Small businesses are the backbone of Australia’s economies.
They contribute 40 per cent of our national economic output and employ almost half of our workforce (Source: ANZ).
Beyond their economic contributions, small businesses are the very fabric of our regional communities. Our prosperity, health and well being regionally rests on the commitment, brilliance and resilience of our 802,000 regional small businesses (Source: Australian Bureau of Statistics).
Around 10 per cent of regional small businesses are doing incredibly well, leading their industries, innovating and setting an example for all to follow. You don’t need to look far to see these great Aussie regional businesses – like Birds Nest in Cooma, the Long Tack Pantry in Jugiong and the Junee Licorice and Chocolate Factory in Junee, just to name a few.
Sadly, however, these success stories are in the minority. The reality is that too many small businesses fail, or ever realise their true potential.
Recent statistics tell us about half of all businesses started in Australia see their fourth birthday. By their tenth birthday, more than 70 per cent have failed (Source: Australian Bureau of Statistics).
For regional communities, that equates to 71,694 businesses failing each year (Source: NSW Small Business Commissioner).
That’s not okay.
Regional Australia, we have a problem: Regional small businesses contribute so much, but they are failing, and not enough is being done about this.
As a businessperson living and working in regional Australia, I’ve seen the real-life impact of small business failure.
Far beyond the simple financial realities of a failed venture, there are human costs borne by the business owner, their family and their staff. Business owners often face mental health issues and family breakdowns. They often lose faith in themselves and face in the community.
This happens quietly, and then these people – these families – are forgotten. We see this unfolding frequently and it’s frustrating to know that things could be very different. As a family man and a regional business owner, I am deeply concerned and motivated to do more.
In the spirit of full disclosure, I’m in the business of regional business. In establishing the Regional Entrepreneur Academy – designed to help regional small business owners forge resilient, scalable and investment-worthy businesses – we started looking at the reasons behind business failure in our region. In fact, we invested a considerable amount of time trying to better understand the performance of regional business in Australia.
What we concluded from our research is, beyond the disciplines and mentoring we provide, regional business owners do benefit from taking the following four simple steps to ensure they don’t become a statistic. These steps include:
- GET REAL.
- GIVE YOURSELF A BREAK.
- CALL THEM OUT.
- STAND UP.
Our goal: To support regional businesses to thrive and avoid becoming a statistic.
Yes, that’s right: Get real. It may seem basic, but the first step is to honestly assess yourself, your business and your plan for the future.
We know that 90 per cent of small business owners do not receive quality business training as part of their technical training (Source: MGI Australian Family & Private Business Survey, 2013). This is true no matter if you are a plumber, baker, physiotherapist, lawyer or surgeon. And so we go in blind and ill equipped.
Research conducted in 2015 by Next Move Consulting shows most small business owners have never learned how to:
- Assess the financial viability of their idea;
- Establish a simple business plan;
- Interpret a set of financial statements;
- Create a simple financial model or manage cash flow;
- Develop or manage a budget;
- Write a sales or marketing plans;
- Put a simple legal agreement in place to protect their assets;
- Protect their intellectual property; and
- Attract and manage staff.
Put simply, if you’re in small business, you are probably an excellent technician in your chosen field, but may lack the business knowledge and training needed to really excel. Start by assessing your skills gaps. This is where you can make your life easier. What are your strengths and where are your weaknesses? What leaves you scratching your head, or losing sleep at night? (Hint: it’s probably not your core product or service.)
Next, take realistic steps to bridge the gaps you find. Outsource the tasks that you find most difficult to the experts. There are many ways to outsource online, including Airtasker, Upwork, TaskArmy and various other virtual assistance services. Find ways to delegate the low-value activity. Seek out small business training or advice, and find a good business adviser or mentor.
Then, set realistic goals and a clear and concise plan to achieve them. We know that only 28 per cent of SMEs have a business plan in place (Source: Australian Financial Review, 29 May, 2016). However, planning is vital. A 12-month plan-on-a-page is a great place to start. Set yourself and your business three or four realistic goals per quarter and determine the tactics you need to get you there. If you don’t know how to write a business plan, ask.
By getting real, you may build new skills, your business will be better resourced, and the very act of taking charge will leave you empowered to get on with doing the high-value work you do best.
Give yourself a break.
As a regional business owner or CEO, this isn’t easy.
I get it. I’ve worked in small businesses since I was a kid. It’s bloody hard work and sometimes it feels like there’s no end in sight.
We can’t know what we don’t know and quite often business skills are far too often overlooked. This is the stuff we should be taught in school. And, in the absence of holistic business education, we even start working in areas that are misaligned with our strongest skill sets. [Dont be a statistic – Step One].
Think about the time you’ve spent developing the technical skills, knowledge, training and qualifications to perform your job. Why is that we expect that the skills necessary to run and grow a business will suddenly appear the minute we start trading?
