+ About Tim Reed
Thursday, November 05, 2015
It’s been just under two months since Malcolm Turnbull became Australia’s 29th prime minister after beating Tony Abbott in a dramatic leadership ballot. It’s not news that this historic act increased the Liberals’ popularity amongst the nation, almost immediately. Just one week after Turnbull was sworn in, the Federal Government recorded a significant jump in the opinion polls, with an election-winning lead over Labor, 51 percent to 49 percent.
As the voice for over 1.2 million small businesses enterprises (SMEs), we wanted to understand whether this sentiment translated to our small business community; the engine room of Australia, and some of the hardest working people in the country. We went out and asked over 400 small business owners the impact, if any, the recent change in prime minister had on their perception of the government’s support towards SMEs.
The overall impact of the change in prime minister was seen as positive to SMEs with 35 percent noting their impressions of the government had improved since Turnbull came to office.
This came down to two things;
Firstly, SMEs rise and sink with the broader tides. Over the past couple of months, there has been a steady increase in general business confidence. According to a National Australia Bank survey in September, business confidence index jumped from 1 point in August – its lowest level since mid-2013 to 5 points in September. SMEs live off consumer spending and big business, and with the steady improvement of business conditions and confidence, this has had a positive multiplier effect on small business owners.
Secondly, SMEs have considered Turnbull a reliable and consistent politician for years. The feedback we’ve received from our conversations with small business owners reinforces Turnbull as a prime minister with a fresh message and unique perspective. Turnbull speaks about what is required for a robust SME community; entrepreneurialism, innovation and a thirst for technology and learning.
Turnbull’s rise to the nation’s top job has given Australia’s business confidence a well needed shot in the arm. The test now is whether the prime minister can translate his popularity into tangible reform, that will drive the Australian economy and fuel further success in one of the most industrious groups of Australia – the small business sector.
Friday, October 09, 2015
By Tim Reed
The latest MYOB SME Snapshot has revealed the current education system is failing to foster the next generation of entrepreneurs and innovators.
As part of our monthly survey, we quizzed over 400 SMEs about their thoughts around current student learning, and its connection to the success of Australian small businesses.
Almost 60% of those surveyed agreed that the education curriculum is not providing the skills that students need to be entrepreneurial and innovative in the future.
Furthermore, when asked about whether the current education system groomed students for running a business, two thirds of the respondents agreed that it did not. Similarly, almost half felt their own education had not helped them in running their own business today.
It’s no surprise that we are falling behind on the international scale of innovation. A recent study by Microsoft found that 70% of SMEs felt their workplace did not support innovation. Research from NAB revealed a similar result, with only one in 17 businesses in Australia found to be ‘highly innovative’.
There is so much more work we can do to embed innovation in our thinking, culture, and work places. The MYOB results indicate that if we are going to foster innovation and entrepreneurialism, it needs to start with the education system. We need to start developing these skills early, so we can tap the creative potential of the next generation of business leaders.
This future focus on entrepreneurship is crucial to Australia’s economic success, yet roughly more than 40 per cent of SMEs are at risk of failing in the first few years due to poor business management. We need to future-proof our students and ensure they have the skills and confidence they need to not only start their own business, but flourish earlier on in their career.
We found that our SMEs didn’t necessarily believe their university degrees helped them get to where they are today. In fact, roughly 78% of respondents didn’t feel that a degree was required to run a business.
This shows us that our businesses people are learning on the job and didn’t learn their skills from their school or university studies. We need to start a discussion about fast-tracking our entrepreneurship and teaching more of the skills needed in schools, TAFE, private colleges and universities.
Small business is the backbone of our economy. Our hope is that in the future, there will be more children wanting to be an entrepreneur, alongside a teacher, a firefighter or a lawyer.
Wednesday, August 05, 2015
By Tim Reed
It’s been the buzz word for months. The “small business package” has been at the forefront of political discussion, headlining every news outlet since its announcement in May 2015. And rightly so. For the first time in a decade, the Government prioritized small businesses by putting them at the heart of government policy.
The centerpiece of the policy was a $20,000 tax break that allowed businesses with annual turnover under $2 million to claim immediate tax deductions for as many sub- $20,000 purchases as they choose until June 30, 2017. It feels like “back to a better future” could be the motto of the Liberal government. The announcement signified a reversal from last year, when the Government reduced the instant tax deduction for assets costing up to $6,000 to a lower limit of $1,000.
As a result, the spotlight is now on this important group. But three months since the announcement, has it received the anticipated reception? Has it got small business owners spending; subsequently stimulating investment; bringing forward planned hires and driving an increase in productivity and business confidence?
Over the last three months, we monitored the finances of a group of 30,000 MYOB customers to understand if there had been any changes year on year, since the introduction of the instant tax break. The results indicate some reservation. At the end of June 2015, these businesses showed no increase in spending. In fact, MYOB in-house data revealed that the net outflow of our customers between May and June 2015 was 40 percent less than that of May and June in 2014.
So, why has this happened and what impact does it have on the success of the policy?
Firstly, we saw an immediate jump in business confidence. The National Australia Bank monthly business survey for June revealed that business confidence rose from 8 to 10 points in June 2015, its highest level since September 2013. If this policy did nothing other than deliver a much-needed shot in the arm to business confidence, it is a win.
Secondly, quality feedback indicates that many SMEs do intend to utilise the $20,000, but rather than be trigger happy, they also thinking strategically about the right time to purchase items and \taking into consideration their current cash flow. This demonstrates the maturity of small business owners, as well as the success of the policy to help SMEs grow and thrive.
The Government now has an opportunity to lop a particularly nasty piece of red tape for small businesses – the requirement for coding GST-free transactions into one of eight categories. If we took a simpler approach, as they do in New Zealand, it would more than halve the time it takes small business to complete GST reporting, and slash the $13.7 billion time cost to business that we estimate.
The federal Budget presented an opportunity for the Government to remove many obscure federal taxes to create an environment more attractive and conducive to doing business. Our small business operators are saying ‘bring it on’ when it comes to tax reform, and we’re right there with them. If our small business sector is to flourish, we can’t shy away from taxation reform.
With the taxation review well underway, we’re hopeful the Government will lead the way in creating a simpler, more effective taxation system. The current system is stifling business and must change.
Looking forward, we’re hopeful businesses utilise the positive changes in the Budget. It’s a great time for business owners to look to the future and assess opportunities to invest in products and services that will impact their business trajectory.
As the saying goes, you’ve got to spend money to make money, and though there is always more work to be done for our small businesses, the introduction of the $20,000 instant tax break could make a decision to invest more compelling than ever before.
Tim Reed is the CEO of MYOB, and also sits on the advisory panel for Business Council of Australia.