Australian Small Business and Family Enterprise Ombudsman Bruce Billson interview with Leon Delaney on Radio 2CC Canberra.

Subject: Inspiring people to start their own business, creating Prime Minister’s Small Business Awards, right-sized regulation for small business, the importance of mentors

Leon Delaney

A recent study from Westpac has apparently found that almost half of the people starting their own business are motivated by the dream of being their own boss. That sounds about right, doesn't it? I mean, that's a lofty enough ambition to be your own boss. Turns out, though, there's a little bit more to being successful in running a business than just having ambition. The Australian Small Business and Family Enterprise Ombudsman, Bruce Billson, is here to help. Good afternoon.

Bruce Billson

Leon. Fab to be with you and your listeners.

Leon Delaney

There is, unfortunately, a little bit more to success than just having ambition, isn't there? 

Bruce Billson

Yeah, there is. I mean, owning and running your own business is a big responsibility, and really thinking through what your motivations are, what's your Why? Why are you attracted to it is really important and then putting in place the legwork and the preparation to make sure you give yourself the best possible opportunity to succeed, to grasp those delicious opportunities. A lot of that's about work, and it's often where these surveys that show what's motivating people then go to the next layer. 

So, the next layer is okay, I might want flexible work, but that probably doesn't mean less work. That might mean I've got a little bit more control over the hours I work, but I might be working later in the day, or having some early starts. Or, as some others, about one in four have said, I see a gap in the market. I see something that's not being done well, maybe that's an opportunity for me. 

So, they are some of the motivations, but all of them come back to that central idea - plan it well, cost it out, be realistic about what's involved and be ready for what can be a challenging journey as well as a satisfying one. 

Leon Delaney

It really sounds great to be your own boss. It sounds fantastic, but the reality can be quite different. It can be a lot more responsibility than people are prepared for, and the idea that you might enjoy flexible working hours, forget about that. You're just going to be working 24/7, in some instances, aren't you?

Bruce Billson

The thing that often emerges is people think, oh, look, I'll have this flex where I can work my own hours or be my own boss. It might be less demanding than being employed by someone else. And then the reality arrives that it is a big responsibility. I've got tax obligations. If I'm employing people, there's a myriad of workplace relations duties and obligations. I've got to think about my customers. I might have this great idea, but where do I find them? 

And then there's usually, in that early stage, there's quite a lot of cash that gets burnt whilst you wait to see the benefits of your work in building a customer base, making sure you've got something people want to pay for. And from my own direct experience, even if you have a very detailed plan to start up and those early days of your business, you calculate that, on my experience Leon, is you double the amount of money that you need to try and make sure you can sustain the business whilst it hopefully hits its straps and starts paying its own way.

Leon Delaney

Indeed. Now, one of the things you've written today is that you noted in that Westpac study, about 20% of people said they were inspired by seeing other successful entrepreneurs. And I think we can all identify with that, because we look at people that are successful in business, and some of us are tempted to think to ourselves, that greedy bastard who doesn't deserve it. But some of us are actually more inclined to think, gee, that's really amazing. How did he do that? How did she do that? And can I do the same thing? Can I follow that example? And that's the message to take, isn't it?

Bruce Billson

It is, and it's also not only an inspiration, but it can also be a fantastic learning journey to follow the steps that they've taken to become successful. I mean, so often you hear a brand emerging, it starts to become known in the marketplace, and people think, wow, that's an overnight sensation. No, no, there's probably been six, seven, eight, 10 years’ worth of work going in behind it to get to the point where there is that visibility and that recognition. 

It's interesting, though, in that same Westpac study, almost half of Gen Z said their reason for going into a business was because of seeing a successful entrepreneur. So more than twice the number of the general business population that have formed and are running their own business, twice as many in that Gen Z group are really motivated by what they saw other entrepreneurs doing. 

So that's a good sign, but it's also partly why I'm really urging the government and the Prime Minister to have some small business awards, where the Prime Minister is there celebrating excellence, you know, honouring that achievement, but also telling the story about the journey, so that that's a real positive way of inspiring others, but also informing people that are thinking about going into their own business, just what that journey looks like and what they need to prepare for.

Leon Delaney

So, Gen Z, that's an interesting topic that you've broached there. While a significant number of those people have that motivation following the example set by others, they're only a very small cohort in the business community, aren't they? There’re not many small business owners that are in that generation, are there?