Once you decide to go easy on yourself, you can give yourself a break – literally.
We know that a third of all small business owners work more than 50 hours a week and 58 per cent earn less than $50,000 per year (Source: NSW Small Business Commissioner). They take, on average, less than two weeks leave a year (Source: MGI Australian Family & Private Business Survey, 2013).
As a business owner, it’s likely that you’re bearing the burden of all the business risk and you’re not getting the rewards. When you’re in business, it’s easy to fall into the trap of working longer hours to keep things humming, but that’s a short-term solution at best.
Your family and your health will suffer long-term if you don’t address it. Owner burnout is a sure-fire way to instability – and failure – in the business.
Make sure you pay yourself and that you take holidays. If that scenario instantly provokes an “as if” from you, it’s time to call in help. Again, outsource where possible, consider short-term and permanent staffing arrangements, and seek out the business advice needed to make it happen.
Take charge, and Call Them Out.
Having spoken to thousands of regional small business owners throughout my career, there is no doubt in my mind that many professional services are letting our small business owners down.
ABS data shows that regional areas may be underserviced in many areas important for small business development. You only need to look at the figures to see that small owners are not getting the full service from their professional partners.
- 17% of businesses have an up-to-date family will;
- 7% have an appropriate business will;
- 31% have a clear succession plan;
- 32% have a formal exit strategy;
- 34% are ready for investment; and
- 15% have an external board.
(Source: CCH survey)
Where there is a constant failure by business professionals to deliver full services in regional communities, small regional business owners start settling for less. The hope for a holistic service offering to regional businesses quickly fades away.
As a witness to the under-servicing of small businesses, I’m calling out business professionals across regional Australia: Are you truly looking after ALL the needs of your small business clients, or are you doing only what it is that is expected of you? (Their tax and not their financial performance reporting as an example).
As a recipient of professional services, it’s up to you to call out your individual providers.
- If your lawyer is completely reactive to your needs, ask them why;
- If you only see your accountant at tax or BAS time, ask them why;
- If your financial adviser is more concerned with selling their product than meeting your needs, ask them why; and
- If your insurance broker can’t find insurances to fulfil your needs, ask them why not.
As one of my mentors suggests, ‘Call it tight.’ It’s time to demand more. You are worth it. What you’ll discover is that, when you start to demand more, you can start to give yourself a break. Dont be a statistic – Step Two.
It’s clear that there are many things you can do to change the future of your business immediately. There are other things that take time. After all, small business is a marathon and not a sprint.
A healthy, resilient business must be capable of rising to each challenge.
And it is incumbent upon you, as the business owner or CEO, to stand up, get moving, and get uncomfortable. This is because your business will not outgrow you. The health, resilience and adaptability of your business is directly linked to your willingness to grow.
Now, more than ever, your personal growth is imperative. Why? Because the world is in the midst of rapid and unprecedented change. There is a new sense of global interconnectedness, and we are exposed to the greatest in human and business achievement every minute of the day.
This exposure inspires and dares us to do greater things – to take greater leaps forward – and to realise our full potential as human beings. In striving to do greater things, you must have the courage to demand more and not settle for less. Don’t be a statistic – Step Three.
You are called to do business differently. You are called to experience a wider perspective, and refocus your business so it is aligned with the times. And so you have to be willing to get out of your own way and let others support you.
And, I get it, this is not easy.
When practised, though, there is a very real positive impact on your health and resilience (and, by extension, your business’s). As R. Buckminster Fuller said:
“When individuals join in a cooperative venture, the power generated far exceeds what they could have accomplished acting individually.”
allowing other people to support you is incredibly beneficial.
If you’re doing things on your own, you’re falling behind – and you’re likely feeling the pain and the struggle of doing so. This “go it alone” approach is, in my view, a systemic problem, and dampens the true potential of regional individuals and businesses.
You can stand up and take an approach that will serve you, your business, and the community around you. So, get started!
In business, we’re always part of a bigger picture, so we have a role to play in ensuring the system in which we operate is working for us. Start by using your voice – join your local business chamber, lobby your local member, talk to your council. Demand that regional small business is firmly on the agenda.
The most important thing in all of this is that you keep going – one foot in front of the other. When the path is not clear, forge your own. Adapt, play to your strengths and think of new ways of doing things, even when they’re scary as hell. There’s much to be gained from modern technology and don’t be afraid to think big.
Yes, running a small business is one of the toughest assignments on the planet, but it can also be one of the most rewarding. With technology and the digital age, there has never been a better time to scale your business and thrive. You just need the right people around you and the right business model and strategy. These things, plus an unwavering commitment to your own growth, will support you to get the job done.
Jeremy Hutchings is a business development specialist and CEO and co-founder of the Regional Entrepreneur Academy. He lives in Wagga Wagga, NSW, Australia, with his wife, Jane, and their four incredible children. You can contact Jeremy at firstname.lastname@example.org