Transcript

Resolving small business disputes

Olivia Pearce — Tue, 03 Sep 2024 02:07:26 +0000

Resolving small business disputes Olivia Pearce Tue, 09/03/2024 - 12:07

03 September 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Raf Epstein.

ABC Radio Melbourne

Subject: Concern about small businesses being paid, resolving disputes, sleepwalking into a big corporate economy

Raf Epstein

Bruce Billson, former MP, is now the �Թ�� and Family Enterprise Ombudsman. Good morning.

Bruce Billson

Raf, fab to be with you and your listeners, and thanks for your interest in small and family businesses.

Raf Epstein

Some of the numbers in your press release are pretty disturbing. I take it these are numbers from the people who've come to you. What is it like for small business right now?

Bruce Billson

Really challenging. We know even the last full year where tax information is available, 46% weren't making a profit. And that's concerning. But for the million and a half self-employed people, those that do that as their full-time livelihood effort, three-quarters are taking home less than average weekly wages.

So, it's a challenging time. The slowness of growth, the inflation, the change in consumer spending is really hitting some businesses very hard. Others have a business model that's attractive for the times, they're doing okay, but increases in input costs and inability to pass those on is really squeezing margins. And then the issue that you mentioned, worries about getting paid for work they've actually done.

Raf Epstein

So, the money that Bruce's business should pay Raf’s business, because I did work for you, how much is that gotten worse? And just give me some idea of what their problems like?

Bruce Billson

It’s huge. 40% of the cases that come to us looking for help are that ‘Bruce hasn't paid Raf’ example that you alluded to. What we're also seeing is a real doubling of people inquiring about their worries, their stress, that someone that they've done work for might be teetering on insolvency and they might miss out getting paid for work they've already done.

And let's think about that. If you and I were putting the electrical system in Tarneit at a new subdivision, we're worried about being paid. We've laid out for substations, the conduit, the cabling, and so we've got outgoings already. So not being paid is just not about us being paid for our time and our effort, and hopefully a little bit of profit. We've already laid out a lot of money. And then our challenge then can cascade onto someone we owe money to, and you can find that becomes a really significant concern, and that's what's popping up in the inquiries that we're receiving.

Raf Epstein

As Ombudsman, I should mention, actually, it's the �Թ�� and Family Enterprise Ombudsman, so that gives you some sense of who Bruce works for effectively. As Ombudsman, Bruce, do you sort of bash heads together and make sure that Raf does pay Bruce or Bruce does pay Raf. Is that what you do?

Bruce Billson

We aim to. Where it's Raf just wanting to make sure Bruce pays right now, we're not debt collectors. That's not our role. But where there's scope for us to bring the parties together, where communication may have stopped, we get involved.

Raf Epstein

So, you do mediation?

Bruce Billson

Yeah, we do. We have alternative dispute resolution mechanisms. But we also try to tool-up the parties to that transaction with some skills and some tactics that they can deploy. A lot of people that go into business, Raf, the idea of chasing debts probably isn't their number one priority. And not everyone's good at it. So, we actually provide some better practice guidance to say, maybe go about it this way. This will start the conversation. That will get all the documentation that you need in place. And if that doesn't bring about a change and a satisfactory resolution, come to us and we'll get alongside the parties. We're impartial.

We just want to get the matter resolved but get business back to business. And in so many cases where these niggles and grievances arise, the businesses need to keep doing business with each other. So, there's no point having a winner takes all sort of scorched earth approach. We want to get a resolution, make sure the parties are happy with the outcome, or as happy as they can be, get them back to business, and hopefully have those business relationships still intact.

Raf Epstein

On 774 Bruce Billson's the �Թ�� Ombudsman, it's 10 to nine. I'll read this text from Roger, who's in Eltham. Raf, why do you constantly characterise small business as simply cafes, coffee sellers or construction? Small business is a diverse engine. Professional services, consulting, design, transport, logistics, primary production, training, communications, not just family incorporated and not just bloody coffee. That's from Roger.

Bruce Billson

Roger’s on the money there, Raf. It is a diverse space, but it's also what's showing at multi-speed economy for different people because of the different type of business that they're in. Some that are providing digital solutions for other businesses, they're very popular right now because finding efficiencies within the business, using technology to deal better with the business of running the business so more time and the businessperson’s bandwidth can go into delighting customers and growing and nurturing their enterprise.

Raf Epstein

And Bruce without getting too political, if the economy shrinks, which is I think what we're going to get tomorrow, it's not growing as much as it was, still growing, but barely. Does that necessarily mean that those training, communications, logistics, cafes, small business, do they necessarily find it harder if the economy is barely grown. Does one follow the other?

Bruce Billson

Yes, that does happen, but the consequences can be different. There's quite a lot of research that says the economic trauma, if I could use that phrase, tends to strengthen those that are already strong, because they've got the depth of resources, the skill set. It makes newer and smaller businesses more vulnerable. And the other thing that we've seen, and this just isn't in the last window of time, this is over the last decade and a half, Raf, we've actually been sleepwalking into a big corporate economy.

We're seeing the big end of town growing. We recently celebrated Micro, Small and Medium-sized Enterprises Day, and of course, we were really acknowledging and celebrating the two in every five private sector jobs that small business makes possible. But it used to be one in two. We celebrated the one-third of GDP that small businesses make possible, but it used to be 41%. So, we're seeing a contraction there. And what comes with that is those economic opportunities and livelihoods land differently.

People that live outside the capital cities or don't have a big mine in their neighbourhood, they rely on these small and family businesses who give so much economic opportunity, but they're also great contributors in the local community. And when you start sort of taking maybe a cylinder out of the engine room of the economy, it has implications right throughout the community and the economy and the opportunities that people can look forward to into the future, and that's why I get out of bed every day for them.

Raf Epstein

Thanks for joining us today.

Bruce Billson

It's good to be with your Raf, take care.

Raf Epstein

Bruce Billson is the �Թ�� and Family Enterprise Ombudsman.

Concern about small businesses being paid

Olivia Pearce — Mon, 02 Sep 2024 22:20:08 +0000

Concern about small businesses being paid Olivia Pearce Tue, 09/03/2024 - 08:20

02 September 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Emma Hannigan.

ABC Radio Gold Coast

Subject: Concern about small businesses being paid

Announcer

It's a challenging time for many small businesses. If you're the owner of one, what is the biggest stress you are under at the moment? New figures from the Australian �Թ�� and Family Enterprise Ombudsman shows a surge in requests for help from distressed business owners who fear they won't be paid by those who owe them money and are worried about their own ability to meet financial commitments. Reporter Emma Hannigan spoke with the Ombudsman, Bruce Billson, about these concerns.

Bruce Billson

The small business environment's extremely challenging right now. We're seeing a lot of small business owners really concerned about getting paid on time, a wariness about whether other businesses they're dealing with are solvent and also new challenges as more turn to digital platforms to find customers.

Emma Hannigan

What is the main concern for small businesses at the moment?

Bruce Billson

Well, the biggest concern, by quite a margin, is about getting paid. That could be either people receiving goods and services and then not paying in the time that's been agreed, or some contest over whether what was to be delivered, has actually been provided. But either way, we're seeing about 40% of our caseloads relate to delays in getting paid, and that, on top of some big businesses with appalling payment performance for small business suppliers, is a real concern for cash flow-dependent small enterprises.

Emma Hannigan

Speaking of cash flow, what is the flow on effect for businesses if they're not getting paid, or they're concerned about not getting paid?

Bruce Billson

Well, the flow on effect is quite insidious, as it's not only a concern and a problem for the business waiting to be paid. That business also has suppliers and staff that it has to pay. So it can have a compounding effect, a cascading effect, where one business not paying in a timely way can have enormous implications for others, and in some cases, even make the business vulnerable for insolvency. Cash flow is the oxygen of enterprise, and if you not seeing those payments made in a timely way, it really can put the business in a precarious situation.

Emma Hannigan

What kind of impact does this have on the well-being of small business owners?

Bruce Billson

We've seen recent research from Treasury showing that a significant percentage of small business owners are expressing concerns about their own emotional and mental wellness. It's a big responsibility owning and running a business, and then, not only are you dependent on yourself for your own livelihood, but there’s also others that are equally dependent on it. For many business owners, their identity and their sense of purpose is almost central to their reason for being self-employed, and it makes business ownership so much more demanding than retaining a job, for instance. So that's what we see, and we know that there are concerns that people feel overwhelmed. There’s many expectations, and when there's additional challenges, such as not getting paid, that can have a very, very significant emotional impact on business owners.

Emma Hannigan

Bruce, are there policy changes that could be made to ensure that businesses are more stable and secure and don't have these kinds of issues from insolvent suppliers, or the concern about people becoming insolvent?

Bruce Billson

Well, there's probably three things that can be done right now. One is to take timely payment more seriously. I'm pleased that the Government has invested in its payment time reporting framework, but we're yet to see any meaningful improvement in payment performance, with still one in four big businesses taking 120 days or more to pay small business suppliers. That's just shabby performance and action needs to be taken.

