111868 DED Small Business Final Web

Small Business StrategySeptember 2011

Department of Economic Development, Tourism and the Arts

Small Business Strategy 2011 1

SUMMARY

This Small Business Strategy has been developed as part of the Economic Development Plan for Tasmania.

The Tasmanian Government is committed to the strategic development and sustainable growth of small business in Tasmania as part of its broader strategy for development that is economically, environmentally and socially sustainable.

The Tasmanian Government will:

• createacompetitivebusinessenablingenvironment in Tasmania

• deliverleading-edgebusinessadvice,marketinformation andskillsdevelopmenttooperators

• supportandencouragewell-plannedandwellprepared start-upbusinesses

• facilitatethegrowthandexportcapabilitiesofestablishedsmall businesses

• assistsmallbusinessesthatarereadytobeplayersinthe digital economy

• maximiseopportunitiesforsmallbusinesstobeinvolvedingovernment contracts and projects

• improvetheexchangeofinformationandcommunicationbetween government and small business

• workcloselywithsmallbusinessrepresentativeorganisations,chambersofcommerce,industryassociationsandstakeholdergroupstobuildastrongsmallbusinessnetwork.

Disclaimer:

The information contained within the Small Business Strategy is considered to be correct at the time of publication. Images used within this publication remain the property of the copyright holder.

© State of Tasmania September 2011 (reprint February 2012)

ISBN 978-1-921527-17-3SmallBusinessStrategy(Print) and978-1-921527-18-0SmallBusinessStrategy(Online)

Images courtesy of f8 photography, Tourism Tasmania, Rob Burnett, DanFellow,NickOsborneandSimondeSalis.

2 Small Business Strategy 2011

A small business employs less than 20 people, is independently owned and operated, and close control over operations and decisions is held by the owners.1 Generally, one or two people arerequiredtomakeallofthecriticalmanagementdecisions–finance,accounting,staffing,purchasing,processing,marketingandselling–withouttheaidofspecialistsorspecificknowledge.Smallbusinessesarenotsimplysmall-scaleversionsoflargecompanies.They have many features that are not found in large organisations and are managed differently.

A dynamic small business sector is critical to achieving economic growth,creatingnewjobsandincreasingexportsintheTasmanianeconomy. Small businesses play an important role in binding communities, especially in regional Tasmania. Small businesses are also a vehicle for human capital development and social inclusion.2

There are sound reasons for government to actively support the smallendofthebusinesssector.Smallbusinessesmakeupover 95percentofbusinessesinTasmaniaandemployaround 46percentoftheTasmanianworkforce.TheyareessentialtoTasmania’s economy. They are frequently the drivers of new business models and first adopters of innovative products and services.

Every large business was once a small business. Innovative small businesses create and maintain significant numbers of jobs3 and are a significant component of the Tasmanian economy. Small businesses are important vehicles for income generation and wealthcreation,andtheself-employmenttheyenableisanimportant contribution to employment more generally.

Research suggests that in times of economic crisis, small businesses display resilience that serves to cushion the impact of economic downturn by maintaining employment at a time when large firms tend to shed staff.4Manysmallbusinessesareexportersinterstateorinternationally,orsupplylargerfirmsthatexportproducts and services.

The potential benefits of government support for small businesses include:

• improvedviabilityandreducedincidenceoffailure

• lowersocialandeconomiccostsoffailure

• greatersmallbusinessconfidence

• appropriaterisk-taking,includingagreaterwillingness to innovate

• fastergrowth

• increasedprofitability

• higherlevelsofexporttointerstateandinternationalmarkets

• increasedemployment

• higherbusinesssalevalues,resultinginwealthcreationandintergenerational transfers.

Governments across all jurisdictions in Australia recognise the strategic importance of the small business sector to the community and the economy. In support of the challenges faced by small business, the high social and economic costs of failure, and the potential benefits of success, governments have for many years fundedorpart-fundedthedeliveryofsmallbusinessservices,including:

• theprovisionofinformation,adviceandsupportforbusinessintendersandsmallbusinessstart-ups

• coordinationoflocalnetworkingevents

• coordinationofthedeliveryofbusinesseducationand training programs

• theallocationoffundingtosupportexpansionoraccesstoexportmarkets

• thesupplyofbusinessdiagnosticsandcounselling

• thesupplyofcoachingandmentoringprograms.

Small business in TasmaniaSmallbusinessesmakeavitalcontributiontoasuccessfulTasmanian economy and community. In addition to being a major contributor to the economy in terms of output, employment and numberofbusinesses,thesmallbusinesssectorinTasmaniaisself-reliant, innovative, responsive and entrepreneurial by nature.5

Large200+ staff

0.3%

Medium20-199 staff

4.9%

Small1-19

36.0%

Non-employing58.8%

Figure 1: Size of all businesses operating in Tasmania

Source: ABS 2009 Counts of Australian Businesses, Including Entries and Exits, Cat no 8165.0

1 ABS 2001 Small Business in Australia, Catno1321.0

2 KuratkoandHodgetts,2007

3 Bridge,2011

4 Johnsonetal,1995

5 DepartmentofEconomicDevelopment,TourismandtheArts,Small Business Focus

Groups, 2010

1.0 Overview


Thereisestimatedtobe38000businessesinTasmaniaofwhicharound36000aresmallbusinesses(95percent).6 A decade ago therewerearound23700smallbusinessesinTasmania,indicating anincreaseofapproximately37percentoverthepast10years.7 OfthesmallbusinessesinTasmania,around22000(58.8percent)arenon-employingmicro-businesses.6Approximately106000people are employed by small businesses in Tasmania.8

Key statistics for small business in Tasmania

36 000 small businesses in Tasmania9

Almost one third of small business operators are aged over 50 years10

95 per cent of all businesses in Tasmania9

Over a third of small business operators are women10

73 per cent of small businesses are located in Hobart, Launceston, Burnie and Devonport9

Almost a quarter of all small business operators are born overseas10

58.8 per cent are non-employing9

One third work part-time10

Almost 40 per cent of small businesses are operated from homes10

92 per cent of small business owners operate one business (eight per cent have multiple small businesses)11

Figure 2: Tasmanian small business facts

Asillustratedinthegraphbelow,45percentofallTasmanianbusinesses have an annual turnover of less than $100 000, including 29percentwithlessthan$50000.Around18percentofbusinesseshaveaturnoverbetween$200000and$500000perannum.