Bruce Billson

My goodness, Mr Delaney, you are well informed, you are absolutely right.

Leon Delaney

I read your article, Bruce, come on.

Bruce Billson

I'm being facetious, but you're right. This is more than Gen Z, but when we look at the under 30 group, 8% of business owners are currently under the age of 30. Now what's interesting, you go back to the ‘70s, it was twice that number. So, in terms of the proportion of that younger generation that are part of our business community, it's far less than it was at a time when we see the average business owner is around the age of 50. 

So, there's a real, I would say, transition in that small and family business community that we're leaning into right now that really is seeing people who put a lot of their life into building that business may be thinking to move that business on and for them to think about retirement. Where is the next gen of business owners saying, hey, I'd love to pick up the reins of what you've started well. I can add my own ideas to it. I can bring some new thinking, some new technology, some new ways of delighting customers. That's what I want to do, and that's partly why we're saying, let's honour that journey more, so that more are motivated to think about that as their pathway for their livelihoods, and we can turn around some of those stats.

Leon Delaney

So, you've mentioned your idea about introducing some sort of Prime Minister's awards for small business and family enterprises. But you've also said in your article today, that's just one of 14 steps that you've put forward to energise enterprises. Without just rattling off a list, what else needs to be done to help promote small business? 

Bruce Billson

Well, there's a couple of things. One, we think the risk-reward balance isn't quite right at the moment. There's been quite a tsunami of regulation and even some of it getting more and more complex that makes it easier for larger businesses to navigate than a smaller business. I've just come from Parliament House where we were talking about some of the climate change reporting obligations and the like. And you can see the good motivation that sits behind them. But if you're a larger firm with a big compliance department, great sophisticated systems, you could probably do that relatively easily, compared to a small business that might only have a handful of people.

So, we think getting that regulatory burden right, right-sizing those compliance requirements, really important to get the risk side of it right, but then the other side is, where are the rewards? And we've talked before that 46% of businesses in the last full tax reporting year weren't profitable. And that for those that are self-employed, and they see that self-employment as their full-time livelihood endeavour, three-quarters are taking home less than average weekly wages. 

It's not like there's a natural river of gold there, but some of the research says that's not the only reason why people get into their own business, but we've got to make sure we get that risk and reward balance right, so that rational people think, yep, I can see an opportunity here, it's worth my effort having a go, and there are incentives for me to do so, and there's acknowledgement of a wonderful contribution to our community. Let's give that a crack. So, they're just some of the ideas that we've been pushing forward saying, let's energise enterprise.

Leon Delaney

You've also provided some advice for people that want to have a crack, as you say, and chief among those is mentors. You need advisors, like accountants and other experienced people, and perhaps join the local business chamber or other similar group. The importance of mentors is something that can't be overstated, isn't it? 

Bruce Billson

Look, I'd argue it's really crucial for a range of reasons. We all know, and we've all been part of and frankly, I've been victim of it as well, where I've got such stars in my eyes and excitement about a business idea, I’m maybe not thinking it through as fully, or there might be some dimension that I'm not really putting enough weight on because I'm so jazzed and excited about what I'm hoping to do. Having people around you that are good sounding boards, that have been in business themselves, who can even talk about the way they've handled challenges in their business life. There’s rarely a challenge that someone hasn't had to navigate before. 

And as we see an increasing number of businesses operating from home and things like, that can be quite isolating, so to be a part of those industry associations, those chambers of commerce, a peer group of people that you can use as a sounding board, someone to encourage you on your journey and also pick up the wisdom that's in the room, I think that's gold, and that's why we're urging people to have that as part of their plan. 

Leon Delaney

You’ve also pointed out there's more useful tips and resources on your website.

Bruce Billson

There are gripping resources there, Leon. Jump on. It’s asbfeo.gov.au Our task is to help put those resources in people's hands, help them improve their prospects of success. It's not our gift to make sure they succeed; we just want to make sure no business fails because they didn't know about something that might have helped. 

Leon Delaney

Bruce, thanks very much for your time today.

Bruce Billson

Great to be with you.

Leon Delaney

Thank you, Bruce Billson, the Australian Small Business and Family Enterprise Ombudsman.