PowerPoint Presentation

The Voice of Australian Business 2016

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The Voice of Australian Business 2016

Mark Chapman CEOThe Bentleys Networkceo@bentleysnetwork.com.au

INTRO4TH VOICEGREAT DEAL OF INFOCAN ONLY TOUCH THE SURFACEFOR SERVICE PROVIDERS/CONSULTANTS/CLIENTSHAPPY TO MAKE AVAILABLE OR COME AND TALK TO YOUR STAFF

WHAT IS THE VOICE?2

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 fourth Voice survey and the data represents what SMEs are telling us.

LONG TERMSMEC SUITE

WHY3

Why does Bentleys collect this data?There are 2,100,162 businesses in AustraliaOf which 2,045,333 are SMEs They produce over 90% of GDPThey provide approx. 69% of the workforce

Source Australian Bureau of Statistics 2015 SMEs feel that they do not have a VoiceA professional services firm needs to understands its clients concerns.Bentleys wants to position itself as a thought leader

READ THROUGH

STATS MAY VARY BUT REASONING CLEAR

DATA IS INTERESTING

TEMPTING TO TRY TO MAKE CONCLUSIONS BUT IT IS MORE ABOUT TOUCH POINTS

EXAMPLE OF TOUCH POINT

RUNNING AN SME IS HARD4

Running an SME is..

THIS SLIDE ALONE GIVES US A TOUCH POINT

SO FOR US MORE ABOUT BEING ABLE TO CONNECT WITH CLIENTSAND DEMONSTATE AN UNDERSTANING

BUT ALSO WE DO GET A LOT OUT OF ANLAYSING THE DATA

PAST SURVEYS

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The Voice SurveysThe Voice 1April 2014The Voice 2November 2014The Voice 3August 2015The Voice 4March 2016Business ConfidenceBusiness ConfidenceBusiness ConfidenceBusiness ConfidenceThe Dining BoomAttitudes to Tax and GSTChallenges for SMEsRisk ManagementTechnology concernsTechnology why the slow uptake?Investment in TechnologyDigital Disruption Foreign InvestmentKnowledge of Foreign InvestmentAccess to FundingCross Cultural ChallengesIndustrial relationsThe emergence of The Micro BusinessSuccession Planning and SuperannuationThe Budget Expectations and the SME EnvironmentSelected industry sectorsAll Industry sectorsAll Industry sectorsAll Industry sectors3280 SMEs350 SMEs350 SMEs350 SMEs

TALK THROUGHSHOW TRENDSBUS CONFTECH

A QUICK REVIEW OF SOME KEY DATA FROM PREVIOUS SUREVYS6

Western Australia key take outs Most confident state with 67% confident in business16% say they have delayed investment to improve business resilience, as well as diversification, working longer hours and improving productivity 52% of SMEs are familiar with cloud computing, only 6% of those who arent using the technology for something other than email plan to adopt it in the next 12 months

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The Voice 2 - SMEs believe that Tax is too complicated

NOV 2014A CONCERN THAT HAS NOT REALLY BEEN DEALT WITH

SHOW SLOPE -TYPICAL SLIDESO WHEN IT DIFFERS INTERESTING

METRO/MICRO/SMALL MEDIUM EXPLAIN LATERTHE VOICE 38

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

IN THE LAST SURVEY STARTING TO SEE SMES TAKING UP TECH

SHOWS TRENDS USEFUL FOR ADVICE AND A TOUCH POINTTHIS DATA MAKES THE SURVEY VALUABLE

AND SEEEING AN INCREASE IN BUS CONFIDENCE9

The Voice 3 - Business ConfidenceComparison of recent data

TALK THROUGH BUT DID IT LAST??

AND WHAT CONCLUSIONS CAN WE DRAW?

LET SEE WHAT WE ASKED IN VOICE 4?10

The Voice 4 - What did Bentleys ask?Business Confidence to what extent do you feel concerned about business prospects over the next 12 months and what will this confidence lead to?The Budget 2016 what do you want to see in the budget and do you think the rate of GST should be raised to 15%Risk Management what are your key business risks and do you have a formal risk management process?