Secondly, for the businesses themselves being more alert to the financial condition of parties that they're dealing with. We know the Tax Office is being far more aggressive now in pursuing debts owed by small business. And I think an appropriate step would be for the Tax Office to identify on credit reference platforms just who it is that they're concerned about where there are substantial debts outstanding, and then other businesses can decide on how and when to deal with businesses that have a significant tax debt outstanding.

The third point would be to actually think about contingencies. Understanding that cash reserves for many businesses are depleted, but having some continuity plan, some reserves that can take account of circumstances that aren't what you plan for, and not place the business itself in a difficult situation. I think that could be a positive step also that government and policy makers could support with small businesses.

Announcer

That's the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson.

How small business can get help

Olivia Pearce — Mon, 02 Sep 2024 22:11:50 +0000

How small business can get help Olivia Pearce Tue, 09/03/2024 - 08:11

02 September 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

Radio 2CC Canberra

Subject: How small business can get help, insolvency concerns, payment times, solving problems with digital platform providers

Leon Delaney

The latest report from the Australian �Թ�� and Family Enterprise Ombudsman has revealed a 50% increase in requests for help from business owners that fear another business which owes the money may have become insolvent or are therefore worried about their own ability to meet their financial commitments. Joining me now the Ombudsman. Bruce Billson, good afternoon.

Bruce Billson

Leon. Great to be with you and your listeners.

Leon Delaney

Well, this is apparently the most significant, most common challenge that small businesses face, getting paid by other businesses.

Bruce Billson

Certainly from our caseload, and there's about 6500 a year, 40% of those are about just trying to be paid. But also they've taken a slightly sharper focus on what's happening with the other party that they're dealing with. We know that many businesses aren't having a particularly profitable streak right now, that cash flow is a big concern for many. And businesses are hoping, whilst they may have taken all proper care in their own financial arrangements, they haven't gone and done some work or supplied things to another business that's running into trouble, and they might end up not being paid and having to carry the cost of the inputs that help them deliver that goods or service. So that risk of a cascading consequence where the difficulty of one business relates to another being caused, that's a real concern. We've seen noticeable uptick in that kind of inquiry.

Leon Delaney

The construction sector in particular is notorious for that kind of thing, isn't it?

Bruce Billson

It is, and that's why it's such a prominent part of our statistics. I think you and I and your listeners have spoken before about the construction sector, particularly when it's fixed price contracts, and there might be a delay in getting some equipment, some material. Maybe it might be harder getting the trained staff, the tradesmen that you're looking for. And the inflation pressures that we understand and talk about as cost of living pressures, are cost of doing business pressures. And you can find yourself part way through a project, and then all of a sudden, the other party - where we've seen quite a spike in insolvencies in construction - is unable to pay its bills, and then that has enormous impacts on your own business, particularly if you've laid out money to help meet that contractual requirement in the first place. So that's that anatomy of that cascading concern where the financial challenges of one business can have a really significant bearing on another business and their ability to pay their bills.

Leon Delaney

And while it is a feature of the construction sector, it's far from being the only sector where this happens. Other businesses also experience a similar thing, don't they, in sectors such as hospitality and similar types of businesses. What can a business do to protect themselves against that?

Bruce Billson

Well, there's a couple of things, and you're right, it's not just a construction industry thing. Hospitality, where margins are pretty tight at the best of times, it can be really significant there with energy costs really making it more difficult. Input costs, you know, even the interest rates are cost of funds for businesses, become more expensive and customers have less to spend. But even in sectors that are doing well, and we've seen recent results for the major supermarket chains, some big businesses are doing quite well, yet we still know one in four of their small business suppliers are having to wait 120 days to be paid.

So that brings into question, well, what can you do about it? It's pleasing that the government's focused on the Payment Times Reporting Register and actually making that more useful, so that a small business can check what the form is of big businesses and take account of that. There's also a range of credit monitoring services. That might not immediately jump to mind, but let's go back to your example. Just say we were doing a subdivision, there's new ones going on throughout Canberra and the region, and we were putting the electricity services in, if we're forking out money for cabling and conduit and substations and the like, you'd want to be pretty confident that the subdivider is actually able to pay the bills when it comes.

You can check these credit reference websites just to see whether they're late on making payments generally, or whether they've got a particular credit risk attached to them. And then you and I could decide, well, we might do that work, but we might want half the money up front before we even start.

The other thing to think about, too is the Tax Office is up and about. And I'm urging the Tax Office to really be using that credit reference notification process more often, and sooner, so that businesses can take that into account when they're dealing with another business. If that other business owes $150,000 to the Tax Office, I'd be wanting to know that if it did become insolvent, I wasn't going to get trumped by the Tax Office and other secured creditors who are going to get looked after way before we get looked after as a small business. They are a couple of steps you can take, along with a little bit of buffer where that's possible.

Right now, one in four small businesses, Leon, are reported to have no cash reserves, so they're really running close to the wire. If you're able to, the recommendation is six to nine months of operating expenditure put to one side so that you can navigate those choppy waters and survive yourself, even if you are faced with the setback like what we've described.

Leon Delaney

Although it can be difficult to accumulate that buffer when trading conditions are as tough as they are at the moment. Now, you've also reported that there's a significant number of small businesses having a lot of trouble dealing with digital platform providers. And of course, these days, digital platforms are pretty much the platform that businesses operate on, aren't they?

Bruce Billson

They are, and it's the fastest growing type of matter we're being asked for assistance with. You and I might be selling miniature goats. They are pure bread. We've trained them well…

Leon Delaney

You come up with such extraordinary examples, Bruce! Miniature goats. I never thought I was going to go into business selling miniature goats with Bruce Billson, but there you go.

Bruce Billson

And there we are at the Murrumbateman market selling them at market day. But when we're not at the market, we might be promoting the personality of our goats on our website, and then people can buy them through Marketplace or other of these digital platforms. And we might think things are pretty good. But then someone might hack into our account. They might take over our account. They might trash talk miniature goats to our disgust.

But more nefariously, they might get in there and start promoting other websites. We might have a credit card linked to that account, and they start spending our money on other things. We reach out to that platform provider, and we go to the frequently asked questions on their website, and it says, if you can't get into your account, get into your account to tell us you can't get into your account. That’s how nonsensical and unhelpful the current arrangements are. So, we try and get involved and speak to a real person. It shouldn't be that hard. These digital platforms need to do better. They need to have internal dispute resolution and assistance mechanisms so that long live the miniature goats.

But I use that in a facetious way to point to a very significant problem. If that's our only channel to our customers, all of a sudden, our business is down, we've got no way of reaching those customers, no way of supporting them and delighting them. And that could potentially have really big implications for our business into the future.

Leon Delaney

I've certainly heard of people having a business presence on social media, and it is their primary platform for selling. And then, for whatever reason, they lose control of the account, they get their account suspended, and all of a sudden they've got no business, and they've got nowhere to turn.

This point you've made about talking to a real person, this harkens back 20, 30, 40, years ago, Bruce, when I was banging on the table and shouting into a radio microphone about the number of big businesses now that when you ring them up, you get an automated recorded message menu system. And I said back then that what we need to do is pass a law that every major government agency, every major public entity and every big business must, by law, employ a real person to answer the phone and direct the call accordingly to preserve the status of proper customer service. It would solve the problem of customer service and unemployment at the same time by creating all those jobs for people to answer telephones. I think I've still got a case, don't you?

Bruce Billson

Oh, visionary stuff. You were before your time then, you are now. What a cunning idea actually having customer service with someone at the other end to give you service. And that's been a central recommendation of ours. We've gone through various digital platform inquiries. The ACCC has done some spectacular work. We know there's things that aren't working right in these sectors and that's what we've been calling for - effective and timely internal dispute resolution and support mechanisms, including scope to escalate to a real person. And if all else fails, they contact us. We get onto them and the deal we've got with some of these platforms is, look, we can recommend to government that they sting you with enormous costs and set up some complicated, expensive system. Or you can work with us to solve these problems. Your call, but we want to do the best by small businesses that rely on these platforms. And boy, can they do better.

Leon Delaney

I think my rule is probably more relevant than ever now that we're facing the age of chatbots and artificial intelligences. Bruce. Thank you so much, and I'll chat to you again soon.

3G shutdown to affect small, family and farming businesses

Emily Carter — Tue, 20 Aug 2024 05:47:07 +0000

3G shutdown to affect small, family and farming businesses Emily Carter Tue, 08/20/2024 - 15:47

19 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

Radio 2CC Canberra

Subject: 3G shutdown to affect small, family and farming businesses

Leon Delaney

There are lots and lots and lots of pieces of business equipment that might well be caught up in the phase out of 3G. Joining me now, the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson. Good afternoon.

Bruce Billson

Leon, great to be with you and your listeners.

Leon Delaney

Thanks for joining us today. I was a little bit surprised by just how long this list of business equipment and other related devices actually is. There's a lot of gear on there, isn't there?

