business
- 1. TheVoice of Australian Business 2016 Wave 5
- 2. The Voice of Australian Business 2016 Fab Fanayan Director – Taxation & Business Services
- 3. Why do we collect this data? • 2,121,235 businesses in Australia, 96% are SMEs • Producing over 90% of GDP • We are looking to better understand our clients concerns
- 4. The focus of the Voice 5 • The current SME environment • Attitudes towards technology • Superannuation and retirement
- 5. What is an SME?
- 6. Definitions micro: 1-4 employees small: 5-19 employees medium: 20-200 employees Metro – A capital city or its surrounding suburbs Non-Metro – a non state or territory capital or a regional or remote area
- 7. The Voice 5 - What did we learn? • Larger SMEs have greater confidence • Growth is the main goal • Larger businesses are looking to external advice and guidance • Outsourcing & Technology is gaining momentum
- 8. The current SME Environment
- 9. 21% 14% 25% 16% 18% 40% 40% 34% 44% 41% 23% 25% 25% 24% 22% 13% 18% 15% 14% 16% 3% 3% 2% 3% 3% Wave 5 Wave 4 Wave 3 Wave 2 Wave 1 Confidence in business prospects over next 12 months Extremely confident Somewhat confident Neither confident nor worried Somewhat worried Extremely worried Confidence is growing
- 10. The biggest concerns for SMEs 23% 17% 16% 16% 8% 7% 5% 30% Cash flow Growing revenue Government regulations and compliance Competition Finding staff Retaining staff Something else Nothing
- 11. 21% 19% 23% 23% 22% 20% 40% 37% 45% 41% 40% 41% 23% 25% 21% 23% 21% 26% 13% 17% 8% 8% 13% 12% 3% 2% 3% 5% 4% 2% Total Micro Small Medium Metro Non-metro Extremely confident Somewhat confident Neither confident nor worried Somewhat worried Extremely worried Confidence in business prospects over the next 12 months
- 12. Main focus for 2017/18 41% 23% 13% 8% 6% 2% 7% Improve profits Improve cash flow Improve business value Upskilling employees Improve technology/ IT infrastructure Improve solvency Another area
- 13. Likely business action 49% 34% 32% 28% 23% 21% 16% 13% 8% 7% 6% 4% 4% 2% 2% 13% Acquire new customers Grow revenue Grow profits Hire new staff Introduce new products or services Invest in new technology Invest in new plant or equipment Invest in marketing/advertising Exit the industry (e.g., orderly closure or sale) Introduce new initiatives to support your employee value… Invest in new premises Obtain/seek specialised turnaround or restructuring advice Re-finance Acquire a new business Make formal appointment over business (e.g.,… None of the above
- 14. Where is this confidence coming from?
- 15. What affects Confidence? 3% 3% 2% 2% 2% 2% 27% 22% 16% 10% 9% 5% 56% 61% 54% 62% 62% 70% 9% 10% 21% 22% 19% 18% 4% 4% 8% 4% 9% 6% Recent interest rate cuts The re-prioritisation of the small business portfolio by the Federal Government The falling Australian dollar The Federal Budget announced in May this year The election of the ‘slim majority’ Turnbull Government The threat of Australia’s AAA credit rating being downgraded Attitudes to the impact of Australian political and economic events on business - overall A significant positive impact A positive impact No impact A negative impact A significant negative impact
- 16. Attitudes to the impact of international political and economic events 2% 2% 1% 1% 1% 1% 5% 7% 4% 7% 5% 6% 49% 64% 73% 77% 82% 81% 38% 25% 17% 13% 10% 9% 5% 3% 6% 2% 2% 2% General market volatility The slowdown of China’s economy Terrorist activity The upcoming US elections Humanitarian issues (e.g., refugee crisis in Europe) Brexit (UK exit from the European Union) A significant positive impact A positive impact No impact A negative impact A significant negative impact
- 17. Not much faith in the Turnbull Government 2% 1% 1% 3% 1% 2% 15% 14% 17% 15% 12% 17% 38% 37% 39% 40% 43% 33% 27% 26% 28% 27% 27% 26% 19% 22% 15% 16% 16% 22% Total Micro Small Medium Metro Non-metro Expectations of the Turnbull government to address issues affecting SMEs Very high expectations High expectations Neither high nor low expectations Low expectations Very low expectations