Do you seek external advice when was your organisation banking relationship reviewed and by whom?Digital Disruption is it a threat or opportunity and in what areas do you think it can benefit your business. Have you automated any of your processes?Cross Cultural Challenges do you operate in markets outside Australia or New Zealand and what are the challenges you face?The SME Environment time in business, competitors, business intelligence and your advisors

YOU CAN SEE WE KEEP SOME THEMES

BUT ALSO GET IDEAS FOR THE NEXT SURVEYS FROM QUESTIONS

EXPLAIN BUDGET, RISK MANNAGEMENT, EXTERNAL ADVICECROSS CULTURAL

DEFINITIONS11

Definitionsk?micro: 1-4 employees49%small: 5-19 employees26%medium: 20-200 employees 25%

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

TALK THROUGH

NOT GOING TO GO TO TURNOVER 10 MILLION.

WE HAVE A LOT OF DATA AVAILABLE12

Data AvailableBy LocationBy Size

EXPLAIN THE DETAIL AND METRO AND NON METRO

WILL ONLY SHOW IT IF RELEVANT

THERE IS A LOT OF DATA

BUS CONFIDENCE13

Confidence is beginning to weaken

JUST HALF ARE SOMEWHAT OR EXTREMLy WORRIED STRENGTH OF CONFIDENCE LOWERDECLINE IS DRIVEN BY SMALL AND MEDIUM POINT OUT NO CHANGE AT BOTTOM ENDCHANGE IS WITHIN TOP END

NO REAL CHANGE OVER SHORT AND LONG TERM

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Short and long term confidence

THE BUDGET GIVES SOME SHORT TERM LACK OF CONFIDENCE

THIS DECLINE IN CONFIDENCE IS DRIVEN BY SMALL AND MEDIUM BUSINESS

LETS LOOK AT THIS FOR MICR/SMALL/MED AND METRO AND NON METRO

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Medium sized business is more confident for long term prospects

WHAT SEEING HEREMEDIUM LESS CONFIDENT THAN BEFOREBUT STILL GREATER IN SHORT AND LONG TERMMICRO IS STATIC AND PESSIMISTICMICRO ALSO INDICATE NOT PLANNING CHANGESOR ACTIONS THAT MIGHT BENEFIT BUSINESS

SO WHAT ARE SMES PLANS FOR NEXT 12 MONTHSWITH THIS FALLING CONFIDENCE

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Plans for the next 12 months

MICRO-GROW PROFITSFOR SMALL BUSINESS - REVENUE GROWTH AND STAFF GROWTHAND INVESTING IN NEW TECHMEDIUM BUSINESS - LOOKING AT ACQUISITIONS AND SEEKING SPECIALIST ADVICENO REAL SURPRISES BUT SMALL BUSINESS AS WE SHALL SEE LATER TENDED TO BREAK THE TREND 38% OF ALL BUSINESES INDICATED THAT THEY WANTED TO DIVESIFY

WE ASKED WHAT CHANGES TO BEHAVIOUR 17

Changing behaviours in order to meet business goals

SADLY MICRO INDICTED THE LEAST INTENT TO CHANGE BEHAVIOUR TO MEET BUS GOALS

THEY WERE ALSO LESS LIKELY TO MONITOR COMPETITION AND HAVE A RISK MANAAGEMENT STARTEGY

THE BETTER CUSTOMER EXPERIERNCE WAS MAINLY ABOUT RELIABILTY AND MAKING THE CUSTOMERS FEEL SPECIAL

NOTE 22% - OPPORTUNITY

A QUICK LOOK AT THE BUDGET18

The Budget

IT WAS INTERESTING TO ASK WHAT WAS WANTEDLATER WE WILL ASK FOR POST BUDGET OPINION

GENERALLY OPINION WAS DIVIDED ON IF BENEFICIAL MEASIURES WOULD BE INCLUDEDONLY 13% OF MICRO BUSINESSES THOUGHT THAT THE BUDGET WOULD HAVE BENEFICIAL MEASURES COMPARED TO 44% OF MEDUIM

THIS IS THE BREAKDOWN 19

With the benefit of hindsight -what was wanted from the budget?

BENEFIT WAS HIGHEST IN METRO AND MEDIUMNOTE SLOPE

TALK THROUGHCLEAR DISTINCTION BETWEEN MICRO AND MEDIUMMETRO AND NON METROBUT ALOMST 40% WERE NOT EXPECTEING A BENFICIAL BUDGET POSS RELATED TO CONFIDENCE

SO WHAT DID THEY WANT?20

With the benefit of hindsight -what was wanted from the budget?

