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.
Starting in June, the annual trend of “End-of-Financial-Year” business closures again accelerated – where multitudes of closely held family businesses shut their doors for the last time.
We have already been witness to 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.
A prominent commentator Robert Gottliebsen wrote this week in the Australian, “Small Business in Australia accounts for an incredible 44% of our total employment” plus he also made this observation “Americans work for big organisations. Australians work for smaller enterprises – an incredible difference” Yet as every accountant, business broker and representative body has been saying 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.
The absence of investment money, lack of general business confidence and deficiency of entrepreneurial risk-taking is having a massive impact on the historic rates for inter-generational business handovers.
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.
SME’s 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’s 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 suggests selling price across all SME’s 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 the small business funding owners’ retirement is swiftly coming to an end – but it’s much worse than that. What is going to happen to the new breed of entrepreneurs when they catch-on that there is no retirement pay-day.
Over the last thirty years, SME’s 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 is 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. When the suburban professional, the tradie and the shopkeeper or service supplier reaches age 65 to 70 or becomes unwell and they are forced 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 SME’s. 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 more information, please talk to me:
Kevin Lovewell