- 18. The life of an SME
- 19. Age of the Business 17% 23% 13% 11% 14% 21% 30% 27% 37% 31% 35% 26% 52% 51% 51% 59% 52% 53% Total Micro Small Medium Metro Non-metro 0-4 years 5-10 years 11+ years
- 20. Founders and Sole Founders 19% 27% 16% 4% 21% 16% 28% 37% 22% 13% 24% 31% 54% 36% 62% 83% 55% 53% Total Micro Small Medium Metro Non-metro Is the founder of their business Sole founder Joint founder Neither
- 21. Age of Sole Founders 38 41 33 30 38 38 Total Micro Small Medium Metro Non-metro
- 22. Previous involvement in other businesses 2%2% 11% 43%42% 10 or more6-94-52-31 only The number of businesses previously involved in on a senior/decision- making level
- 23. Previous involvement in other businesses that have failed? 84% 5% 8% 2% 2% No Yes, after less than 1 year Yes, after 1-5 years Yes, after 5-10 years Yes, after more than 10 years If that business failed (previously involved in more than one business)
- 24. Competition. Small, Queensland Director of the company taking money out of business and not replacing. Medium, Melbourne Disinterest of bankers. Micro, WA Economic downturn. Medium, Hobart Foreign imports. Micro, Melbourne Cyclone/fruit fly Small, Queensland Government contracts that were tendered for not being renewed. Medium, Sydney GOVERNMENT tariff changes. Micro, Brisbane Increased government charges and taxes. Micro, Melbourne Inflation. Micro, WA It went bankrupt and we lost all of our money. Medium, other NSW Lack of customers. Medium, Darwin Lack of trade. Micro, NSW Over extended in technology. Micro, Queensland Poor management. Micro, Canberra Slow economy. Medium, Perth We did not anticipate market change quick enough and faced demand dropped too quickly. Micro, NSW We moved out of the city area and postal rates were too high. Micro, Queensland Withdrawal of vital contracts, product not sufficiently developed. Small, Sydney
- 26. Risk Management 34% 21% 34% 56% 36% 31% 13% 11% 14% 17% 14% 12% 53% 69% 52% 26% 50% 57% Total Micro Small Medi um Metr o Non- metr o Yes I’m not sure No 38% 34% 23% 21% 14% 14% 13% 13% 12% 11% 9% 8% 8% 7% 7% 6% 5% 10% 0% 10% 20% 30% 40% 50% Competitors Economic volatility Reputation Lack of stable, long-term… Information technology… Bad debt Employee resignation Natural disasters Having a successor for the… Employee injury Premise leasing… Lack of supplier choice Banking / financier… Security of document storage Relationships with creditors Continuity of finance… Under insurance Another risk Do you have a formal Risk Management process? The top business risks for SMEs
- 27. Extent to which each area of the organisation is challenging and time consuming 48% 35% 23% 21% 18% 17% 16% 51% 22% 14% 26% 21% 19% 8% The active daily management of the business Accounting Marketing/PR Bookkeeping Administration IT support Human resources Most Challenging Most time consuming
- 28. Describing technology use in the organisation 13% 40% 10% 17% 20% We are very tech savvy and we proactively look for new and innovative technology to apply to our business practices We keep abreast of new technologies relevant to us, but it’s not a core focus of our growth We want to integrate new techonologies into our business, but don’t have the resources to do so When we need a new technology solution, we will research and adopt We don’t take much intereset in new technology and wouldn’t describe ourselves as innovative
- 29. Strategies for funding retirement
- 30. Strategies for funding retirement 57% 43% Has a strategy in place to fund retirement Yes No 48% 52% Confident in ability to afford their desired lifestyle after retirement (all respondents, n=328) Yes No 38% 35% 28% 25% 21% 19% 13% 11% 10% 3% 9% 0% 5% 10% 15% 20% 25% 30% 35% 40% Rely on my savings Use income from rent or other investment dividends Use my age pension Sell my current house and move into a smaller one (i.e.,… Sell my business Sell my investments Buy annuities (lifetime or fixed Partially sell my business (e.g. find an equity partner) Use an inheritance Sell my house and rent instead Other Type of strategy for funding retirement