SIMPLIFCATION WAS TOP OF LIST COMMON THEMECUTS TO RATE OF CORPORATE TAXEXTENEND THE IMMEDIATE ASSET WRITE OFFINCREASED INCENTIVES FOR EMPLOYEEES POPULAR IN MEDIUMAND SCAPPING NEG GEARINGGST STILL RAISES IS TS HEAD 27% SUPPORTED RISE TO 15%

Just over a quarter of businesses overall (27%) supported lifting the rate of the GST to 15%, contingent on a corresponding reduction in personal income tax.

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Rate of GST to be changed?

NOTE MICRO ARGUABLY THOSE MOST AFFECTEDWE DID PASS THE SURVEY ROUND TO SOME BENTLEYS CLIENTS

THE RESULTS WERE INTERSTINGNOT SURE WHAT TO MAKE OF THAT

MOVE ON TO RISK MANAGEMENT22

Risk Management

RISK MANAGEMENT WWAS SUGGESTED BY A MEMBER OF THE AUDIENCE AT A PREVIOUS VOICE

AND BACKED UP BY QUESTIONS AND DATA TO SUGGETS THAT IT WAS AN ISSUEAS WE SHALL SEE MOST BUSINEESES DO NOT HAVE A FORMAL RISK MAN PLANCONFUSION ABOUT WHAT ONE ISALSO CONFUSION ON HOW IT DIFFRES FROM A BUS CONT PLAN

WE ASKED - DO YOU HAVE A RM PROCESS?23

Do you have a formal Risk Management process?

WE ASKED THIS SIMPLE QUESTION. THE RESULTS WERE ALMOST IDENTICAL FOR A BUSINESS CONTINUITY PLAN

IN BOTH CASES MEDUIM BUISINESS AS LEADING THE WAY UNDERSTANDABLE

THIS IS A GREAT TOUCH POINT OFR US THE MACDONALS EFFECT

MOST DID NOT SEE NEED, OR TOO SMALL RISKS NOT APPLICABLE

WHAT DO SMES CONSIDER THE KEY RISKS

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The Top Business Risks

COMPETITION MORE MICRO AND SMALL CONCERNBUT DESPITE BEING TOP RISK ONLY THIRD ADMIT TO MONITORING COMPETITORSMEDIUN SAW REPUTATION AS A RISK MICRO NOT AT ALL.

BAD DEBTS WAS NOT HIGH ON THE LIST BUT WE WANTED A DEEPER INSIGHT IN TO THIS25

Looking closer at Bad DebtsLength of time business would survive without debtors repaying

FROM THIS IT YOU CAN SEE 48% CAN SURVIE 4 MONTHS OR GREATER

BUT NOTICE SMALL OUTSTRIPS MEDIUM

NOTICE NO REAL DIFFREENCE BETWEEN METRO AND NON METRO

SOME MORE DETAIL ON THIS26

Amount profit has to decrease for organisation to be unable to operate by business location

HOW MUCH DOES PROFIT HAVE TO DECREASE TO MAKE THE ORGANISATIONUNABLE TO OPERATEEXPLAIN CHARTAMOUNT PROFIT ON BOTTOMAVERAGE IS 47%Note non metro performance

QUICK LOOK AT BUSINESS INSURANCE

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Level of business insurance for current organisation

THIS GIVES AN INDICATION OF ATTITUDE TO RISKSOME NOT APPROPRIATE SHOW THIS TO REALLY LOOK AT THE RED AREAS TO HIGHLIGHT THE KEY LACK OF MANAGING RISK IN SOME AREASCOMMENT ON GREY AREATOP 4 AS EXPECTEDLOWER ONES SHOW POSSIBLE LACK OF ADVICE

OF MORE INTEREST TO THE AUDIENCELOOKING AT THE FIGURES OF USE OF ADVISORS28

When was your organisation's banking relationship reviewed by a trusted advisor?

WE ASKED WHEN WAS THE ORGANISATIONS BANKING RELATIONSHIP REVIEWED BY A TRUSTED ADVISOR?

AS YOU CAN SEE:

LESS THAN 50% REVIEWED IN LAST YEAR BY ACCOUNTANT OR FIN ADVISOR40% NOT REVIEWED FOR OVER 1 YEAR TOUCH POINTSNOTICE -THE BEHAVIOUR WAS CONSISTENT ACROSS ALL SIZES AND LOACTION

LOOKING AT USE OF ADVISORS TO MANAGE BANKING RELATIONSHIPS29

Does your business use an advisor to manage your banking relationships?