Annual turnover of Tasmanian businessesAnnual turnover of Tasmanian businesses

0% 5% 10% 15% 20% 25% 30%

zero to less than $50k

$50k to less than $100k



$500k to less than $1m

$1m to less than $2m

$2m to less than $5m

$5m or more

Percentage of businesses

Ann

ual t

urno

ver

Figure3:AnnualturnoverofTasmanianbusinesses


Tasmania’s small businesses span a range of industries, including high representation in agriculture, forestry, fishing, construction and services. These five industry sectors account for almost 60 per cent of Tasmania’s small businesses.

Small business is also highly represented in the state’s tourism sector, with at least 90 per cent of the 2 000 operators classified as small business.12 It is estimated they contribute around $1.06 billion or 4.98 per cent to gross state product. Direct jobsgeneratedinTasmaniafromtourismareapproximately6.15percentofTasmanianemployment(14150jobs).13

Almost 40 per cent of small businesses in Tasmania are in exportingindustries(mining,agriculture/forestry/fishing,transport/postal/warehousingandmanufacturing).14 In general terms (all sized businesses), total employment in mining and transport/postal/warehousinghasincreasedoverthelast10years,whilstagriculture/forestry/fishingandmanufacturinghasdeclined.

Tasmanian small businesses by industryTasmanian small businesses by industry

0% 2% 4% 6% 8% 10% 12% 14% 16% 18%

Agriculture, forestry and fishing

Construction

Rental, hiring and real estate services

Retail trade

Professional, scientific and technical services

Transport, postal and warehousing

Financial and insurance services

Accommodation and food services

Manufacturing

Health care and social assistance

Other services

Wholesale trade

Administrative and support services

Not classified

Arts and recreation services

Education and training

Information media and telecommunications

Public administration and safety

Electricity, gas, water and waste services

Mining


Figure 4: Tasmanian small businesses by industry


6 ABS 2009 Counts of Australian Businesses, Including Entries and Exits, Catno8165.0

7 ABS 2001 Small Businesses in Australia,Catno1321.0

8 Modelled from ABS 2009 Counts of Australian Businesses, Including Entries and Exits,

Catno8165.0


10 ABS 2004 Characteristics of Small Business, Catno8127.3

11 Australian Communication and Media Authority, Jan 2008, Telecommunications Today

Report 2: Take-up and use by small and medium enterprises

12 TigerTOURdatabase,TourismTasmania,May2011

13 SustainableTourismCooperativeResearchCentre,2007/08 Tourism Satellite Account



Thereareapproximately5000newbusinessentriesinTasmaniaeach year. The survival rate of Tasmanian business is the highest of any other state or territory in Australia, with 76 per cent of businesses that were operating in June 2007 surviving to June 2009.15Thismaybelinkedtothecomparativelyhighernumberofsole-trader,home-basedandfamily-ownedbusinessesoperatingin Tasmania, for which there is generally a higher survival rate. Home-basedbusinessesandindependentcontractorsrepresentanexpandingpartofsmallbusinessesinTasmania.

The economic and social impacts of the global financial crisis are still being felt by businesses in Tasmania. It is, and will continue to be, a challenging operating environment for small business as a result of pressures in the global financial system and the rapidly changing nature of competition and consumer spending. Small businesses, in particular, are very sensitive to changes in the economic environment.16Whilechangesinmarkets,competition,products and customer preferences are inevitable, it is those small businesses that can anticipate and adapt to such changes that will flourish. The global financial crisis has also impacted on the government’s own fiscal position and has required it to review its approach to supporting small business.

The Department of Economic Development, Tourism and the Arts(DEDTA)hasconductedextensiveindustryconsultationtoproperly understand the needs and challenges of Tasmanian small businesses and what role government can play in addressing these. The state’s small business community has provided significant input into this strategy, through a series of focus groups, an industryforum,andone-on-onemeetingswithsmallbusinessrepresentative groups, associations and chambers of commerce.

DEDTAhasalsoconductedareviewofexistingdataonsmall business, as well as considered the small business policy and program initiatives across Australia and overseas. The opportunities and challenges for small business identified are summarised below.

1.1 OpportunitiesTasmania has the opportunity to become an entrepreneurial economy,onebasedontheknowledge,flexibilityandexpertise ofpeople.Itinvolvesthestart-upandgrowthofnewinnovative firms rather than economies of scale and routine production. Thisshiftisalreadyvisiblewithservice-basedsectorsbeingthefastest growing in Tasmania and nationally. Two main factors have triggered the emergence of the entrepreneurial economy: globalisation and the digital economy (the use of information and communications technology for online activity).17

The digital economy: The digital economy presents a major change in the way consumers buy their goods and services and the nature and location of competitors for Tasmanian business. Competition is not restricted to businesses in the same suburb or region. Global competition and access to products and services online presents an opportunity for businesses to change their businessmodel,pricing,andpromotionalstrategiestotakeadvantageofnewandemergingmarkets.Researchindicates

that small businesses have identified productivity related benefits of the internet, including communication via email, conducting online research, access to online reference materials and e-commerceinitiatives(forexample,acceptingordersonline).18

Thedigitaleconomycanquicklypresentnewmarketopportunities while those that fail to adapt to the changing competitive environment may not survive. Recent research by IBISWorld has suggested the past decade of doomsday predictions in relation to the rise of the internet and online trading have been unfounded as retailers have found ways to reinvent and innovate, enablingsmartoperatorstoremaininthemarketplace.19

Research by Sensis into social media usage by both consumers and businesses in Australia indicates further online opportunities for business. The research indicates 62 per cent of Australian internet users are actively embracing social media, however only 14 per cent of small businesses have a social media presence.20

Sustaining existing businesses: With around one third of small businessoperatorsagedover50,Tasmania’sageingpopulationisaloomingissueinthelabourmarket.Agreaternumberoftransfersof businesses to younger generations would have a positive effect ontheTasmanianeconomy.TheEuropeanUnionexperienceindicates that successful transfer of business preserves more jobs onaveragethanthosecreatedbynewstart-ups.21 Government support therefore needs to be given to succession planning, businessvaluationandexitstrategies.