- 31. Level of awareness of the proposed changes to Australia’s superannuation system in the 2016-17 Federal Budget 9% 8% 8% 11% 12% 6% 41% 38% 41% 45% 42% 39% 33% 39% 30% 25% 30% 37% 17% 15% 21% 19% 16% 19% Total Micro Small Medium Metro Non-metro I have been following this issue closely and know a lot about the proposed changes I am aware that changes are being discussed, and have a rough idea of what they are I have heard that changes are being discussed, but I don’t know much about what they are I didn’t know that there were any proposed changes
- 32. Opinion of the proposed superannuation changes - overall 5% 3% 5% 3% 11% 13% 9% 9% 15% 13% 10% 13% 11% 19% 9% 10% 47% 40% 56% 55% 11% 12% 10% 10% Introducing a $500,000 lifetime cap for non-concessional contributions Lowering the superannuation concessional contributions cap to $25,000 per annum Requiring those with combined incomes and superannuation contributions greater than $250,000 to pay 30 per cent tax on their concessional contributions, up from 15 per cent Introducing a $1.6 million superannuation transfer balance cap on the total amount of superannuation that an individual can transfer into retirement phase accounts Extreme impact on me High impact on me Moderate impact on me Some impact on me No impact on me I'm not sure
- 33. Has implemented The Australian Tax Office’s SuperStream system 32% 31% 36% 29% 34% 30% 26% 17% 29% 43% 23% 29% 42% 52% 36% 28% 43% 41% Total Micro Small Medium Metro Non-metro Yes I'm not sure No
- 34. The impact of implementing SuperStream on business - overall 26% 10% 2% 38% 25% Savings in time spent on superannuation Savings in resources allocated to administering superannuation Other impacts No impacts Too soon to tell
- 35. SMSF use 25% 75% Has an SMSF Yes No 67% 34% 7% 1% 2% I manage it myself Financial adviser Family member Friend Someone else The person who manages their SMSF
- 36. Working with our clients on their business
- 37. Case study • ‘Client A’ is a service based company • Operating in Perth for 10 years • And they have been a Taxation & Business services client for 10 years • The challenge: Falling profits • Our solution: Develop a budget and make a plan based on the figures
- 38. Get to know your business By understanding the ‘financial story’ of your business: • Make informed strategies to improve your business and • Review the impact that changes to key drivers have on your profit, cash flow and the value of your business.
- 40. Where did my cash go?
- 41. What is my business worth?
- 42. Why is a 3-way forecast needed? • Don’t drive your business blindfolded • Easier to gain funding from a lending institution • Helps in working out what needs to be done to achieve desired results
- 44. KPI Dashboard
- 45. KPI Dashboard
- 46. Bentleys Mentoring • Understand your cash flow • Get control of your numbers • Make informed decisions • Design a better future for your business • Inspire, guide and give advice
- 47. QUESTIONS?
Editor's Notes
- We presented wave 2 to this business forum
- INTRO 5TH VOICE GREAT DEAL OF INFO CAN ONLY TOUCH THE SURFACE HAPPY TO MAKE AVAILABLE OR COME AND TALK TO YOUR STAFF WHAT IS THE VOICE? – A QUICK REMINDER
- What is the Voice? a long term research project that follows and explores the mindset, needs, expectations and concerns of the Small to Medium (SME) business environment in Australia. The survey is conducted online with actual business owners, and decision makers who are remunerated for their time. The survey has been carried out twice a year since 2013 and each survey examines key areas of SME concerns yet retains lines of questioning around business confidence, growth and technology. This is the fifth ‘Voice’ survey and the data represents what SMEs are telling us. They provide approx. 69% of the workforce SMEs feel that they do not have a ‘Voice’ As a professional services firm we need to understands our clients concerns.
