I am going to give you a small sob story – as in SAVE OUR BUSINESSES; because I really don’t think our politicians have grasped the true significance of the actual state of small business in this nation. SME owners are facing tough times.
Starting in June, the annual trend of “End-of-Financial-Year” business closures again accelerated. Multitudes of closely held family businesses shut their doors for the last time. We have already witnessed the rapid (and unchecked) decline of regional based business and employment since the GFC of 2009. Any person who has bothered to travel outside of their capital city suburban environment has seen that evidence.Prominent commentator Robert Gottliebsen observed this week in the Australian,
“Small Business in Australia accounts for an incredible 44% of our total employment.... Americans work for big organisations. Australians work for smaller enterprises – an incredible difference”
Yet every accountant, business broker and representative body has been saying it for about five years: There is an increasing trend in numbers of SME closures. Now, that trend has rapidly expanded – unnoticed - into highly populated coastal corridors.
3 factors impact hugely the historic rates for inter-generational business handovers: The absence of investment money, lack of general business confidence and deficiency of entrepreneurial risk-taking.This is not referring to, or linked to, the often-quoted statistic of business failures that occur in the first five years. We are talking here about businesses that have 20, 30 and 40 years of continuous trade behind them. SMEs once represented 70% of Australia’s national wealth and was a major employer. Today it could be much less. The contribution of SME’s to national growth is not found in recruiting; it is in being an owner/worker, basically being self-employed.
Retiring owners are finding it difficult, near impossible, to transfer their businesses; even at what previously might have been called “Fire-Sale” prices. Our recent sales and historic data suggest selling price across all SMEs has declined by approximately 30% since Christmas 2016. Parents increasingly cannot hand farms or businesses – whether professional or trade based - over to the kids due to the absence of investment finance. The era of small business funding owners’ retirement is swiftly coming to an end. But actually it is much worse than that. What will happen to the new breed of entrepreneurs when they catch-on that there is no retirement pay-day?Over the last thirty years, SMEs powered a generation from youth to present day, permitting baby boomers their freedom. Owning a small business provided community employment. It enabled people to buy groceries, buy homes, take holidays, pay school fees, pay sporting fees. In essence, SME income and expenditure drove the nation and the governments’ own tax revenue. Now these family-owned small businesses are simply closing up. Knowledge and skill are not being sold-on, handed-over or even given away. The wealth and experience held by an entire generation is dissipating like early morning mist on a pond.All of us are feeling the onset of this tsunami. What will happen when the suburban professional, tradie and shopkeeper or service supplier reach age 65 to 70? Or when they become unwell and they have to simply shut up shop? How many associated jobs will also disappear into this whirlpool?
Yet some politicians continue to act and speak as if their war on business will have a beneficial outcome for the community. That they remain convinced we can forever drive economic growth via high taxes and more spending – rather than facilitating investment in business ownership, simply numbs the mind. This is a call to all level of Government to take their foot off the throats of SMEs. National wealth is eroded with the closure of every small businesses. There is a real decline in national capital occurring right now with the accelerating numbers of business closures and fire sale handovers. The investment savings held by self-employed entrepreneurs in their SME businesses cannot be freed-up if it cannot be transferred. If you need help to protect the value of your business and prepare your exit so you can preserve jobs and your retirement money, get in touch to discuss how we can help
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