Bruce Billson

Yeah, there is. And one of the things is it's not that obvious. I mean, at least with the old handsets, you get a bit of a hint when you're using it. A little symbol comes up in the top corner telling you what network you're on. So, there's at least something that might prompt you to think about it. But in terms of business equipment, your example with the transport system in Canberra is a classic one. No one gives a lot of thought to what the wireless connection is in the background busily doing its thing, whilst what you focus on as the primary purpose of that equipment does its thing.

So, you can think about everything from those point of pay, black square things you wave your card in front of, they might have a 3G chip sitting behind them to conclude the transaction. Even lifts, those emergency buttons you push if you're stuck in a lift, many of those are on 3G. And then all the way through to farming and equipment that might monitor water levels, open doors for stock, even your friendly surveyor, that little Total Station - doesn't sound as much fun as Theodolite - but a lot of those Total Stations, they use 3G as their communication link as well.

Leon Delaney

Now the obvious one, of course, is point of sale EFTPOS machines. I'm sure most of them have been updated, but there might still be some businesses with older machines that might be impacted.

Bruce Billson

And that's a concern. You might have had your system set up and going well. You might be a small business that sells miniature goats at the Murrumbateman market, and you probably don't give a lot of thought to what the little tap-and-pay device is that you use. In many cases, the older ones are using 3G as the communications link. So, what I'm urging people to do is, it might not be immediately obvious, but if you've got a piece of kit that's got a bit of a wireless connection, please check that out so that you don't find that equipment, all of a sudden, doesn't work when you need to count on it.

Leon Delaney

There are some other unexpected things that can also be caught up. There’re various pieces of computer software relating to record keeping, accounts and bookings and things like that. I'm not sure how that relies on 3G but apparently there are some circumstances where that might be the case.

Bruce Billson

That's where the records may be stored. You might have a tablet or a device that clocks when you're coming into work and when you're leaving. And then it might quietly go off to a central system that processes your pay. And there's other tracking monitoring equipment, like assets have a little device on them that lets you know where they are and what they're doing. And those are examples that aren't immediately obvious. But gee, if you're a business and you're counting on them to work, and all of a sudden, the day after October 28 they don't happen, that can come as a real shock, and the pressures on. So, we're saying, if you're not sure, check it out. Contact the suppliers of that equipment, ask the question, and don't become a casualty of loss of 3G functionality is our message.

Leon Delaney

Some of the more alarming things, if you'll pardon the pun, fire alarms and security systems could also be impacted. It is important that you check your equipment and find out whether it relies on the 3G network. How can business owners actually do that simply and easily? It sounds a bit complicated if you've got to track down every single manufacturer for every single piece of equipment that you have?

Bruce Billson

Sadly, the answer is yes, it is. It can be quite tedious. That's why, when the Senate was probing these issues, we were urging the telcos themselves to have a look at their billing data to say, well, who's paying to use the spectrum, the 3G service? And encouraging those telcos to get up and about talking with what's called third party equipment service providers, to at least have those service providers lean in and be proactive rather than wait for people to contact them.

Leon Delaney

Is there a sort of a simple rule of thumb? Because obviously 4G was introduced quite a while ago now, and I can't remember what date that was. But if you've got equipment that was built after a certain date, that should be safe, would that be right?

Bruce Billson

Look, that could be right. I'd hate to give that sort of advice on the run. It is best to check with the equipment suppliers. But even on the telephony thing, you may well have a 4G phone, but it might divert to 3G for emergency calls. In that case, best to jump on the website 3gclosure.com - there's a little process you can go through to check your handsets, because there's still thought to be nearly 100,000 people that haven't changed over. That's easy for that. The process around checking what's in your equipment, that's a little more complicated.

Leon Delaney

Yeah, I don't know, technology Bruce, it's a wonderful thing isn't it, so long as it actually works. I tend to keep on using something until it breaks. And if it's 10 years old, but it still does the job just fine, why do I need to get a new one? It's not fair, Bruce.

Bruce Billson

If you were a cattle rustler and you've got your Herefords down in the back paddock, and all of a sudden, a gate randomly opens because the technology is no longer there for you, I reckon that's not a good way to find out that it's not working.

Leon Delaney

Bruce, thanks very much for chatting today.

Energising enterprise

Emily Carter — Wed, 14 Aug 2024 05:50:59 +0000

Energising enterprise Emily Carter Wed, 08/14/2024 - 15:50

13 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Julie-anne Sprague.

Radio 6PR Perth

Subject: 14 Steps to energise enterprise

Julie-anne Sprague

There is a worrying trend and the �Թ�� and Family Enterprise Ombudsman, Bruce Billson, is sounding the alarm. He's concerned we are sleepwalking into a big corporate economy. Joining me to find out why and how. Bruce Billson himself, Bruce G'day.

Bruce Billson

Jules, fab to be with you and your listeners and how come Rush, rush from Paula Abdul is not on that list?

Julie-anne Sprague

That’s so good Bruce. We might do a best of three theme with songs that have the word twice in the title, and then we can get Paula Abdul.

Bruce Billson

I think you're onto something there, but what we’re not onto is great times for small and family businesses. There’s plenty of headwinds there right now, and I'm just trying to draw attention to just how challenging the circumstances are. But also some of the underlying trends and trajectory, which is why I'm concerned with sleepwalking into a big corporate economy.

Julie-anne Sprague

Let's talk about that. If people think about Australia and business, obviously big business operates, but a lot of people will think there's a lot of small businesses, a lot of family businesses, but that is starting to dwindle. Let's talk about how much it has changed over the decade. So, they represent around 33 per cent of the nation's GDP, Gross Domestic Product. But not so long ago, it represented an awful lot more.

Bruce Billson

Yeah, that's right. So, $1 in $3 generated in the economy we can thank a small business for, and that's worth celebrating. That's very important. That is a big deal. It's over half a trillion dollars. So yes, that is big, but it used to be 40 cents in the dollar, not 33, not so long ago in 2006. Even what livelihoods are powered by that economic contribution. We celebrate, as we should, two in every five private sector jobs being made possible by a small business. But that was over half in that same window back in 2006. I'm sort of just saying, look, this is a trajectory that's on. It concerns me because I see other things happening as well.

In the last full year of tax returns, 46 per cent of small businesses not making a profit. I see an aging small business owning community. The average age is now 50, was 45 back in 2006. But also, for young people. I mean there's only 8 per cent of business owners that are under the age of 30, whereas in the ‘70s, it was twice that.

So, something's going on and I'm just calling it out to say, hey, for people that aren't blessed with a big mine or a major employer in their community, the livelihoods that are made possible, we should be thanking small family and farming businesses for, and what can we do to best give them the best chance to be successful?

Julie-anne Sprague

A couple of points there you raise Bruce. If you're saying 46 per cent of small businesses did not make a profit, that says, to me, it's very, very difficult. And if you're a young person, honestly, why would you want to go and set it up if you're seeing that from a generation in front of you? So, what do we need to do as a country to make it at least an easier environment, so that they are able to be at least profitable?

Bruce Billson

We think we need to energise enterprise. We need to not just try, as we've been putting a lot of effort into, reducing new headwinds in the face of small businesspeople. What about putting some wind in their sails? What about celebrating that contribution we just spoke about? What about some incentives for people, particularly in those early years, when starting out a business is a very cash hungry thing to do. You might look like you're profitable on paper, but you've got money going out the door building up your capacity to deliver what you hope to deliver to your customers. So that's a real valley of death in terms of cash flow. We can do things in that space.

I think we also need to be more active in thinking about the regulatory impositions. It’s a big responsibility owning and running your own business. We want to make sure we're not making it so onerous that it's incredibly unattractive. And this is when we're thinking about new rules, new regulations, new compliance obligations. What's the right-sized answer, not what some big corporation could deal with where they got 20 people tucked away in a compliance area that gets out of bed every day doing that stuff. This is about the business of running the business and most enterprising men and women, that's not their jam. They didn't get into the business to lodge BAS returns. They got into the business because of some driving passion, some desire to delight their customers, some real area of great interest to them.

There's some of the things that we've outlined. In fact, we've outlined 14 steps that we think will help, and that's just some of them that we feel would really make the ecosystem as supportive as it can be.

Julie-anne Sprague

And the industrial relations system would feed into that if I'm thinking about regulation. So, there's your BAS statement. There's all the paperwork that goes with running a business, and it does feel to me, having a chat to business operators, that the burden has increased over time, and we need to look at that. But then you have an industrial relations system where you've got hard-working people, and I think by and by most of them want to do the right thing by their staff, but you have a system where the award rates are incredibly complicated. I feel like you need a university degree just to understand some basic awards. Do we need to simplify things Bruce?

Bruce Billson

We think we do. We've called that out as a particular challenge point for smaller employers. I mean, about 94 per cent of all the businesses that employ people are small businesses. But does anyone imagine that the workplace relations regime is actually built for them? It's not. It's built for big corporations, at the club of Industrial Relations lawyers, big unions, and they can navigate and play in that playground that they're familiar with.

