The Voice of Australian Business 2016Wave 5

The Voice of Australian Business 2016

Fab Fanayan

Director – Taxation & Business Services

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

The focus of the Voice 5

• The current SME environment

• Attitudes towards technology

• Superannuation and retirement

What is an SME?

Definitions

micro: 1-4 employees

small: 5-19 employees

medium: 20-200 employees

Metro – A capital city or its surrounding suburbsNon-Metro – a non state or territory capital or a regional or remote area

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

The current SME Environment

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

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

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

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

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

Where is this confidence coming from?

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 theFederal 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

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

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

The life of an SME

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

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

Age of Sole Founders

38

41

33

30

38

38

Total

Micro

Small

Medium

Metro

Non-metro

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

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)

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

Opportunities and Observations

Risk Management

34%

21%

34%

56%

36%

31%

13%

11%

14%

17%

14%

12%

53%

69%

52%

26%

50%

57%

Total

Micro

Small

Medium

Metro

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

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

Describing technology use in the organisation

13%

40%

10%

17%

20%

We are very tech savvy and we proactively look for new andinnovative 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 researchand adopt

We don’t take much intereset in new technology and wouldn’t describe ourselves as innovative

Strategies for funding retirement

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 otherinvestment dividends

Use my age pension

Sell my current house and moveinto 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

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

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-concessionalcontributions

Lowering the superannuation concessional contributionscap to $25,000 per annum

Requiring those with combined incomes and superannuationcontributions 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 balancecap 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

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

The impact of implementing SuperStream on business - overall

26%

10%

2%

38%

25%

Savings in time spent on superannuation

Savings in resources allocated to administeringsuperannuation

Other impacts

No impacts

Too soon to tell

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

Working with our clients on their business

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

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.

Profitability KPI’s

Where did my cash go?

What is my business worth?

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

3-way forecasting

KPI Dashboard

KPI Dashboard

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

QUESTIONS?