The Voice of Australian Business 2016 Mark Chapman – CEO The Bentleys Network ceo@bentleysnetwork.com.au

What is The Voice? The Voice of Australian Business is 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 business owners, ‘C’ suite or Directors (decision makers) who are remunerated for their time. The survey has been carried out twice a year since 2014 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.

Why does Bentleys collect this data? There are 2,121,235 businesses in Australia Of which 2,045,333 are SMEs They produce over 90% of GDP They provide approx. 69% of the workforce Source Australian Bureau of Statistics 2015 SMEs feel that they do not have a ‘Voice’ A professional services firm needs to understands its clients concerns. Bentleys/MBA wants to position itself as a ‘thought leader’

Running an SME is……..

The Voice Surveys The Voice 1 April 2014 The Voice 2 November August 2015 The Voice 4 March 2016 The Voice 5 October Business Confidence The Dining Boom Attitudes to Tax and GST Challenges for SMEs Risk Management The budget Review 6 months on Technology concerns Technology – why the slow uptake? Investment in Technology Digital Disruption NBN and Technology Foreign Investment Knowledge of Foreign Investment Access to Funding Cross Cultural Challenges Domestic and International Influences Industrial relations The emergence of The Micro Business Succession Planning and Superannuation The Budget Expectations and the SME Environment Superannuation and Retirement

The Voice Surveys The Voice 1 April 2014 The Voice 2 November August 2015 The Voice 4 March 2016 The Voice 5 October Business Confidence The Dining Boom Attitudes to Tax and GST Challenges for SMEs Risk Management The budget Review 6 months on Technology concerns Technology – why the slow uptake? Investment in Technology Digital Disruption NBN and Technology Foreign Investment Knowledge of Foreign Investment Access to Funding Cross Cultural Challenges Domestic and International Influences Industrial relations The emergence of The Micro Business Succession Planning and Superannuation The Budget Expectations and the SME Environment Superannuation and Retirement

Aim To give you an insight in to the main findings. To identify trends and challenges To brief you on the latest findings To ask you what we should ask next!.

What is an SME?

Definitions? Metro – A capital city or its surrounding suburbs Non-Metro – a non state or territory capital or a regional or remote area Medium: 20-200 employees Small: 5-19 employees Micro: 1-4 employees

Data Available

The Voice 1 – April 2014 We gained insights into: The potential and mood of agriculture – where they are falling behind and how we can help prepare them for ‘The Dining Boom’ All important business confidence – are things finally on the up? Wide spread misconceptions about foreign investment – how much of Australian business is actually Australian? Fears and opportunities about technology especially The Cloud – which sectors have their head in the clouds about The Cloud Strong feelings on industrial relations – how well are we working?

The Voice 1 – Ignorance or Xenophobia The Voice 1 – Ignorance or Xenophobia?? What proportion of GDP comes from FDI?

Queensland key take outs The top strategy among QLD SMEs to become more resilient is to work longer hours (33%) followed by improving productivity (30%) and diversification (26%) A quarter of QLD SMEs are expecting a business decline - low confidence in QLD Only 44% familiar with cloud computing are using it for a service other than email

The Voice 2 – November 2014 Understanding Tax

What makes Tax hard to understand?

The Voice 3 – August 2015 Business Confidence Comparison of recent data

The Voice 3 - Evidence suggests that SMEs are finally embracing technology

The Voice 4 - March 2016 Risk Management and where to go for advice

The Voice 4 – Source of information to inform decision making

The Voice 5 – October 2016 What did we learn? Larger SMEs are maintaining greater confidence than their smaller counterparts – but Small and Micro improving 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

Confidence is beginning to recover

Confidence in business prospects over the next 12 months

This confidence leads to… likely business action

This confidence leads to… an opportunity – a touch point

Trends over time – 12 months

What was wanted from the Budget?

What did you get from the Budget?

What affects Confidence?

Brexit, Terrorism, Refugees, the US Election and the Turnbull Government

Attitudes to the impact of international political and economic events

Not much faith in the Turnbull Government

Mixed views from SMEs Expectations of the new Turnbull government’s first 100 days Constant bickering between the parties over non-significant issues, and not much real action on anything. Micro, other Queensland Growth funding to support innovation and reduce crowding out the market due to higher Government spending not delivered by the market. Medium, Melbourne I'm afraid not much. The lack of a Senate majority is going to be a significant issue in terms of moving forwards. Medium, other Victoria Little - no decisions made as majority is too slim. Small, Brisbane I have confidence in our Prime Minister – looking at continued investment innovation, FTA’s with our high growth neighbours and support for small business owners via tax offsets and incentives. Small, Queensland The senate not being an obstruction to the government in getting the budget under control. The Senate to do its job with the Australian economy and what is good for Australia as its focus and get rid of stupid political self interest. Micro, other NSW Improved economy … more jobs Medium, other Victoria They move very little really, every change costs us more for services and goods, then there is more rules and changes to try to keep up with. Micro, other NSW More competitive tax system and incentives to grow workforce. Small, Adelaide To follow through with the promises. he needs to go back to the parties conservation roots this will encourage small business. Try and get the company tax cuts through the senate and to push the building regulation policy through. Small, other Queensland

The life of an SME

Age of the Business

Describes their business as a start-up

Founders and Sole Founders

Age of Sole Founders

Previous involvement in other businesses

Previous involvement in other businesses that have failed?

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, Queensland 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. Withdrawal of vital contracts, product not sufficiently developed. Small, Sydney Competition. Small, Queensland Director of the company taking money out of business and not replacing. Medium, Melbourne Disinterest of bankers. Micro, SA Economic downturn. Medium, Hobart Foreign imports. Micro, Melbourne Cyclone/fruit fly

Risk Management Do you have a formal Risk Management process? The top business risks for SMEs

Extent to which each area of the organisation is challenging and time consuming

Strategies for funding retirement

SMSF use

The Voice of Gold Coast Business

QUESTIONS?