If you and I, as enterprising men and women, want to build a business, we could possibly build a $10 million business, employ dozens of people, but still never be quite sure whether we've got the workplace relations arrangements right. Because we've seen some of the biggest, most sophisticated organisations in the country find themselves having made errors. And when we start talking about big consequences for getting compliance obligations wrong, that has a real chilling effect on people. They think, I'm not sure I've got this right, but gee, if I get it wrong, what's going to come down on me? Is it a ton of bricks, or is someone going to come along and help?

So, what we've argued for is let's have a dedicated �Թ�� Commissioner working within a dedicated �Թ�� Division at the Fair Work Commission so that the special circumstances of smaller employees is front of mind and what gets them out of bed every day. And if a small employer makes a misstep, that they get alongside that employer to support and help them to do the right thing, not have a real heavy compliance, and boy, are you going to be in strife sort of tone which isn't going to support adjustment and isn't going to support a proportionate approach. And we think there's a real opportunity to improve that aspect of it.

Julie-anne Sprague

And Bruce, just more broadly, Bob Gottliebsen, he wrote a piece for The Australian newspaper, a business commentator, well-respected, and he's making the point here that if we have a dwindling small business sector or family businesses that aren't thriving, that this makes the job of the Reserve Bank of Australia quite difficult. And so, the thesis being that it is in fact, small and family businesses that can keep a lid on prices. They are more nimble, they are more tuned to it. And big business can sometimes sit back and flex their muscle and say, well, we're big businesses, you're gonna have to pay this price. Has he got a point?

Bruce Billson

Yes, he has, and it’s a ripper piece that Rob's written about. He's drawn the connection between some of the things that we're talking about and some of the recommendations that we've put forward as positive action steps and steered it into one of the big challenges that we're facing right now, and that's the productivity challenge. I mean, if we can't be more productive and innovate and find new ways of delighting people, we then have these pressures in the economy. And a wage increase without productivity gains that go alongside it, is inflationary, and you end up having those sorts of challenges without the magic that sees innovation, new ways of doing things, better ways of operating from everything from the corner smash repair or through to someone running a digital tech platform. There's always better ways to delight the customer. Productivity is not, you know, go and invent Wi-Fi. It's little steps in the right direction that sees us being able to get more done and delivering more value for the effort and time we put in. And he's making the point that's so crucial, so crucial to trying to drive better outcomes for the economy, but also where small businesses are offering choice and innovation, whereas a big business can impose themselves on the economy, on their customers, and you can sometimes be too powerless to do something about it. So, it's a really good connection of a range of things. Some really big national challenges, with the day-to-day boots on the ground challenge that small and family and farming businesses are facing.

Julie-anne Sprague

There are some challenges indeed Bruce, and chief amongst them, I've got a rush, rush to the next story we’ve got.

Bruce Billson

Jules, it was great to be with you and your listeners.

Julie-anne Sprague

Thank you very much Bruce Billson, �Թ�� and Family Enterprise Ombudsman.

14 steps to energise enterprise

Emily Carter — Tue, 13 Aug 2024 04:32:29 +0000

14 steps to energise enterprise Emily Carter Tue, 08/13/2024 - 14:32

13 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Nadia Mitsopoulos.

ABC Radio WA

Subject: 14 Steps to energise enterprise, small business conditions, family business succession, lowering merchant fees on transactions, the high cost of insurance, tax discounts for small business

Nadia Mitsopoulos

There are 2.5 million small businesses in Australia. That actually makes up 98% of businesses in this country but they’re not contributing as much to the economy as they used to, and that's worrying Bruce Billson. Now he's the Australian �Թ�� and Family Enterprise Ombudsman, and he says we are sleepwalking into a big corporate economy. And he's with me now. Good morning. Mr. Billson.

Bruce Billson

Oh, Mr. Billson, that sounds like my dad. How are you, Nadia?

Nadia Mitsopoulos

I’ll call you Bruce, then. Now, Bruce, first of all, what contribution do small businesses make to the economy?

Bruce Billson

Well, it's really significant. And all of us, I think even yourself and many of your listeners, celebrated International Micro, Small and Medium Enterprise Day just a few weeks ago, and we were highlighting that a third of Gross Domestic Product, all the things that we produce in Australia, are made possible by small businesses. And two in five of the jobs in the private sector workforce are made possible by small business. So that's 5.36 million people counting on their livelihoods through small and family business effort. That's great. But what I was calling out was just a few years back in 2006 that third of Gross Domestic Product was actually 40%. That two in five jobs was actually more than two in four.

So there's this gradual decline, and that trajectory, I think, is quite worrying when we think about how are we going to generate productivity, new livelihood opportunities, innovation, and create the wealth and good fortune that the nation looks to and that small and family businesses are such a part of making possible.

Nadia Mitsopoulos

Why are we seeing that decline? What's the problem?

Bruce Billson

Well, we've got a few ideas around why that might be. Obviously, the pandemic has had quite an impact. The economists will point to, after a dislocation in the economy of that size the larger firms tend to do better. They've got deeper pockets, they've got avenues to raise funding, they've got capacities that are a small and family business that's flat out trying to deal with the headwinds doesn't have available to it. So that's part of it. The other thing too is we think there's a real need to focus on just how complicated governments at all levels are making owning and running a business. It's a big responsibility. We know that, and I know you know that, Nadia, and so do your listeners. But we don't need to make it harder than it needs to be and then really put in the road barriers and obstacles to enterprising men and women going their own way and creating their own business opportunities for themselves and others.

Nadia Mitsopoulos

So, you’ve got rising costs, and you've got rising red tape.

Bruce Billson

Yeah, it is. And at a time when cost-of-living pressures, which are rightly very much front of mind, they are cost of doing business pressures in small and family businesses. So, they're getting cost pressures coming through. The payroll’s going up. Super contributions are up. Rents are up. Energy costs are making their eyes water, and, frankly, insurance costs, they're ballistic at the moment. And all of those things and other inputs combined to make cost pressures very real in too many businesses at a time when they just can't pass them on to customers, because those households are really being careful about where their dollar is being applied. And that's really creating a margin squeeze.

And in the last full year of tax data, 46% of small businesses weren't making a profit. So, this is a really challenging time, and that's why I'm urging people in a position to do things about it, to actually do something. And why we’ve mapped out 14 steps that could be actioned pretty quickly.

Nadia Mitsopoulos

And I want to go to some of those steps in a moment. But can you just explain your comments that we are sleepwalking into a big corporate economy. What do you mean by that?

Bruce Billson

Well, that's that trajectory. When you look at the contribution made to our economy by small businesses that's contracting, and for larger business, it's growing. We look at that contribution to employment, the same thing is happening. There are fewer employing small businesses, employing a smaller proportion of the private sector workforce. Even when you look at longer term trends over profitability, if you're lucky enough to be a small business that's profitable, those profit growth year-on-year are at about 3%, so that's below inflation, whereas for larger corporates, it's 13%. So, you're seeing that dominant market position that larger businesses have being able to attract new ways of generating, for them, profitable activity at a time when small businesses are often receiving into that and with few choices.

The other thing we need to watch too is, you know, I'm all for celebrating people over 50. I'm one of those, Nadia, I confess. But the average age of a business owner right now is 50. Now that aging of the small and family business ownership population, that's something we should be turning our minds to as well. There's only 8% of current small business owners under the age of 30, yet in the ‘70s, it was 17%. So something's there, something's going on. And I think we just need to make that entrepreneurial pathway for people's lives more attractive.

Nadia Mitsopoulos

Or is it succession issues that the kids don't want to take over the family business?

Bruce Billson

Look, there's a bit of that. I mean, I travel around the country a lot. I was joyful in being in Perth just a few weeks ago. And you meet business owners, and particularly family businesses, where, you would think, in their gene pool that they'd be ready and ripe to take over the business. But I occasionally hear some saying, ‘I’ve looked at how hard mum and dad are working. I don't know what I want to do with my life when I grow up, but I know that's not it.’ There's a bit of that there too.

But the flip side is, particularly for people born overseas, a disproportionate share of business are owned and led by people born overseas. Perhaps that spirit that sees people migrate to a new country is part of the drive that sees many of that community become our business owners and leaders.

Nadia Mitsopoulos

Bruce Billson is my guest this morning. He's the Australian �Թ�� and Family Enterprise Ombudsman. A lot of you want to talk about this. I'm going to get to your calls in just a couple of minutes. So just some of the points and the kind of assistance that you suggest small businesses could have. First of all, can fees on card transactions, debit cards, credit card transactions, be reduced?

Bruce Billson

Yes, they can. And boy, shouldn't they do that right now. I mean, we think there's around $800 million to $1 billion of unnecessary fees being charged just so customers can pay for their goods and services at the checkout. Now that happens when you walk up to an EFTPOS machine, a payment terminal. You are time-poor, the staff behind the counter might have a long line of people to serve, you wave the card and you're out the door. Now what automatically happens in too many cases, is that payment is routed down a more expensive channel than it needs to be. That's usually one of those international cards where their fees are much higher than, say, a local EFTPOS option where the fees should be less.