- The current SME environment– Business Confidence Barriers to Growth and success Start-ups, founders and failures Attitudes towards technology– Who has adopted the Cloud? How has the NBN been received? Domestic and International Influences – How is the Turnbull Government tracking? Brexit and Trump –so what? Superannuation and Retirement The proposed changes – do you know what is happening? Can SME business owners retire comfortably? SMEs and Foreign Investment– Do SMEs want foreign investment? How do SMES get advice on foreign investment
- WE KNOW HOW MANY THERE ARE WE KNOW THAT THEY ARE THE BACKBONE OF AUS BUSINESS BUT WHAT ARE THEY? SME ACRONYM– ACTUALLY DOE NOT COVER THE MICRO WE USE THE SIZE MEASURE DEFINITIONS
- TALK THROUGH NOT GOING TO GO TO TURNOVER – ALSO REMIAN AT MED-200 TO STAY CONSISTENT DATA BY SIZE AND LOCATION
- Larger SMEs are maintaining greater confidence than their smaller counterparts Growth is the goal for the coming year for small and medium businesses Willingness to lean on external advice and guidance greater for larger businesses Outsourcing is occurring most commonly for accounting and IT support SMEs will generally apply technology once they feel it is needed, rather than proactively implement Mixed reception to the NBN Trump, Brexit, Terrorism –not a concern, but market volatility is Expectations on Turnbull doing right by SMEs are generally low Awareness of proposed changes to Superannuation is low SIZE MATTER BUT MICRO AND SMALL ALSO MORE CONFIDENT PROFITS CASH FLOW AND GROWTH MAIN GOALS FIN REPORTS AND EXTERNAL ADVICE – MED SMALL/MICRO INFLUENCED BY OTHERS TECH NOT BEING OPTIMISED TURNBULL NOT HITTING THE MARK SUPER SME ENVIRONMENT
- GROUPING A FEW DIFFERENT SUBJECTS IN TO SME ENVIRONMENT We have applied a consistent benchmark of confidence to determine the mindset of SMEs
- ???????? STARTING TO SEE A SMALL BUT NOTICABALE COMPARISON SLIDE CONFIDENCE RECOVERY POINT OUT CHANGES – TOP END CHANGES BOTTOM END THIS CONF EXTENDS TO NEXT 12 MONTHS
- Talk about difference between sizes and location
- JUSST V 5 WHAT IS INTERETSING ABOUT THIS SLIDE IS MOST FIGURES THE SAME USUALLY M OUTSTRIPS MICRO METRO OUTSTRIPS NON METRO HIGHEST FIGURES SO FAR SO WHAT IS THIS CONFIDENCE GOING TO BRING?
- WE ASKED WHAT THE MAIN FOCUS IS GOING TO BE? PROFITS –THE MAIN THIS IS A CHANGE FROM PREVIOUS SURVEYS –INVESTMENT/IT WHAT DOES THIS MEAN IN TERMS OF BUSINESS INITIATIVES?
- TALK THROUGH CONFLICTING IN SOME CASES BUT THIS IS THE CLASSIC EXAMPLE OF A TOUCH POINT WHAT DO WE MEAN BY A ‘TOUCH POINT’
- THE DATA SHOWS A SMALL RISE IN CONFIDENCE CHANGES IN SOME BUSINESS OBJECTIVES SO WHERE IS IT COMING FROM? WAS IT THE BUDGET?
- TWO MAIN FACTORS INTEREST RATES SMALL BUS PORTFOLIO CHANGE BUDGET AND TURNBULL LOW BUT WHAT ABOUT THE WIDER GEO POLITICAL?
- KEY ASPECTS HERE ARE RED AND GREY TERRORISM RANKS ABOVE TRUMP BREXIT IS HARDLY RELEVANT REFUGEES ARE SEEN ON TV AUS SEEMS TO BE FOCUSED ON INTEREST RATES AND SMALL BUS CHANGES LETS LOOK AT TURNBULL
- EXPECTATIONS THAT WILL ADDRESS MAIN ISSUES TALK THROUGH SIMILAR FOR ALL S-M-M 17% HIGH – 46% LOW –FAIRLY DAMNING Leaving Politics aside, where are businesses at?
- WE WANTED TO KNOW AGE, START UP STATUS WHAT TAKES UP TIME AND IF BEEN INVOLVED IN OTHER BUS LOOK AT AGE
- 47 % OF BUS LESS THAN 10 YEARS 17% LESS THAN 4 YEARS MICRO AND NON METRO DOMINATE THE 0-4 YEARS
- EXPLAIN SLIDE IN S AND MICRO 50% FOUNDED BY SOMEONE ELSE MEDIUM AS EXPECTED MICRO –HIGHLIGHT WHAT ABOUT AGE OF FOUNDER?
- THIS SURPRISED ME THOUGHT IT WOULD BE YOUNGER AVERAGE IS 32 WHAT ABOOUT INVOLVEMENT IN OTHER BUSINESSES?
- TALK THROUGH BUT KEY QUESTION IS HOW MANY HAVE FAILED?
- SO 84% OF INVOLVEMENT OF OTHER BUSINESS WERE SUCCESSFUL FOR THAT 16% THAT FAILED WHAT WERE REASONS?
- TALK THROUGH NO SINGLE REASON BUT GIVE US AN OPPORTUNITY TO LOOK AT SOME GENERAL OBERVATIONS
- HERE WE HAVE TAKEN SOME OF THE KEY FINIDNGS BUT ALSO LINKED TO PREVIOUS SURVEYS WE HAVE SEEN FAILURES AND WHY – RISK MANAGEMENT
- WE SAW WHAT THE MOST COMMON RISK WERE – RIGHT LEFT CAN SEE THAT 51% NOT HAVE A RM PROCESS –OPPORTUNITY WHAT AREAS OF BUSINESS ARE CHALLENGING?