The government also needs to encourage suitably trained young Tasmanianstostayandworkinthestate.Thispresentsanopportunity for the training sector, but also requires businesses ofallsizestoprovideanattractiveworkenvironmentinwhichtoretain good staff. It also suggests that strategies should be pursued that encourage an ‘enterprising culture’ in Tasmania’s education systemfromanearlyageandpositionself-employmentasa career option.

15 ABS2010 Counts of Australian Businesses, Including Entries and Exits, Catno8165.0

16 Houghton,1997

17 Bridge, 2011

18 Australian Communications and Media Authority, Jan 2008, Telecommunications Today Report 2: Take-up and use by small and medium enterprises

19 IBISWorld, March 2011

20 Sensis, May 2011, Social Media Report, What Australian people and businesses are doing with social media

21 Commission of the European Communities, 2008


Supply chain collaboration:Buildingstronglinkswithinsupplychains with a focus on collaboration offers considerable opportunities for small business in Tasmania. As noted in a recent UnitedStatespaper,“neithersmallbusinessnorlargebusinessoperatesinavacuum.Oneimportantconnectionisthesupplychain: small and big businesses selling each other’s intermediate inputs, that is, the goods and services used as inputs in the production process.”22

Sectors with competitive advantage: There are significant opportunities for small businesses to start and grow in those sectors identified in the Economic Development Plan where Tasmania has competitive advantage, such as renewable energy and agriculture.

Other opportunities for small businesses in Tasmania include:

• productionofniche,value-addedgoodswithaconnection to ‘place’

• continuedgrowthintheservicessector–knowledgeintensiveindustries

• speedtomarket–flexibilityandinnovationinmeetingcustomer demands

• Tasmania’sliveability–asagreatplacetolive,work,andlearn.

1.2 ChallengesThe operating environment for small business has always been challenging.23 Starting and managing your own business is not easy, butitprovidesanopportunityformanypeopletotakecontroland be their own boss. Generally, the challenges faced by small businesscomeaboutduetotheirsize,theconnectionstomarketsandthedeficienciesinverticalandhorizontallinkages.24 Reviews of the literature and research indicate barriers faced by Tasmanian small businesses are similar interstate and in developed countries overseas.

AstudyconductedbytheEuropeanUnionofEuropeansmallandmedium businesses cited administrative burden, overregulation and bureaucracy as the main concerns preventing business growth.

Theseconcernsarefollowedbyaccesstofinance,taxation,lackofskills,accesstopublicprocurementandunfaircompetitionasbarriers to growth.25 Issues identified as priority concerns for smallbusinessintheUnitedStatesincluderegulatoryburden,fairandefficientcapitalmarkets,pro-growthtaxpoliciesandpoorlymaintained infrastructure.26

In past statements on small business, the South Australian and VictorianGovernmentsacknowledgethechallengesoftheoperating environment including government red tape, business taxes,skillsshortageanddeficiencies,andtheneedforbettercoordinatedservicedeliveryandincreasedexportcapacity.27 28

Fromaconsumer’sperspective,theVictoriaUniversityinMelbourne conducted a survey on community perceptions of small business. The research revealed that 78 per cent of Australianshadanegativeperceptionofwhatitwouldbeliketobe in small business.

More training was the top suggestion for government to improve the success of small business.29

In 2010 and 2011 the Tasmanian Government conducted its own focus group research, an industry forum and consultations to confirmthekeybarrierstosmallbusinessgrowth.Thefollowingcharts present the barriers to growth and issues raised in the research.

Barriers to growthBarriers to growth

0% 10% 20% 30% 40% 50% 60%

Marketing and promotion

Business planning

Computer IT technology

Balancing time and work

Financial management

Sales

Networking

Staff management

Project management

Distribution/logistics

Tendering and costing

Succession/exit planning

Customer service

Negotiation

Pricing

Exporting


Figure5:BarrierstogrowthidentifiedbyTasmaniansmallbusiness

Source: Department of Economic Development, Tourism and the Arts, 2010, Small Business Focus Groups, Strategic Economic Solutions Pty Ltd

22 Slaughter, M., 2010, Mutual Benefits, Shared Growth: Small and Large Companies

Working Together. Business Roundtable

23 Houghton,1997

24 Tolentino, 2000

25 EuropeanUnion,2008

26 UnitedStatesChamberofCommerce,2011

27 Government of Victoria, 2006

28 Government of South Australia, 2008

29 Breen, 2010


Issues for small business

Figure 6: Issues impacting growth raised by Tasmanian small business

Source: Department of Economic Development, Tourism and the Arts, 2010, Small Business Focus Groups, Strategic Economic Solutions Pty Ltd

Although a range of issues was raised, particular challenges were consistently identified by businesses across each region and sector andcanbesummarisedintosixbroadthemes:

1. costs of doing business

2. compliance with government regulations

3. afairandcompetitivebusinessenvironment

4. managementandbusinessskillsofsmallbusinessoperators

5. accesstoskilled,qualitystaff

6. access to finance and capital.

These are discussed in more detail below.