JUST OVER A THIRD REPORTED USING AN ADVISOR TO MANAGE THE PRACTICE IS MORE COMMON AMONG LARGER ORGANISATIONSTHOSE THAT DO NOT USE AN ADVISOR SAID IT WAS BECAUSE THEY HAD A GOOD RELATIONSHIPWITH THE BANK OR JUST FELT THEY DID NOT NEED AN ADVISOR SCEPTICISM AND PRICE WERE REASON NOT TO 9% DID NOT KNOW THAT YOU COULD USE AN ADVISOR

MOVING ON TO EXTERNAL CONSULTANTS IN BUSINESS DECISIONS30

Use of external consultants in making business decisions

A QUARTER OF SURVEYED SAID THEY USED EXTERNAL CONSULTANTSAND AS YOU CAN SEE LARGER BUSINESSES WERE MORE LIKLEY TO DO SO

THIS IS PERHAPS AS EXPECTED BUT IT GETS INTERESTING WHEN

YOU LOOK AT WHO AND WHAT HELPS SME MAKE DECISIONS

I.E. ADVICE FROM THOSE INVOLVED IN THE PROCESS31

Extent to which the following inform business decision making process

OVERALL AND REGARDLESS OF SIZE OR LOCATION THE STRONGEST INFLUENCES ON BUSINESS DECSIONS MAKING WERE OWN FINANCIAL DATA AND ACCOUNTANTS GOOD NEWSAND THE EXTENT OF INFLUENCE INCREASED WITH BUSINESS SIZE

SMALL AND MICRO WERE MORE LIKELY TO USE FAMILY AND FRIENDSTHIS IS ABOVE BANK OR FIN ADVISOR.

TAKING IT ONE STEP FURTHER WE LOOKED AT SOURCE OF INFORMATION TO HELP DECISION MAKINGSO THESE ARE INVOLVED IN THE PROCESSBUT WHAT ACTUALLY HELPS MAKE THE DECISION?32

Source of information to inform decision making

THIS IS WERE IT STARTS TO GET WORRYINGINFORMATION IS ONE THING BUT DECISION MAKING IS ANOTHERTALK THROUGHPROFESSIONAL SERVICES RANK UNDERNEATH SOCIAL NETWORKSIT SHOWS THE POWER OF SOCIAL MEDIABUT ALSO THAT 22% DO NOT SEEK INSIGHTS THESE TENDED TO BE MICRO BUSINESSES OPPORTUNITIES OTHERWISE RESULTS AS EXPECTED BY SIZE - BUT SMALL BUSINESS RELY ON NEWSPAPER WAY IN EXCESS OF MICRO AND MEDIUM

SOME KEY STATS ABOUT THE SME ENVIRONMENT33

THE SME Environment

WE LOOKED AT SUCH FACTS AS AGE OF BUSINESS

OWNING OR RENTINGS

JUST COVER AGE OF BUSINESS34

How old is your business? by size

TALK THROUGHMOST BUSINESSES 1-10 YEARS OLDTHEN DROPSSMALL BUSINESS IN THE 11-20 YEARS BRACKETOTHERWISE AS EXPECTED

BUT LOOK AT MICRO IN THE LESS THAN A YEARTIES IN WITH BERNARD SALTS PREDICTIONSGOLD COAST BY 2020 22% OF ALL BUSINESS MICRO

LETS LOOK AT THIS BY LOCATION35

How old is your business? by location

SAME CHART BUT WITH LOCATION AS KEY FACTOR

METRO BUSINESSES TEND TO DOMINATE THE STATS UP TO 10 YEARS

THEN NON METRO TAKES OVER COMBINE THE TWO.

THE SMALL BUSINES IN NON METRO AREAS TENDS TO BE MORE SUCCESSFUL OVER TIME

Digital Disruption36

Digital Disruption

TWO POINTS FROM QUOTE

PACE

SOCIAL INTERACTIONS

GEN X GEN I

SO THREAT OR OPPORTUNITY37

Digital Disruption a threat or opportunity?

MAINLY EVENLY DIVIDED 25%- 29%

SMALL BUSINESESS MORE POSITIVE LIKELY TO BE MORE FLEXIBLE AND HAVE FUNDSMEDIUM HAS A GREATER DIFFICULTY IN ADAPTINGMICRO LACK THE RESOURCES

MEDIUM BUSINESS WAS FAR MORE LIKLEY TO HAVE INTRODUCED AUTOMATION

WE ASKED THEIR OPINION ON BENEFITS OF TECHNOLOGY38

Possible Benefits of Technology?

