Australian Small Business 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 Small Business 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 Small Business 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 Small Business 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 Small Business and Family Enterprise Ombudsman.