Now the technology is there to actually have the device when you're paying, pick the most cost-effective channel, so that the fees are as low as they can be. But that device functionality isn't activated in about half of the small business merchants that our banks claim to be wanting to look after. So, we're saying, get on your bike and activate that functionality. That's good for the business, but it's also good for the customers, many of whom are a bit tired of seeing those little surcharge signs popping up everywhere.

Nadia Mitsopoulos

We sure are tired of it. What about tax discounts? What could be done there?

Bruce Billson

In other countries, such as Singapore, they recognise those early years of a small business can be, you know, the valley of death in cash flow. You got a lot of money going out the door to set up and scale up that business. And not always is the revenue coming in at the pace that you need it. So, in countries like Singapore, they actually say we'll discount the tax that you're expected to pay so that you can reinvest that money back into the business. Now it does a couple of things, Nadia. It helps those businesses with a flame of success within reach during a period of time where the journey is challenging to get through that time.

But it also makes a big statement that these people matter. They're important to our economic and societal well-being. Here's a clear, bold statement that we value that and we're going to incentivise that behaviour by the discount.

Nadia Mitsopoulos

You want discounts on insurance as well. You made the point earlier that insurance is really crippling for a lot of small business.

Bruce Billson

Look, it's terrible, and it's an unavoidable cost. Because unlike consumers who might make you know the decision for whatever reason to under insure, perhaps not insure, if they're brave or some other arrangement. Most businesses don't have that option. If you want to engage in trade and commerce, there are essential insurances you have to have. Yet we see the price of those skyrocketing. Now I respect and I admire the insurance industry for explaining why they're going up. That's fine. There's been a lot of explaining going on. What I'm calling for is a decisive action on what solutions look like. Start mapping out a better scenario so that small and family businesses just don't sit there paying through the nose in the hope that something will get better sometime soon.

Nadia Mitsopoulos

Gosh, there are so many people that want to talk about this. I'm going to get to calls. Bruce Billson before I let you go, finally, the other one that I found interesting is you want small businesses to have a greater chance of competing for government contracts, because you say that a lot of those government contracts favour the ‘in-crowd’ of familiar, established, larger suppliers.

Bruce Billson

Yeah, we did a lot of work on this Nadia. In fact, successive governments asked me to do some work on how to make the Commonwealth procurement processes more small business friendly. We asked a lot of small businesses, and they said, Look, you need to be really part of that ‘in-crowd’, knowing who to talk to, when things might appear on an obscure website, knowing how to make a bid, so that you can be part of that contest to win that work. Because who wouldn't like the government to be a key customer? That can be really game changing for a small business, but the rules are so darn hard. It's so complicated. Often those rules aren't even well understood by procurement officials, and we said, let's decode them so that commercially minded people can engage in that opportunity. That's good value for the taxpayer. You've got good, healthy competition. You're getting better outcomes for the nation.

Nadia Mitsopoulos

Well, you've sparked quite a conversation, Bruce Billson. I'm going to get to calls. Good to talk to you.

Bruce Billson

Fab to be with you, and best wishes to your listeners. Nadia.

Nadia Mitsopoulos

Bruce Billson, there. He is the Australian �Թ�� and Family Enterprise Ombudsman. And boy, you want to talk about this on ABC Radio Perth and WA.

Rising cost of small business insurance

Emily Carter — Mon, 12 Aug 2024 23:51:02 +0000

Rising cost of small business insurance Emily Carter Tue, 08/13/2024 - 09:51

12 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Eddie Williams.

ABC Radio South-East NSW

Subject: rising cost of small business insurance

Eddie Williams

Insurance is one of the biggest upfront costs for small businesses and over the last few years it seems like that cost has only been going up. A parliamentary inquiry is looking into the impact of climate risk on insurance premiums, not only impacting homeowners and property owners, but small business as well. Since the black summer fires, insurers have paid out nearly $17 billion in natural disaster claims across the country. Bruce Billson is the Australian �Թ�� and Family Enterprise Ombudsman and has made a submission to this inquiry.

Bruce Billson, good morning. How much of an impact are insurance costs having on small business at the moment?

Bruce Billson

Eddie, good to be with you and your listeners. It's having an enormous impact in that we've seen, particularly in New South Wales, when small businesses are asked what are their biggest pressure points for input costs – we understand them as cost-of-living pressures in households, these are business input costs for businesses – they’re citing insurance quite regularly and quite consistently. There's a couple of reasons for that. One, you touched on the simple maths, which is insurers are paying out a lot of a lot of money and they're looking to recover those funds and provision for future events with the premiums themselves and the pricing of them. There's a hardening in the insurance market. So, the appetite for insurers to come into Australia, and even for reinsurers a long way away from our shores to sort of underwrite catastrophic events is really being challenged at the present time. But I suppose the other point too, which is a little bit different from households, not that I would recommend people under insure or self-insure or choose other options. That's not an option available to most businesses, Eddie. They've got to have certain insurances to meet licensing requirements, obligations that they have to have in place so they can engage in trade or commerce. So they can't really get away from it and that's where it's really causing a great deal of pain for small and family businesses, particularly in your listening region.

Eddie Williams

And in this region which has experienced the worst of fire also flooding in recent years as well. How resilient are small businesses? How do they go in that recovery from disasters?

Bruce Billson

We've done a lot of work on this and, interestingly, only about one-in-four have an up-to-date continuity plan to deal with an event that really knocks their business off course. You know, it may be a natural disaster. It may be some event that surrounds a region that really impacts on the economy. Or it might be something that happens to the person that brings in the money, the core of the business, a health event for them. All of those things can really knock the business off track. Yet so few actually have what's called a business continuity plan. And those plans think about things not going the way you hope for, and what would you do about them. Do you have insurance? Do you have the kind of data that you know if your property is taken out by a natural disaster, that you can reach for key contact numbers? Do you have your business systems and invoicing and accounts in the cloud so that you can recover and get yourself back in shape?

And what we found was the better prepared people are clearly their prospects for recovery are improved. But it's not front of mind, and right now with 46% of businesses not making a profit, they're just trying to keep the lights on Eddie and trying to keep a pulse in the business. So some of these issues around planning and the business of running the business is probably not as front of mind for some and then when there's a disaster looming, it's action stations everywhere and that sometimes is not the time to be really planning for those sorts of events. You're really just prepping for something coming your way and hoping it's not catastrophic.

So it's really challenging at that level when it’s a tight-margin, not a lot of huge profits around, lots of other pressures in the economy, lots of headwinds facing small and family businesses. And then fold in the concern around an event really taking the business out or knocking it off course, and the cost pressures involved in having proper and appropriate insurance.

Eddie Williams

On ABC South-East, and you're hearing from the Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, on issues when it comes to insurance and disaster resilience for small business. There's something elsewhere in the country - the Cyclone Reinsurance Pool. You've suggested expanding that to include other disasters like fire and flood. In simple terms, how does it work? And how would it work?

Bruce Billson

The government's involved itself in the north of the country, and understandably so. Where there's a catastrophic event, a cyclone, those numbers that are paid out by insurers are eye-watering. They are enormous sums of money, because there's vast areas that are impacted, and the sums involved are very significant where property and assets are taken out.

What's happened after a series of cyclones in the north of Australia, insurers are saying, ‘Yeah, nah, I don't think we want to insure people up in this part of the world because of these natural disasters.’ So the government said, look, we just can't leave people to defend for themselves without any kind of insurance cover. What is needed to bring insurers back into the marketplace? And what was identified was this reinsurance pool.

So, imagine you and I are insurers. We go insure some properties down at Merimbula. Something terrible happens, it's an enormous sum of money for you and I. We as insurers then can insure against that happening, and then go and transfer some of the risk onto a reinsurance pool that steps in when those numbers are really eye-watering, and they risk bringing down our insurance arrangements, or impacting on whether we want to insure those properties in the first place, if that makes sense Eddie. So, it's like a second step in insurance for the insurers themselves to guard against really, really big claims being made. And that's what a reinsurance pool does.

That logic makes sense in Northern Australia for a range of reasons, but those reasons are starting to appear in other regions, and we should turn our mind to whether that's a mechanism to make sure businesses and households in, say the Bega Valley, have multiple options of insurers. Get some competition happening because people know that they have a reinsurance pool that's sitting behind them in the event that a really catastrophic event occurs.

And this is an example that's happened in the UK. There's parts of the UK you've seen those lifestyle TV shows, Eddie, I'm sure you're loving those if you listening to Boz Scaggs, where you can get on a canal and boat your way around. And clearly, those areas are subject to inundation by floods. And with the impact of climate change and more severe weather events, you're seeing those floods really impacting on those regions. And insurers saying, maybe this is a place where we don't want to insure properties. In the UK example, the UK government got involved and created a reinsurance pool called Flood Re, and Flood Re was there to back up those insurers in those regions in the event of a really catastrophic disaster.

Eddie Williams

Very, very briefly, consumer protections. Are they strong enough? Are there any for small business when they're dealing with insurance?