EXPLAIN THAT THIS IS PERCEPTIONGENERAL AGREEMENT UP TO CASH FLOW THAT TECH IS BENEFICIAL

LACK OF TRUST IN B2B SOCIAL INTERACTIONREDUCING STAFFING COSTS SEEN AS HAVING TO EMPLOY MORE INITIALLYDOES NOT ASSIT IN RECRUITING

BUT WE THEN ASKED WHAT THEY USE39

Has your business used the following?

THIS IS WHAT THEY ARE ACTUALLY DOING

SO A LACK OF COMMITMENT DESPITE THE BENEFITS

NOTE NONE OF THE ABOVE - ROLE FOR ADVISOR

BUT FOR THOSE 47% WHO HAVE IMPLEMENTED HAS IT HELPED?40

But has there been a benefit?

CLEARLY YES

GOOD DATA TO SHOW THE BENEFITS OF TECHINTRESTING ABOUT RECRUITMENT

A TOUCH POINT

FINALLY LOOK AT OVERSEAS41

Does your business operate outside Australia or New Zealand?

WHEN CLASSIFING OVERSEAS WE CONSIDERD NZ AS DOMESTICTHE MOST COMMON MARKETS WERE USA, UK AND ASIA

MICRO UNDERSTANDBLY DID NOT FEATURE THAT MUCH

THOSE THAT DID NOT CONSIDER OPERATING OVERSEAS HIGHLIGHTED THAT IT WAS NOT WORTH THE EFFORT

LOOK AT THE BASICS42

Does your business operate outside Australia or New Zealand?

SO ALMOST 1 IN 5 SMES OPERATES OVERSEAS SURPISINGALMOST IN IN 3 MEDIUM

NOTE BENTLEYS CLIENTS WELL INFORMED

WHAT ARE THE CHALLENGES?43

What are the challenges of operating overseas?

PHYSICAL DISTANCE SEEN AS GREATEST CHALLENGES

HIGHER THAN LANGUAGE

KEY POINT IN RELATING TO TECH/SOCIAL INTERACTION

WE ASKED ABOUT KNOWLEDGE OF AGREEMENTS -TPP44

Awareness of the Trans-Pacific Partnership (TPP)?

THE AGREEMENT BETWEEN THE 12 PAC RIM COUNTRIESINCREASE RIGHTS OF GLOBAL CORPORATIONSSURPRISING AMOUNT OF AWARENESS

THERE IS A LOT OF CONCERN SO WE ASKED IF A THREAT OR OPPORTUNITY?45

Trans-Pacific Partnership (TPP)Threat or Opportunity?

YOU CAN SEE THE UNCERTAINTY OF IGNORANCEBUT THE THREAT ASPECT DOES TEND TO OUTWEIGH THE OPPORTUNITY

CHINESE FREE TRADE AGREEMENT46

Intention to take advantage of TPP and/or CHAFTA

THE CHINA FREE TRADE AGREEMENTCAME IN TO PLACE DEC 2015WILL HELP TO SECURE CONTINUED GROWTH OF TRADEREDUCE COSTSMAKE BUS EASIER

MORE POSITIVE THAT TPPMETRO AND MEDIUMBUT STILL LACK OF KNOWLEDGE47

Video Trade Agreements

Darren Lee puts them in to perspective hereTells us what they areAre SMEs taking Advantage of themChallenges of operating overseas48

The Voice SurveysThe Voice 1April 2014The Voice 2November 2014The Voice 3August 2015The Voice 4March 2016The Voice 5October2016Business ConfidenceBusiness ConfidenceBusiness ConfidenceBusiness ConfidenceBusiness ConfidenceThe Dining BoomAttitudes to Tax and GSTChallenges for SMEsRisk ManagementThe budget Review 6 months onTechnology concernsTechnology why the slow uptake?Investment in TechnologyDigital Disruption NBN and TechnologyForeign InvestmentKnowledge of Foreign InvestmentAccess to FundingCross Cultural Challenges?Industrial relationsThe emergence of The Micro BusinessSuccession Planning and SuperannuationThe Budget Expectations and the SME Environment?Selected industry sectorsAll Industry sectorsAll Industry sectorsAll Industry sectors3280 SMEs350 SMEs350 SMEs350 SMEs

TALK THROUGH49

Australias predicted growth industries

TALK THROUGHHand over to MR50