Costs of doing business

The costs of doing business are noted as a challenge to business growthinTasmania.Theyincludematterssuchasstatetaxation,and increasing costs of utilities such as electricity, gas and water, costoffreightandlogistics.Thereviewofstatetaxationisanimportant first step towards improving the competitiveness of the business operating environment in Tasmania. A system thatbroadensthetaxbaseandreducestheburdenongrowingbusinesses was called for. Rising input costs were also raised by small business and in particular, the need for increasing retail contestabilityofelectricity,initiallytousersof50MWhperannum.Thegovernmenthasreneweditscommitmenttoextendretailcontestabilitytotheseusersin2011-12.Thesecostsaffectallbusinesses, regardless of size, and as such, are discussed in more detailinGoalOneoftheEconomicDevelopmentPlan.

Complying with government regulation

Red-tapewasidentifiedasacommonbarriertosmallbusinessgrowthintheresearchandconsultationundertakenwithsmallbusinesses to develop this strategy. It is particularly burdensome

to smaller companies and may inhibit entrepreneurship.30 It is not an argument about the need for regulation as such; in many cases these regulations are necessary to protect the financial, environmental and safety interests of the community. Rather, it is the processes, forms and requirements on small business to apply and comply with these regulations that are of concern.

Red-tapeisthetimeandmoneyspentbybusinessestounderstand and comply with government regulations that are above and beyond the daily costs of running a business.31 These include:

• paperworkcompliance–thecostsimposedonbusinessthroughform-fillingandprovidinginformation

• non-paperworkcompliancesuchashumancapitalinvestment(staff training and education), physical investment (changes to plant and equipment) or ‘capital holding’ costs associated with regulation-induceddelaysinbusinessprojectapprovals

• governmentfeesandcharges,includingpermitandlicencefees that are intended to recover the cost of administering regulations.

In its 2008 consultations on the major problems that European smallandmediumbusinessesface,theEuropeanUnionnotedthat“administrativeburden,overregulationandbureaucracyarebyfarthemaingeneralconcerns”andthat“focusedmeasuresto alleviate the administrative burden would be helpful”.32 It is acknowledgedthatmanyoftheregulationsthatimpactonsmallbusiness are controlled at the Australian Government and local governmentlevels.TheTasmanianGovernmentwillneedtoworkmore closely with these other tiers of government to influence decision-makingandimproveprocessesinareassuchasindustrialrelations and planning.

However,therearearangeofoptionsavailabletotheTasmanianGovernment to address this issue. These options include:

• reviewsofthestockofregulations

• reductionofadministrativeburdens

• simplificationandre-engineeringofadministrativeprocedures

• consistentenforcementofregulations

• bettermulti-levelcoordination

• rapidintroductionofe-governmentservices.33

These options form the basis of the actions proposed in section three of this strategy.

30 OrganisationforEconomicCo-operationandDevelopment(OECD),2011

31 GovernmentofSouthAustralia,2008

32 EuropeanUnion,2008

33 OECD,2011

25 %

17 %

17 %

17 %

10 %

10 %

4 %Business skills and practice

Labour and industrial relations

Government regulations

Costs

Small local market

Cash flow and access to finance

Business climate


Fair and competitive business environment

Fair competition is regulated by Federal legislation, including the Australian Consumer Law, and is monitored by the Australian CompetitionandConsumerCommission.However,thereismuch that the Tasmanian Government can do to promote a fair, competitive business environment. In particular, there are opportunitiestoimprovearrangementsforsolvingbusiness-to-businessdisputes,particularlyintheareaofretailtenancy.Tasmania does not currently have a formal alternative dispute resolution process outside the legal system.

The public sector in Tasmania is often the driver of large projects and upgrades to essential services and infrastructure. As a result, itisresponsibleformanycontractandsub-contractopportunitiesfor business. Small business access to government tenders and the notionof‘buylocalfirst’wasraisedbyanumberofstakeholders.Issuesraisedincludedtheeconomicbenefitsandflow-oneffectsof supporting local operators to supply government goods and servicesandworkonmajorprojects.

There is a perception that the current arrangements are not transparent, that some government tenders limit the capacity of smaller operators to apply, and that price is the only factor consideredindecisions.Therealsoappearstobeagenerallackofawarenessofexistingservicesandunderstandingbysmallbusinessin Tasmania of how to go about tendering for government business.

Management and business skills of small business operators

The government’s research and consultation with small business identified a genuine concern by small business operators that theydonotpossessthenecessarybusinessmanagementskillstohelptheirbusinessgrow.Manyarehighlyskilledinthetradeor profession delivered as the core product or service by their business,butfeeltheydonothavethemanagementskillsimportant in operating a business.

Broader research indicates that the potential for business growth in small businesses tends to outstrip management capacity. Insufficient managerial capacity has the effect of limiting and contracting growth and is a major factor in business failure.34 Recent figures released by the Australian Securities andInvestmentsCommissionindicatethatlackofbusinessmanagementexperience,skillsandabilityisoneofthetopthreecauses of business failure.35

Linkedtothisconstraintisthefactthatsmallbusinessesareoftencash-strapped,particularlyatthestart-upphase.Thismakesthem more vulnerable to financial failure. Business failure leads to significant social and economic costs, with family relationships and family wealth often the first to suffer.

34 Reynolds,etal,1994

35 AustralianSecuritiesandInvestmentsCommission,2010.AustralianInsolvencyStatistics,2009/2010


Smallbusinessesarealsooftentime-poor.Owner-operatorsknowthattheywillbenefitfromspendingmoretimeworking‘onthebusiness’ rather than ‘in the business’, but operational and financial pressuresmakethisverydifficult,resultingintheirspendingmanyunpaidorunderpaidhoursjusttokeeptheirbusinessesafloat.

These constraints limit the ability of small businesses to realise their full potential for income generation and wealth creation, and areparticularlyacuteinstart-upandfastgrowthsmallbusinesses.