- WE ASKED THIS QUESTION AS WANTED TO GET A UNDERSTANDING OF DAY TO DAY CHALLENGES TALK THROUIGH YET ADOPTING TECH IS NOT A PRIORITY
- TALK THROUGH – OPPORTUNITY Competitors are looking for efficiency gains and reduced admin/accounting overheads INCREASING INTEREST compared to last results HOW are people funding retirement?
- Traditionally SME used business as key part of retirement plans So we asked a few questions around this.
- Large reliance on savings (incl super) Home is still large part of funding later in life Small % on business.
- Talk about difference between sizes and location
- Talk about difference between sizes and location
- Again talking about admin and accounting time used to run business Surprising still some business not across this issue.
- Over 36% have some sort of savings by implementing with some still unsure Surprise about 38% no impact
- Talk about difference between sizes and location
- Armed with these statistics and data we work with our clients on their business, assisting them towards their goals. Business performance improvement is a particular focus of Jon’s. He works with his clients to identify the real drivers of their business and develops strategies to focus on each businesses lead indicators of performance.
- Thank Mark Going to run through a real life client and show how we are utilizing our SME business insights & tools, which is translating into improved profits for our clients This is a real life case study of a Business Mentoring client The challenge: significant downturn in trading that resulted in a reduction in profit The solution: prepare a budget and 3-way forecast, allowing us to look at how a number of scenario’s would impact on the profit margin. The benefit to this client: focus their attention on the actual business and not just the day to day issues. As a result they now better understand their finances and what impact they have on the longevity of the business. A number of business improvements have been made, some more painful than others but as a result they have achieved an increase in their profits. Essentially we inspired and reinvigorated the management team and the business. Let’s look at the figures and what was achieved in more detail
- We perform a HealthCheck on the business Where you have been What are the trends What does that look like moving fwd We can give you the tools to test the effect of your decisions before you implement them. Now, this is what we do with all our SME clients when we meet with them to run over their yearly accounts Here is what we discovered with Client A when we looked at the overall ‘health’ of the business.
- Profitability KPI’s These are correct as of 30 June 2016 and we compare year to year
- CHANGE TITLE Compares each Profit line item with the equivalent Cash Flow Revenue is compared to the actual Cash banked from the Sales. The Operating Profit can then be compared to the Operating Cash Flow. Here is where we can model what the impact of any changes on cash flow will be I always get asked – Great Jon I made that much revenue last year but whew is all the cash? This will show us where . .
- What is your business worth? What do you WANT it to be worth? And how do we get you that value? What is the impact of 1% changes on your cash flow and on your profitability
- Powerful and flexible 3-way budgeting, forecasting and business modelling tool. Comprehensive set of reports and fully customisable dashboards giving our clients the data and insights to confidently make the right business decisions, all based on financial facts Running your business without a budget is like getting in your car and driving with no idea of where you are going or where you want to go. Many business owners think having a budget is a waste of time often because the future is almost impossible to predict. But, if you set your budget to a desired level you can then drill down and work out what sort of things you would need to do to achieve these results. a very powerful brainstorming session with your business partners, advisors and team who will now be thinking 'outside the square'. Of course if you are looking for finance, a carefully prepared Three Way Budget & forecast will impress your financial backers
- We offer our clients a fully customizable snapshot of the business. Including relevant info for specific business Monthly updates and tracking Highlighting trends and changes that can be dealt with Our dynamic reports, include flexible up to the minute dashboards that include financial and non-financial data. Assisting everyone to stay on track and easy to spot issues and areas that need extra attention.
- This is a dashboard with more micro KPI
- Mentoring can help you think outside the box and gain new perspective on your ideas and plans By entering into a formal mentoring relationship with Bentleys you will set a clear business direction, including strategies, initiatives and goals to get you there. It’s about creating a clear view of the future and what business success means to you. It also makes you accountable. Allows you to continue with your passion We help you discover: Your KPI’s Where is the future for the business and where should efforts be focused We look at where the business revenue is coming from - is it the right mix? Is there a reliance on a few clients for the majority of income? What needs to be done to turn the issue around? Regular meetings help everyone to be accountable and complete the tasks We look at the expenses line by line – what are the variances and why? Scenario testing helps to workshop ideas and we can model the effect on KPI’s