Bruce Billson

Well, the thing is, knowing exactly what's covered. This is the problem. For a lot of people, time-poor small businesses, insurance can be a pay it once, set and forget, move on with your life. But as we've seen so many times, Eddie, you pay for something called business interruption insurance, your business is comprehensively interrupted by an event, and then you're told, Oh, hang on, in the fine print, that's not covered. So that's not good enough. We're arguing for a simplification, a clarity around what kind of cover is available so people can make better and informed decisions. And then encourage people to stay close to their insurance so they know what's going on. They know what is covered, and they also know what they can do to improve their the risk so they mitigate risk, make themselves more attractive to insurers, and then hopefully have improved accessibility and affordability of that cover.

Eddie Williams

Bruce Billson, thanks very much for your time this morning.

Bruce Billson

Good to be with you. Take care.

Cyber security tips for small business

Olivia Pearce — Mon, 12 Aug 2024 01:19:05 +0000

Cyber security tips for small business Olivia Pearce Mon, 08/12/2024 - 11:19

31 July 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Tim Webster.

ABC Radio Sydney

Subjects: ransomware attacks on small business, cyber security tips for small business, insolvency concerns, business continuity planning, changes to privacy laws, energising enterprise, Carly Simon, Warren Beattie, Mick Jagger and James Taylor

Tim Webster

Australian businesses are paying untold amounts of ransom to hackers, but neither the government or the public actually knows how much. That's interesting. The Cyber Security Act, which is yet to be unveiled, would force Australian businesses and government entities to disclose the payments or face fines expected to be brought before the parliament at the next sitting. So, how will small business deal with all of that? The Australian �Թ�� and Family Enterprise Ombudsman is Bruce Billson. He joins us from time to time and we love talking to him. G’day.

Bruce Billson

Great to be with you Tim. And I haven't heard that Carly Simon version either. Everyone remembers that Coming Around Again that was in that Heartburn movie, and, of course, You're so Vain. I mean, that doesn't apply to anyone in this conversation, but that was a big hit.

Tim Webster

Certainly not. 1973 You’re so Vain. Well, the conjecture about who it was about, and I think she eventually said it was a conglomerate. Warren Beatty, Mick Jagger, of all the men she’s known.

Bruce Billson

Warren suffered from being a particularly handsome rooster. Who knows. But that’s not what's on our mind though. The pressures on small business.

Tim Webster

The Cyber Security Act. Now, that's an interesting piece of information. Untold amounts to hackers, but neither the government or the public knows how much. I imagine that's because business doesn't want them to know.

Bruce Billson

Yeah, it's a tricky one because most of the expert advice is don't pay for the ransomware to be released so you can get your data back. But, clearly, in some cases, businesses are making a commercial decision that rather than have the whole capability and their ability to engage in trade and vital data, there are reports that some actually pay the ransomware and then hope that the nefarious figures that are involved in cyber hacking then do the right thing and release their data.

It’s a bit of a contested space, but the expert advice is, overwhelmingly, don't pay the ransomware. But then the same experts are saying for us to be best placed to combat that kind of thing, we need to know what's going on. And therefore, you know, the information perhaps around who's doing the ransomware attack and what you may be asked to pay is something that's really important to those trying to defend us in this cyber security threatening world.

Tim Webster

I know it's a threatening world, but tell me, do you think it's fair to fine people for non-disclosure, whether its 15 grand or whatever it might be, because they’ve already been ‘got’, haven’t they?

Bruce Billson

I don't think it's fair for small business to face what could be a fine that, if it was applied to them, would cripple their business. At a time when small business people are so time-poor and margins are really squeezed, and we know nearly half aren’t profitable right now. If you're hit with a ransomware threat or challenge, I reckon you'd be pretty focused on trying to get your business up and going again. And one of the things that we're finding in this complicated, quite sophisticated regulatory environment, you might not even know to whom it is you need to report this breach, but you inadvertently break the law, and then you're faced with another crippling impact on your business.

We've been urging government to have, almost like an A-Team, that can get alongside small and family businesses that have a cyber event. Have them navigate that process, help them make sure they've got appropriate safeguards, but also help them recover on the other side.

I'd hate to see anything that discourage people reaching out for that help if they feared getting pinged with a fine. So, maybe if it's a bigger organisation Tim, and they've got, you know, technical experts and they know all the organisational structure that happens in this space. Maybe a more punitive response is arguable. A time-poor resource-stretched small business, I’m not so sure about that.

Tim Webster

We were, as you would know, a victim of that CrowdStrike. And it was incredibly dramatic here when you've got a studio full of blue screens. So, it's happening to everybody. Maybe more help from the government rather than hindrance from the government on cyber security?

Bruce Billson

That’s our view. Look, there's some encouraging signs there. In the last budget there was an announcement to set up a small business cyber resource hub. I'm optimistic about that. That's what we've been urging that the government does, so that there's a real sense that government is an ally for small business when getting through these terrible events. Not one where they’re fearful of raising these challenges and therefore not getting the help they want and they need, and then having that really impacting on that businesses opportunity to recover, to get its data back, get systems going and and focus on delighting customers. Not that there's some fine around the corner they might get spanked with.

Tim Webster

My texter – don't forget to put your name on the text so I could acknowledge who you are - but he or she basically says, more regulation and red tape on small business owners like myself. It's none of anyone's business what I pay and to who.

Bruce Billson

I think if you had this support posture, one of assistance rather than of compliance, you get small businesses saying, oh, hang on, this is a change in our economy. I really need to be tooled up and as well-equipped as I can be. And to have the resources of government there to assist in making sure you've got appropriate safeguards, good preventative steps. Good, dare I say data hygiene. Sorry for the jargon, Tim. That'd be great. Then if something happened, somebody can get alongside you to work out what you need to do to get through that event. And then some help on the other side getting back up and going.

I think that posture, so much better, so much more likely to get the right outcome that policymakers are hoping for, rather than having this big fine hanging over a small business for whom, if they pinged, they might not have even known they needed to take those steps and then that fine itself could bring them down as badly as perhaps the cyber threat did.

Tim Webster

Everyone's got so much to do, Bruce. Oh, you got pinged and you feel really guilty. But don't because there's so much of it around. I mean everyone's after your information, your money, every day of the week. I mean the amount of text you get, emails you get. You've going to be so vigilant these days.

And look, Jamie says this. Good point. Don't know why you'd pay the ransom. Couldn't the hackers just copy the information they'd hacked and release it anyway?

Bruce Billson

I'm kind of with Jamie. And I’m not discounting for one minute that a commercial decision is often what's guiding this. But I tell you what, if someone was nefarious enough to have a crack and compromised my system in the first place, if I handed over a substantial chunk of change in the hope that they then do the right thing. That's the thing that I'm wary about with paying ransomware. I would have imagined having good backups, you know, multi-factor authentication to sort of limit what's going on. For your listeners that are in business and maybe use digital platforms, and have a credit card attached to say their Meta Marketplace account, if that gets hacked, do what I do. I use a very low amount credit card for my online transactions. Thinking, you know, if someone does grab that data and has a crack at my credit card, if I can't go back to the people that should have guarded against that in the first place, I at least have kept the credit limit very low. And therefore, the harm to me is minimised.

So, for your listeners and businesses and even consumers that are dealing with those online transactions and having credit cards linked to the advertising spend on digital platforms, have a separate credit card with a really low credit limit on it and minimise that risk. Make sure you've got control over that account. If they've taken the account out and blocked you, make sure there's another way of verifying that you’re who you are. And if all else fails and you’re a small business, get on to us and we'll help out.

Tim Webster

Is that Cyber Security Act a fait accompli? Is that going to happen, or can you convince them to not do it?

Bruce Billson

It's still going through the Parliament, so there's plenty of opportunity for some of your texters and others that have raised some good views, to feed those in because it's really about right-sizing it Tim. You and I've talked about that before, but a small business isn't some shrink wrapped major corporation that's got, you know, technical expertise coming out of their ears. That's not right. It's mum and dad and committed enterprising men and women often doing compliance things 10 o’clock at night to try and make sure that the business of running the business is attended to while they also focus on what the future looks like for their business, how can they delight customers and maybe, you know, innovate to get better value for themselves and the people that rely on the business.

Tim Webster

Alright, let's leave that one. There's a few issues to deal with. A 50% increase in queries by small business about a business they're dealing with, possibly being insolvent or a concern about what to do if they're worried about their own place.

Bruce Billson

There's a couple of things happening here. What we are seeing is that really significant uptick in concerns. We're also seeing people checking on what are called credit reference platforms, where they check to see whether the business they are dealing with has some, let's use the word form of not always paying their bills and the like.

But also we're getting an increase in payment disputes even when work is carried out under the contract or the terms that were agreed. Just getting paid Tim, just getting paid is really a pain point. And when the cash flow is tight and when you see the Tax Office are up and about trying to make sure that people with outstanding tax liabilities are engaging with them. When margins are being squeezed, one of the things you see sometimes there’s this friction in just getting paid and the payment time blowing out. It's a real concern.