Adviceandservicessuchasbookkeeping,thepreparationoftaxreturns, business coaching, and legal advice are provided by the private sector. The associated costs often represent too great achallengeforcash-strappedsmallbusinessowner-operators,andtheymayskimponexactlytheadviceandsupportrequiredto underpin their viability and sustained growth. Private sector providers, for their part, have little incentive to provide training for prospective business owners.

Although a great deal of small business information and advice is now available online, it is not easy for Australian small businesses to sift through what is relevant and reliable from the mountains of online information. Furthermore, small businesses often require assistance with interpreting information and applying it to their owncircumstances–aneedthatoftenrequirespersonalcontactofsomekindorspecificsectorknowledge,particularlyatthestart-upstage.Industryassociationsandchambersofcommerceoften play a vital role in supporting small businesses operating in particular sectors or regions.

Access to skilled, quality staff

An issue raised by small business is the ability to recruit and retain well-trainedstaff.Thereasonsbehindthisappeartoincludetheliteracyandnumeracylevelsofapprenticesandlackof‘job-ready’people, particularly in specific sectors and some of the more regional areas of Tasmania. The vocational education and training systemisalsoseenascomplexandthedeliveryofaccreditedtrainingandqualificationsisregardedasinflexibleinmeetingtheimmediate needs of small businesses.

Access to finance and capital

Businesses need access to finance for investment and managing cash flow. A sound financial sector is critical to a robust economy. Risinginterestratesandhigherbankmarginsforsmallbusinessaremakingaccesstofinanceaconstraintforbusiness.Thischallengeiseven greater for entrepreneurs who have great ideas, but have yet toprovetheirsuccessinthemarket.Itisalsoacknowledgedsomesmall businesses are not ready for funding, and in some cases, may not have a sufficient business case to warrant investment by a third-party.

Onewayinwhichgovernmentcanassistisinbuildingthecapacityof small business operators to understand suitable finance options andpreparetheirbusinessforinvestment.Itcanalsosupportnon-traditionalavenuesoffinanceforentrepreneursatthestart-uporinnovation/renewalphases,suchasAngelInvestorsTasmaniaandmicro-financeprograms.

Access to markets

The focus of government in the past has been on supporting businesseswithexportpotentialtoaccessandreachoverseasmarkets.Morerecently,thissupporthasbeenextendedtoassistsmallfirmstoaccessinterstatemarkets–oftenacriticalfirststeptointernationalexpansion.Thedifficultiesforsmallbusinessinaccessingoff-islandmarketswereratedasanimportantconstraintin the research. There was a call for government to continue itssupportforbusinessesexportingTasmanianproductsandservices,giventheirimportantroleinjobcreationandprivate-sector investment.

Communication with small business

The government’s research and consultation with small business indicated the current communication with business by government is not cutting through. The diversity of small businesses in terms ofsector,sizeandlocationmakescommunicationwithandfrom government challenging. There is also a sense that greater coordination across government agencies on issues that impact smallbusinessisneededtoimprovedecision-making.Governmentneeds to consider more formal mechanisms to listen to the needs of business, improve access to information and ensure greater collaboration across government.

There is a role for government in the provision of information and data to business. Numerous studies and reports call for morecoordinatedaccessforbusinesstoinformationonmarkets,industries and regional economies.36 McKinsey and Company arguethat“governmentshaveanimportantroletoplayinprovidingeasy,low-costaccesstoinformation.”37

A study of regional small business conducted for the Council ofSmallBusinessOrganisationsofAustraliaandtheAustralianGovernment,concludedthat“respondentswantbetterinformation about the local and regional economy to help position their business and raise competitiveness.”38 This outcome was confirmedintherecentsmallbusinessfocusgroupsundertakenin Tasmania and supported by the Tasmanian Chamber of Commerce and Industry. The Council of Small Business OrganisationsofAustraliareportconcludesthatthereisan urgent need for a central agency to play the role of information brokerforbusiness.

36 BangsandHalliday,1997,The Australian Business Start-up Guide, Woodslane Press

37 McKinseyandCompany,1994, Lead Local Compete Global, Sydney

38 Houghton,1997


Government’s role is a balance between ‘getting out of the way’ and providing strategic interventions to regulate operations, and support the growth of many small businesses. The diversity of Tasmania’s small businesses in terms of size and sectors in whichtheyoperatemakedevelopingastraightforwardpolicyframeworkdifficult.

Support for small business has been developed within the following policy principles:

• governmentshouldfocusitssupportwhereitcanhavethemost impact, principally by improving the Tasmanian business operatingenvironment–whereithassomecontrolandinfluence

• supportfromgovernmentforsmallbusinessisaboutbroadreachandimpact–itcoversallsectorsandregionsinTasmania

• thebusinesslifecycleframework(concept,start-up,growth,maturity,innovationandrenewalthroughtoexit)shouldbeused to guide government intervention

• initiativesshouldbedirectlylinkedtotheproblemofbarriertobusiness growth as identified in the research

• initiativesshouldbefocused,transparent,flexibleandsimple

• initiativesmustbewellcommunicatedtoreachallsmallbusinessesacrossTasmaniaandtoinvolveawhole-of-government approach

• greateruseshouldbemadeofexistingchannelsandnetworksfor government to listen to, and support, small business, such as industry associations and chambers of commerce

• anyinitiativesproposedbygovernmentmustbesustainableandefficientandmustavoidduplicatingexistingactivitiesdeliveredbythemarket

• whereverpossible,governmentshoulddeliveritsservicesthroughtheonlinemediumandencouragebusinessestomakethe transition to a digital economy

• theimpactofgovernmentinitiativesmustbemeasurable.

Evaluation of the research, challenges and opportunities has revealed gaps and shortfalls that may limit the growth of some small businesses.

The policy principles guide what the role of government is in addressing these gaps and the ways in which government can ‘makeadifference’tosupportthegrowthofsmallbusinesses.

