A recent Westpac study found almost half of the people starting their own business are motivated by the dream to be their own boss.
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Just over one-third said flexible work hours was the top reason while one in four had spotted a gap in the market.
What caught my attention was 20 per cent said they had been inspired by seeing other successful entrepreneurs. For Gen Z it was more than double that at 48 per cent.
That's great to hear because we need more younger people to aspire to run their own business. Only 8 per cent of small business owners are currently aged under 30 - that's half of what it was in the 1970s.
Why is the next generation not seeing self-employment or their own enterprise as a pathway for a future? When young people, particularly, look for purpose as well as profit in their lives, to choose their own path and shape their own story, isn't running your own business a natural fit?
Perhaps the strong labour market has made being employed by someone else more attractive and less of a responsibility. We do need to do more to make the risk and reward balance more attractive and create a supportive eco-system to give enterprising people the incentive to take on their own business and the best chance to be successful.
Being inspired by others is natural and with this as a key motivation for many to create and lead their own business, we need to do more to showcase this success.
Creating the Prime Minister's Small Business Awards to celebrate excellence and achievement would be a mighty positive step to inspire the aspirational and next generation, sending a powerful message that small business people really matter and that they, and the contribution they make, are recognised and valued.
There are appropriate and well-deserved mechanisms for prime ministerial recognition of exemplar figures in other fields of endeavour (e.g. science, literature, public administration) and so there should also be for outstanding small and family business leaders.
It's one of the 14 steps to energise enterprise that I recently published to boost Australia's small and family businesses.
We need more small businesses to bring innovation, creativity and productivity for our economy to thrive.
Just last week the new UK prime minister said his mission to grow the British economy relied upon a stronger small business sector, announcing new rules and penalties to stamp out late payments from big business to small business and ratings for big firms' payment performance.
The recent US presidential debate included a proposal to provide a grant for the early year of start-ups where cash-flow can be most challenging.
Similarly, the Singapore government wants to create more small businesses to drive growth, boost innovation and create jobs and realises the early years can be the valley of death for cash flow. It offers an incentive scheme for eligible businesses to reduce the amount of tax they pay in the first three years so the money can be reinvested.
There is merit in exploring the feasibility of Australia introducing an early-stage incentive in the form of a tax discount or offset scheme to support businesses retaining more of the early-stage earnings for reinvestment in the business when it is needed most to build the foundations for success.
A terrific study by the Queensland Small Business Commissioner Dominique Lamb provides insight into the lifecycle and mindset of small business owners and it found stability to be highly valued.
Beyond being their own boss and working their own hours, owners sought control over how to respond to changing circumstances and a degree of certainty this can entail.
Yet regulations affecting small businesses are becoming more in number and greater in complexity, making it harder for small businesses to ascertain about precisely what obligations they must meet. The cumulative compliance burden and fear of doing something wrong is having a chilling effect on entrepreneurship.
A recent ACCI survey found that 45 per cent of small business owners have considered closing in the past year with ever increasing red tape and compliance obligations and lack of reward as prominent reasons.
The most recent statistics show that 46 per cent of small businesses did not make a profit and three-quarters of full-time self-employed people earned less than the average total weekly, full-time wage.
There is a need to recalibrate the risk-reward balance. Let's refocus and renew a commitment to right-sized regulation, including how regulators and government transparently formulate and administer laws. A more genuine impact assessment discipline informed by a "small business first" regulatory design approach and support and education that enables resource-constrained small business owners to meet their obligations, is needed.
MORE BRUCE BILLSON:
Having experienced first-hand the joys and challenges, and what it takes to own and lead your own businesses, may I encourage you to consider the delicious opportunities of this journey and offer some tips:
- Starting and owning a business is a big responsibility. While purpose, meaning, focus for your passion, independence, joy, and a rewarding livelihood may present, none are guaranteed.
- Why do you want to start a business? Define your goals and craft a realistic business plan to help you achieve your objectives.
- Think about the "business of running the business". This includes: setting up right and the best structure for your business, having systems for your financial, tax and legal obligations, and knowing how to monitor the real-time success of your business, so you can adjust and make changes quickly if needed.
- Work through a detailed budget for your set-up and early operating costs while building revenue - and then double it. Even with the best of planning, it is common to still need around twice the level of investment than originally thought.
- Find a trusted adviser, like an accountant, to be a valuable sounding board, coach, and ally. You don't have to do everything on your own.
- Tap into your local small business community. This includes industry associations, business chambers or similar peer groups that you can go to for advice, questions, learnings, support, and wisdom.
Owning and running a small business can be a wonderful and purposeful journey for individuals, and successful small businesses are essential to growing our economy and supporting our communities. We need to do more to show it is a pathway worth taking and for the sake of all our futures, clear that path of the obstacles to success and energise enterprise.
There's more tips and useful resources on our website at asbfeo.gov.au
- Bruce Billson is the Australian Small Business and Family Enterprise Ombudsman