So, what we're saying to business is if you've got those concerns there are ways you can check, for small fee you can check on the credit record of those businesses. That doesn't mean don't do business with them. But if you and I were running an electrical business and at a subdivision out in western Sydney, in a growth suburb like that, we've got to spend a bit of money buying all the equipment, the substations. So, we're out of pocket already. And then there's our time and expertise. So not being paid, not only us not being rewarded for our work and our diligence, we're also carrying the costs of the equipment we've had to buy. And therefore, you might say to that that developer I want half that project cost as a down payment before I start, so that I can at least cover the costs of those outgoings for equipment. And when the job's done, I'll come and get the rest.

So, you might change your terms, the way in which you engage. But just making an informed decision about those things where we are seeing an uptick in these payment difficulties, we recommend that as part of your approach to your business.

Tim Webster

Louise from Inverell. Louise says, I've got a small limit on my credit card. I used to make jokes that I should keep it maxed out for safety's sake.

Bruce Billson

She raises an interesting point. It is about managing that risk. I mean, sadly, the experience that you've had in the studio and some of these cyber events, I don't think they're the exception. We're likely to see more of that. It’s almost a new normal where there's such a dependency on technology and digital systems in our economy and our lives. Just taking those steps to safeguard, to prevent a bad event happening, and then to limit not only the risk of it, but the cost of it, they’re the things that that we're urging people to do.

Tim Webster

Now, let's allay the fears of Elyse at Mascot. This discussion about small business and security, making me feel very uncertain about transacting digitally with small business. Unfortunately, it steers me to dealing with larger organisations that are better resourced to protect my data.

Now, just on the back of that text. Also, a text about - look, sometimes on the ABC you have to mention a commercial entity just to make a point – I've been asked about PayPal. I don't, but my wife does, and she's never had any issues with that. So, both texts are sort of going, oh, gee, what do I do?

Bruce Billson

There's some really good points in there. And frankly, those messages are reflecting the sentiment in the business community. There is a heightened anxiety and awareness of these things, but there are steps that you can take within your own control. I mentioned multi-factor authentication. Changing your passwords, trying not to have Timisfab12345 as your password is probably not ideal.

Even the software, you get a notification that there's an update for the software. Tim and listeners, often those updates have safeguards or patches to guard against weaknesses or vulnerabilities in the software. Back up your files. I was involved in building a bank to take on the big banks and we used to have a system, and I know it's at a larger scale, but we used to have a system that backed up almost continuously. So, if one of what frankly was thousands of attacks on our site every week, if one of those worked, we could just go back to the moment and all the data before it was compromised and boot it up again from there. So those backups become really important.

PayID, where you verify who the payer is. One of the things in small business that is a real cyber threat are what's called the invoice substitution scam. So, they’ll sneak into your accounting and invoicing system and you won't even know it. They’ll mess with a PDF, a saved file, and put someone else's banking numbers in there. So it all looks legit. You're expecting this invoice. You pay it on the basis of what's in it. All looks legit. And some nefarious character’s gone and changed the banking details so it whisks that payment off to another account. And before you know it, they've converted it to crypto and you can't track it down. So, ways around that is to verify who you are sending money to, to use things like PayID and those secured systems.

The other one is to consider eInvoicing, which is a much tighter, less vulnerable way of sending invoicing. So, there’s steps that you can take. But needing to be situationally aware is really important.

Tim Webster

Jamie opened a second account and transferred my money to that. So, on the credit card, he's got nothing. And this one from Chris. SMEs and large enterprises should open a business continuity plan for ransomware, including incremental offsite backups. It's critical. And then their own servers would help. That’s Chris. It’s clever.

Bruce Billson

Chris is legendary. I hope he doesn't think we've planted that in there. Chris is absolutely right. We found only about one in four have an up-to-date business continuity plan. And that's where you contemplate things that might knock your business off-course and then think about and plan for and have the bits and tools in place to recover and to make considered choices at that time.

That business continuity plan, it could and should address a cyber-attack. And it'll talk about backups and knowing who your providers are and where you've stored data and key contacts to help you get up and going again.

But it might be dealing with a natural disaster. It might be dealing with a health episode. If you and I were the breadwinners of our partnership Tim and one of us got sick, that's going to bump us off track as much as a cyber-attack.

So, Chris is right on the money there. Think about what might happen that could take you off the course you want to be on and what are you going to do about it. And that's a really great contribution from Chris. Top tip of the day.

Tim Webster

Good on you Chris, thank you. Jenny says you can buy a credit card at one of the big supermarkets for various amounts. You can buy it on the internet and that’s not using your own savings. Lot of this is very clever, Bruce.

Bruce Billson

And really practical too. Jenny's again, right on the money. She's talking about practical steps well within your ability to take them, that actually mitigates against the risk of something bad happening. And then if something bad does happen, you’ve really cauterised the cost and consequences of it. They’re fantastic ideas and I hope your listeners are getting something out of this discussion.

Tim Webster

They obviously are. And thank you very much Chris and Jenny.

Now, before the news rushes up at me. The government's looking at removing the exemption that allows small businesses to not, to not comply with privacy laws. How does business feel about that?

Bruce Billson

Not thrilled, but it's very linked to our earlier discussion. So, under the privacy laws, there's a dozen or so privacy principles that big businesses need to read, absorb, interpret and then apply to their workplace and their enterprise about how they're going to manage data that might be vulnerable or might compromise a person's identity and those sorts of things.

So, you can understand where they're coming from. For many years there's been an exemption for small business, with the exception of sort of health professionals and those sorts of things. There's been a review saying, look, the whole world has changed. We just had a great discussion about it. And so much of our day-to-day life sees businesses having data that's really important to us.

Now is that data is risky to your identity or your economic interest, there's got to be certain duties to make sure you take really good care of it or, in some cases, advice to get rid of data you don't need so that you remove that risk. What the government's talking about is simply removing the exemption so that a small business has got to do all the hoop jumping the big businesses do this.

We’re saying, hang on a minute. Again, a time-poor, resource-constrained small business. Let's get in with some really straightforward, easily implementable action steps that achieve that objective and have good data management that's of advantage to the business as well, not just a compliance obligation. And maybe open up new opportunities to link cyber security safeguards, good data management. It’s a more complicated world to be running a business. But let's not make it needlessly super, super, super complicated where the risk and responsibilities just are completely out of whack.

Tim Webster

Bruce, I'm very glad I'm just a humble old broadcaster. The things small business have to deal with. It's quite amazing, isn't it? Really?

Bruce Billson

We've been tracking this and saying to anyone who will listen, the risks and responsibilities of business ownership continue to grow, but the rewards aren’t growing with them.

We need to really think about that risk-reward balance and make sure being an enterprising man and woman is attractive, it's fun, it creates wealth and opportunity for those business-minded people and those employees that they make possible. And it brings such a vitality to our communities where you might not have a big corporate go to regional and rural New South Wales.

What do you think's driving these regional economies and towns? It's small and family businesses, and we need to make sure we celebrate that and look for ways to energise enterprise so there's more of it and better prospects of success into the future.

Tim Webster

And just while I’ve got 30 seconds, a texter says to both of us. Mick Jagger did backup vocals on You’re so Vain so it couldn't have been him. I think that's right. However, why couldn't it have been him?

Bruce Billson

My mail tells me it was Warren Beatty and let’s remember there was a time when Carly Simon and James Taylor had a thing. That didn't end well. It used to be Her Town Too. There’s a song for you.

Tim Webster

I think she said in an interview it was a conglomerate, so let's go with that. Thanks for your time.

Bruce Billson

Take care and best wishes to you and your listeners.

Tim Webster

And he does join us quite regularly, it’s great. Our �Թ�� and Family Enterprise Ombudsman Bruce Billson.

Future Made in Australia

Emily Carter — Fri, 09 Aug 2024 01:25:43 +0000

Future Made in Australia Emily Carter Fri, 08/09/2024 - 11:25

08 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Ross Greenwood.

Sky News Business Now

Subject: 14 Steps to energise enterprise, small business and Future Made in Australia

Ross Greenwood

Perhaps the real Future Made in Australia is already here, but it's battling. That’s the hundreds of thousands of small business owners who flog their guts out each and every day and employ more people than any other sector, in many cases, for little or no reward.

�Թ�� and Family Enterprise Ombudsman Bruce Billson, a former �Թ�� Minister in the Coalition government, has put out a 14-step plan to try and make life easier and hopefully a bit more profitable for small business operators. The man whose slogan is to energise enterprise, Bruce Billson is with me now in our Canberra studio. Bruce, many thanks for your time as always.

Is that the reality that the Future Made in Australia policy almost smacks small business owners who actually are here for now, and for the future, in the face by subsidising others who might be important, but no more important or less important than small business operators?

Bruce Billson

Well, for a Future Made in Australia you need businesses made in Australia. And the engine room of our economy are those small and family businesses, Ross. And for those subsidy programs and production incentives, they're very much out of reach for smaller firms. And what we're saying is that there is this entrepreneurial ambition amongst Australians. Give them the best chance to succeed, support their enterprise formation and really put wind in the sails of those businesses that will drive innovation, growth and opportunity, because right now, they're feeling more headwinds than they are feeling winds in their sails.