2.0 Small business policy approach


Therearetwokeyandinterconnectedareasthataddressthebarriers to small business growth under which initiatives will be developedandimplementedbythegovernmentoverthenextfiveyears.Oneistoimprovethebusinessenvironment.Theotheristoskillbusinessforgrowth.

The government’s initial efforts will be focused on improving the business environment in which small business operates. The policy and regulatory environment determines, to a large degree, the success and sustainability of other support programs for small business.39

The government needs to get the operating environment right first.Theimprovementoftheregulatoryframeworkwithinwhichsmall businesses function is often one of the most important aspects of creating an overall business enabling environment for small business development.40However,creatingthisenvironmentmay not be sufficient to accelerate the development of small businesses. As such, specific support policies and programs to skillsmallbusinessforgrowthwillbeputinplacetoaddress the barriers and constraints faced by small businesses in Tasmania.

Improve the business operating environmentThe government is committed to improving the business operating environmentbyreducingred-tape,simplifyingaccess to information and providing a fairer go for small business.

Action 1: The Business Tasmania InitiativeThe Business Tasmania Initiative aims to reduce the time businesses spendcomplyingwithregulationandmakeiteasierforbusinesstofindwhattheyarelookingforfromgovernmentsatlocal,stateand federal level. It includes two interrelated projects:

a. Business Tasmania Online, a new online portal designed to makeiteasierforbusinessestointeractwithalllevelsofgovernment and to find the information they need, complete transactions and obtain services

b. Reducing the compliance burden, a review of the administrative burdenforbusinessincomplyingwithexistingregulationsacross state government on a sector by sector basis.

Business Tasmania Online

BasedonthesuccessfulVictorianGovernmentmodelandlinkingto new Australian Government online initiatives, the Tasmanian GovernmentwilllooktointroduceBusiness Tasmania Online.

DEDTA will coordinate the preparation of a business case on the initiativeforconsiderationbythegovernmentin2011-12.BuildingontheexperienceoftheServiceTasmaniainitiative,Business Tasmaniawillfacilitateawhole-of-governmentapproachtobusiness services.

It will:

• provideallgovernmentlicences,permits,regulationsandrelated forms in one place

• reducethetime,andthereforemoney,ittakesforbusiness to apply and comply with government regulations

• providereadyaccesstolicenceinformationand payment options

• streamlineandimprovegovernment-to-business service delivery

• provide24hoursaday,sevendaysaweekaccessto online information

• enablesmallbusinessto‘tellgovernmentonce’.

It is proposed that the service will also be supported by experiencedservicecentreoperatorsthatcanprovideadirectanswer from government. Business Tasmania OnlinewilllinktotheAustralian Business Licence Information Service and Australian Business Account, currently under development by states and territories and the Australian Government. Business Tasmania Online will also provide a mechanism for government to audit and monitor administrative and regulatory burdens on an ongoing basis.

Reducing the compliance burden

The government will aim to reduce the administrative burden placed on business in applying and complying with government regulation.Commencingin2011-12,itwillinvolveasystematicreviewofthepaperwork,processes,timeandcostsofcomplyingwithexistingregulationsacrossstategovernmentonasectorbysectorbasis.Thiswillincludeundertakingabaselinestudyofthe costs to business in complying, identifying areas to improve regulatory processes and recommending actions to government to improve efficiency, cut duplication and lower the cost of compliance.

Critical to the success of this program will be the DEDTA project teamworkingcloselywithrelevantgovernmentagenciesandtheindustry representative bodies and associations to identify areas of greatestconcerntosmallbusinessoperatorsandworktoreduceor simplify these. Importantly, the information gathered from this project will inform which licences, permits and related forms can be automated and made available on Business Tasmania Online.

3.0 Action plan for government and industry

39 Tolentino,2000

40 OECD,2011


Action 2: Improve small business access to government tendersThe Department of Treasury and Finance has responsibility for Government Procurement Policy. A review of the current tendering guidelines for government agencies indicates there aremeasuresinplacetomaximiseopportunitiesforTasmanianbusinessestobidforgovernmentcontracts.Overthepasttwoyears, more than 80 per cent of the government’s procurement of goods and services (where at least one Tasmanian business competed) have resulted in one or more contracts being awarded to Tasmanian businesses, indicating progress has already commenced in this area.

Additionally, the government funds the Industry Capability Networktosupportallbusinessestoaccessgovernmentcontractsandsupportagenciesinidentifyinglocalsuppliers.However,advicefrom industry suggests that many small businesses are not aware of the requirements, processes and guidelines for tendering. The government is committed to improving communication with Tasmanian business at all levels on tendering requirements.

DEDTAwillworkwiththeIndustryCapabilityNetworkonimproving communications, training and information events regardingtenderingbysmallbusiness.Thiswillincludemakingonline materials available, delivering training sessions for small businesses that want to become suppliers to government, and a ‘Meet the Buyers’ event where business operators can meet andspeakone-on-onewithprocurementdecision-makersfromgovernment agencies.

TheIndustryCapabilityNetworkwillalsoenhanceitsexistingonline services through the introduction of the Regional Industry Link, an online tool to assist small business suppliers list their capabilities and match with available projects or tenders in their local area. This tool will be accessible through Business Tasmania Online.

The Department of Treasury and Finance will continue coordinating the Procurement Advisory Group, which involves governmentconsultingwithexternalstakeholdersonaregularbasis to discuss tendering and procurement matters. The Department of Treasury and Finance will also continue to maintain,andwhereappropriatesupplement,itsexistingagencyprocurement resources for government agency staff to ensure theyareup-to-dateandawareofalloptionsfortendering,including supporting local suppliers wherever possible.