Ross Greenwood

Okay. The reality is they have to cope with higher interest rates. That slackening consumer demand hurts every one of them. The fact that rents have gone through the roof, the fact that now the Tax Office is chasing them for debts that might have been accumulated during COVID. All of these things conspire to make life more difficult, and you can see that in the bankruptcy figures with more insolvency of business than ever before in recent times.

Bruce Billson

And that’s right. Let's appreciate and respect that there is enormous pressure on households. Cost-of-living pressure is real, and it's affecting people's purchasing choices. But those pressures are business input pressures for small and family businesses, all further squeezing already wafer-thin margins and impacting on consumer spending. And we know there's no substitute for customers, Ross, when you're running a business. And so, this is a real area of challenge. And we looked at the last stats coming out of the Tax Office, you've got 46 per cent of small businesses not making a profit. For those million and a half Australians for whom self-employment, independent contracting, is their full-time livelihood, three-quarters nearly are taking home less than average total weekly wages.

So, the rivers are gold and not there. There is still that drive to be your own business, make your own opportunities, pursue your own livelihood, but no one would think the financial returns are spectacular.

At the same time, we've got growing complexity and volume of regulation and some real challenges about small and family businesses, wondering, well, who's the next generation? Ross, sadly, the average business owner now is 50 years old. The number that are under 30 are 8 per cent whereas it was 17 per cent in the ‘70s. We really need to bring forward that next generation. We need to have people with entrepreneurial ambitions to feel optimistic and supported that going into business and creating opportunities for their community and others is something that's really valued, and we're doing what we can to give them the best prospects of success.

Ross Greenwood

So as the Ombudsman, you step in when there are issues that are really discriminating against those small and family businesses. What are the key factors that are in front of you right now?

Bruce Billson

We've got some real pressure on our assistance cases. As many of your audience would know, where there's business disputes going to court to sort them out for a small business is no option at all. So, we get involved in trying to facilitate resolutions and where there are industry codes, where there's obvious and inherent power imbalances we have a role there too.

But still the largest proportion of our cases are around payment disputes. Really pointing to that cash flow challenge of people who need to pay small and family businesses, that because of the delay in payments, then causing cash flow challenges for those businesses. So that's a biggie.

The other fastest growing is digital platforms. Ross, you many enterprising men and women, their whole relationship with their customers is through these platforms. But heck, if your account’s hacked on Facebook or something like that, and you're told, hey, log into your account to tell us that your account is locked, you can imagine how infuriating that is, and we're trying to make sure that channel to market is one that's supportive as well.

Ross Greenwood

Bruce Billson always good to have on the program, and many thanks for your time today.

Bruce Billson

Thanks for your interest Ross.

Let's boost small and family businesses

Emily Carter — Thu, 08 Aug 2024 23:42:26 +0000

Let's boost small and family businesses Emily Carter Fri, 08/09/2024 - 09:42

08 August 2024

Australian �Թ�� and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney.

Radio 2CC Canberra

Subject: 14 Steps to energise enterprise to boost small and family businesses

Leon Delaney

The Australian �Թ�� and Family Enterprise Ombudsman, Bruce Billson, has expressed his concerns that Australia may be sleepwalking into a big corporate economy at the expense of the viability of small and family enterprise businesses. Bruce, thanks for joining us today.

Bruce Billson

Leon, great to be with you and your listeners.

Leon Delaney

Why are we sleepwalking into a big corporate economy?

Bruce Billson

Well, the trajectory of the economy points to that as being the path we're on. And I'm trying to call that out to say, well, let's think about whether this is what we desire or not. I'm a great believer in small business being the engine room of the Australian economy, a great generator of innovation, wealth, employment, opportunity and prosperity. But essentially, according to the research we've done, if that engine is a four-cylinder engine, we've lost a cylinder.

And we're also looking at a growth in the proportion of the economy that the big corporates control, a reduction for small business in the contribution to GDP. It's about a third of all economic activity in the economy now. It used to be a bit over 40% just in 2006. And even in employment terms, right now, two in every five private sector jobs is made possible by a small or family business employer. That's great, that's worth celebrating. But that used to be half of all private sector jobs were made possible.

So, I'm just calling that out, saying, if we want a future made in Australia, we need enterprises made in Australia, and that means really energising enterprise, supporting small and family businesses, and encouraging more people to think about their own business as a path for their livelihood.

Leon Delaney

Now this week we've seen insolvency figures and Insolvency Australia yesterday, in the statement they made, were referring to chaos and turbulence continuing. I mean, that's pretty powerful language, isn't it?

Bruce Billson

Well, it is, and we are at record highs in terms of numbers of insolvency, but worth bearing in mind, in terms of a proportion of all operating businesses, we're not at that all time high. We're about a bit over 0.3% at the moment. About 0.5% was the high-water mark. So, my concern is there's still more to come, I would imagine. And we know the Tax Office is up and about really working hard and sharpening its effort on pursuing outstanding Superannuation Guarantee contributions or tax debts more generally. We also learned from the last full year of tax data that's available, 46% of small businesses weren't profitable. And of the 1.5 million Australians that are self-employed, independent contractors, for whom that livelihood is their full-time endeavour, three-quarters are taking home less than average weekly wages. So, there's no rivers of gold here.

And we know, and you've talked about it a lot with your audience, about cost-of-living pressures. Well, they’re cost-of-business pressures for small and family business, and they're hurting. They are impacting on customer spending, and we know there's no business success without customers.

Leon Delaney

There's a lot of pressure on the economy at the moment, it's pretty much flatlining. All of the data tells us that the economy is very fragile right now and is at imminent risk of being pushed into recession if some miracle doesn't occur. It's clear that the operating conditions for businesses big and small have been very challenging. But the more challenging the conditions, the more difficult it becomes, particularly for smaller businesses, because the bigger companies have a certain degree of protection from their sheer size, don't they?

Bruce Billson

That’s right and scale and market dominance brings its own bumper rails. It's something that, you know, we can talk about this another time, but we've gone through COVID, the research points to larger businesses tending to recover better after times of great turbulence, because they've got deeper balance sheets, they've got scale, they've got funding options. They've got avenues of support.

You might lose a bit of value in your share market price. For small business they might lose their home, Leon. So, these are really substantial challenges. We know that half of all small business lending is secured by a private home. We also know the average age of a small business owner is now 50. So there's an aging profile there, and we're not generating enough excitement and appetite amongst young people and midlife people to think about their own business as an option.

It still brings many delights, and that's why so many people still seek their own and guide their own business. But we need to make sure that the ecosystem within which they operate is as supportive as it can be, so that they can be successful, and that's why I've released these 14 steps to energise enterprise.

Leon, these are practical, actionable information that I'm inviting our leaders, our policy makers, our decision makers, to pick up and do something with so that we can improve. Maybe reduce the headwinds that are in the face of small and family business owners and put a bit of wind in their sails.

Leon Delaney

Now, I'm sure we're not going to be able to reel off a list of 14 steps, but …

Bruce Billson

Go on. Of course we can, Leon. That'll be gripping listening for your audience.

Leon Delaney

One-minute and 47 seconds left, Bruce. What are the key proposals?

Bruce Billson

Well, there's a couple of things. One is we think the regulatory burden in its scale and its complexity is increasing and the difficult economic climate sees the risks maybe growing, whereas the rewards aren't.

And we think that balance needs to be adjusted, put some incentives back into it by having a tax offset or a discount, for those early years of a new business where it's the valley of death of cash flow. Having a real, passionate, commitment to right size regulation and not overwhelming small and family businesses with compliance tasks.

But a big one for me is let's have every Cabinet submission, every major decision by governments, include a small business impact statement so that those concerns are front of mind, bright on the radar screen.

They're just some of them. There's a number of more of them. I'd invite your audience that's interested to jump on our website, asbfeo.gov.au they're out there in the public domain. I'm inviting anybody who's as concerned about it as I am to embrace these ideas and do something about it.

Leon Delaney

Number 9 - ban unfair trading/business practices that distort competition and harm small business. Anything that's unfair and distorting competition, surely that's already outside the rules, isn't it?

Bruce Billson

No, it's not. We've got a huge gap in our competition laws, quite different from economies that are like ours. In our laws, you might have an unfair contract term. So, that's the ink on a contract might be unfair. And then the next area where unfairness plays out is unconscionable conduct, and there's a very high bar. In between it is a lot of overly sharp business practices where businesses are weaponising their strong market position to cause harm, not only to small businesses, but potentially customers.

These are like renewals of subscriptions, where you've got to be at 4:27, on a glorious Canberra day, and have a left-handed person say you don't want to renew in the next 30 seconds, otherwise it's deemed to roll over for another 12 months. I mean, those sorts of things are ridiculous, just as it is when you're dealing with some of the major corporates and they're saying, here's the price we'll accept, and the small business has got no choice. They've invested, they've got no other customers, they're dependent on those firms. And sometimes that behaviour is beyond shabby, and we've got a big gap in our law, in how we deal with it.

Leon Delaney

Bruce, thanks for your time today.

Bruce Billson

Good to be with you. Leon.