Action 3: Alternative dispute resolutionTheTasmanianGovernmentwillworkwiththeAustralianGovernment in developing options for a nationally consistent approachtoprovidingsmallbusinesswithwaystosolvebusiness-to-businessdisputes,outsidethecourtsystem.Solvingdisputes,suchasretailtenancy,throughtheexistingcourtsystemcanbe time consuming and costly for small business. A system of alternativedisputeresolutionislikelytoimprovetheoperatingenvironment and support small business in resolving complaints aboutunfairmarketpractices.


the business life cycle accessible 24 hours a day, seven days aweek

• onlinetrainingmodulescoveringkeybusinessmanagementskillssuchasplanningandresearch,financialmanagementandmarketing

• practicalstep-by-stepbusinessguidesandtemplatesontopicssuch as succession planning and doing business online

• onlineforumsforsmallbusinessoperatorstosharelearningsand ideas

• searchtoolstoassistbusinessesfindservices,forexample‘findan advisor’ tool

• improveddirectelectroniccommunicationswithbusiness,industry associations and small business service providers

• linkstomarketintelligencedatatohelpbusinessesundertakeresearchandmakeinformeddecisions.

Training and skills development

DEDTA will introduce the Business Ready Program, a series of annualadvancedworkshopsdeliveredbyexpertsacrossthestateforestablishedsmallbusinessoperatorsthataddresskeybarriersto growth or capitalise on opportunities for business. Each workshopwillinvolvegroupdeliveryandfollow-upmentoringtodirect new learning to individual circumstances.

DEDTA will consult with small businesses to determine the focus of each annual series through the Small Business Forums (see Action 8), as well as ensure they are filling gaps not delivered throughtheSkillsTasmaniainitiativesandalignwithprioritysector requirements identified under Goal Two of the Economic Development Plan.

Basedonfeedbackfromsmallbusinessduringthestrategyconsultation, the following have been identified as priority areas overthenexttwoyears:

• peopleready

• energyready

• marketready

• investmentready

• successionready

• digitalready.

Thegovernmentcommitstoimprovingthedigitalskillsandcapacity of small business operators to enable them to compete in globalmarketsthroughtheDigital Ready initiative.

DEDTA will deliver a new version of the established Tourism e-kitsuitableforalltypesofbusiness.Itprovidesself-directedandpaced learning modules on how to develop online business.

Forthosethatrequireone-on-oneassistancetosupportthise-learning,thegovernmentcommitstoextendingthescopeof the successful ‘Digital Coach’ program piloted by Tourism Tasmania.Thisprogramhassupported500individualoperatorstoenhancetheironlineskillsandcapacity.Theinitialfocuswillbe

Skilling small business for growth

The government has a role to play in providing access to quality information, facilitation, training and mentoring to business operators. Support is also needed to better train staff to meet the needsofgrowingsmallbusinesses.Thegovernmentwillalsolooktofacilitatebusinessaccesstofinance,marketsandinformationtohelp them thrive.

Action 4: Business development services

The government will deliver a range of capacity building, training, facilitation and mentoring services that vary in their reach and level of intervention. It will deliver an improved, coordinated approach to Business Development Services based on the following model.

Advisory mentoring

Training and skills development

Online information

Level of intervention

Number of enterprises

Figure 7: Proposed model for business development services

As the core service, the government will provide free access to comprehensive information to assist all small businesses via the Business Tasmania Online website, supported by a free call telephoneline.Moreintensivetrainingandskillsdevelopmentwill be available through the Business Ready Program, targeting businessesatthegrowthandinnovation/renewalstagesofthebusiness life cycle.

Improved business advisory services sit at the top of the triangle, delivering quality advice and mentoring support to businesses at early and growth stages of the business lifecycle. The government willincludeamixoffreeanduser-paysapproachestothebusinessdevelopment services it delivers.

Online information

In addition to improved licensing and regulatory information, Business Tasmania Online will include the following information to assistsmallbusinessoperatorsbuildskillsandunderstanding:

• interactivesmallbusinesstoolkitincludingchecklists,diagnostictools, financial calculators and podcasts covering all stages of


in supporting operators in the retail, tourism and arts sectors in Tasmania,consideringopportunitiestomovetraditional‘bricksandmortar’businessmodelsto‘bricksandclicks’.

The Economic Development Plan has identified 17 sectors with growthpotential,anexportfocusandcompetitiveadvantage.The government is committed to investing and building the role ofsmallbusinesswithinsupplychainsinkeysectors.Fundingforspecific initiatives that can assist in building the capacity, technical abilityorskillsofgroupsofsmallbusinesseswithinasectorwillbesupported under the Business Ready Program.

Business advisory services and mentoring

TheEnterpriseCentresTasmanianetworkcurrentlydeliversfreeguidanceandassistancetostart-upsandexistingsmallbusinesses.ThegovernmenthascontractsinplacewithsixorganisationstodeliverservicesineightlocationsacrossTasmaniauntilJune2013.

As part of the new Business Development Services program, a comprehensivereviewwillbeundertakenonthescopeoftheservices,roleanddeliverymodelofexistingEnterpriseCentresTasmania. This will include consideration of alternative and best practice enterprise facilitation and business advisory models. The review will include discussions with the Australian Government, which also funds some Enterprise Centres in Tasmania, with a view to greater collaboration in the delivery of Business Advisory Services.

Mentoringprovidesavaluablemechanismtoaddressgapsinskills,knowledgeandexperienceofsmallbusinessoperators.DEDTAwillalsoreviewitsexistingfundingandsupportformentoring

activities, including consideration of other mentoring programs andapproachesusedinotherjurisdictions.DEDTAwillalsolookat partnering with industry associations on developing targeted sector-specificmentoringsupportforsmallbusinessoperators.

Action 5: Skills plan for small businessSkillsTasmaniaisundertakingresearchofthesmallbusinesssectorto identify the barriers to small business engagement in vocational and other accredited training for their staff. This is considered an importantfirststepindevelopingaSmallandMicroBusinessSkillsPlanforTasmania,inwhichSkillsTasmania,supportedbyDEDTA,willworkwithkeystakeholderstodevelopstrategiestosupportincreasedworkforcedevelopmentactivity.Thisplanmayincludesupportforon-the-jobtrainingprograms,improvedpartnershipsand better support to increase small business participation in training.

The government is already investing in Tasmania’s education system, in particular improving the literacy and numeracy of young Tasmanians. The results from this investment will be seen over thelonger-term.SkillsTasmaniaisalsosupportingthoseyoungpeople who have already emerged from the education system and require additional support through remedial training to improve theirskillstomeettheneedsofemployers.

Thegovernmentcanalsosupportthelevelofskilledmigrationtothe state, growing the population base to improve business access toskilledstaff.TheissuesaroundeducationandskilledmigrationareaddressedinGoalOneoftheEconomicDevelopmentPlan.


Action 6: Export Active ProgramTheExportActiveProgramaimstoprovidesmallbusinesswithmarketinformation,buildcapacityandfacilitateentrytonewmarkets.Itincludesamongstotheractivitiesthefollowinginitiatives:

Export Skills Workshops–providingessentialinformationontakingaproductorservicetomarket.Contentwillbedevelopedandtargetedtosupportkeysectorssuchasfoodandagriculture,information communications and technology, and manufacturing.

Springboard into Market Program–assistssmallbusinessestodevelopandincreasetheiroff-islandcapabilitiesthroughreimbursementofupto50percentofeligibleexpensesusedforinterstatemarketpromotionactivities.

Export Market Assistance Program–helpssmallandmediumenterprisestodeveloptheirbusinessoverseasandmaketheirfirstexportsales.

Trade exhibitions and promotions–participationinmajortargetedexhibitionsbyacoordinatedgroupofbusinessesundertheTasmanian brand.

Further details on initiatives are in Goal Two of the Economic Development Plan.

Action 7: Facilitate business access to financeSupportwillbeavailabletonon-governmentandprivatesectororganisations that assist Tasmanian small business to access finance.Forexample,AngelInvestorsTasmaniaandPitchClubprovide an opportunity for individuals to meet on a regular basis to pitch their idea, share contacts and information that can lead toaccessingfinance.Creatingthesenetworksofstart-upsandexperiencedbusinesspeopleandinvestorsisastrategicwaytolinkexperiencewithneed.

DEDTAwillbuildrelationshipswithprivate-sectorproviderstofacilitateaccesstofinanceforbusiness.Forexample,promotingtheNationalAustraliaBankMicro-Enterpriseloantosmallbusinessstart-ups.Anassessmentofoverseasmodelsforincreasing the availability of finance for small business such as the UnitedStatesSmallBusinessAdministration’sguaranteeschemeswillalsobeundertaken.

As part of the Business Ready program, an Investment Ready workshopwillbeofferedacrossTasmania.Theaimofthisworkshopistoprovidesmallbusinesseswithexpertadviceandtools with which to approach investors or financial institutions for funding, including what they may need to consider in return for a capital injection into their business.


Action 8: Small business connect

Small business forums

The Tasmanian Government is committed to running a public Small Business Forum twice a year to provide an opportunity for an ongoing, open dialogue between government, small business and representative organisations. These forums will be chaired by the Parliamentary Secretary for Small Business and enable business to communicate current views and issues of concern as well as provide government with the opportunity to share information on current activities and report on progress of initiatives.

Tasmanian Small Business Advisory Network

Many Tasmanian Government agencies have interactions with small business, but not always in a coordinated manner. TheTasmanianGovernmentwillintroduceacross-agencyadvisorynetwork,withrepresentativesfromeachrelevantstategovernment department. Representatives from relevant Australian GovernmentagenciessuchastheAustralianTaxationOffice orFairWorkAustraliawillalsobeinvitedtojointhenetwork. Thenetworkwillmeetquarterlytoconsiderpolicyandprogrammeasures that impact on small business such as the introduction of new regulations.

Small business research: statistics and profiling

The gap in the availability of data on small business in Tasmania, andmoregenerallyinAustralia,makesitmorechallengingtodetermine policy and program responses and measure the impact of any such activities.

DEDTA will collect reliable and current statistical data on small business in Tasmania through various methods which may include an annual survey of Tasmanian small businesses. DEDTA will also continuetoleadworkwiththeAustralianBureauofStatisticsandthrough the National Small Business Advisory Group to improve collection of reliable small business data at a state, regional and local level. A Small Business Fact Sheet will be produced, regularly updated and made available on the Business Tasmania Online website.

Support innovative networks

Innovationisembeddedintheevery-dayactivitiesofsmallbusinesses and entrepreneurs. Supporting our entrepreneurs throughthesponsorshipofgrassrootsorganisationslikeStart-UpTasmania enables government to recognise and support the benefit of growing entrepreneurial capacity, with the community owning the benefits. Government can also support activities that showcase innovative practices and provide opportunities for collaboration, knowledgetransferandskillsbuilding,suchasthe5DaysofInnovation Festival or Women in Global Business initiative.


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APPENDIX

References

http://www.oecd.org/document/43/0,3746,en_2649_34141_38227179_1_1_1_1,00.html

http://www.oecd.org/document/43/0,3746,en_2649_34141_38227179_1_1_1_1,00.html

http://businessroundtable.org/

http://businessroundtable.org/

http://www.uschambersmallbusinessnation.com/take-action/key-issues

http://www.uschambersmallbusinessnation.com/take-action/key-issues

http://www.asic.gov.au

http://ec.europa.eu/enterprise/policies/sme/files/docs/sba/sba_consultation_report_final_en.pdf




Contact

Department of Economic Development, Tourism and the Arts

Business Point

1800 440 026

22 Elizabeth Street, Hobart TAS 7000

Email: [email protected]

Web: www.development.tas.gov.au

mailto: [email protected]

www.development.tas.gov.au

Documents

111868 DED Small Business Final Web