MYOB BUSINESS MONITOR€¦ · The weak Australian dollar, sharemarket volatility and FTAs perceived...

MYOB Business Monitor October 2015 Page 1 © 2015 MYOB Limited, all rights reserved. Copyright strictly enforced.

MYOB BUSINESS MONITOR:

THE VOICE OF AUSTRALIAN BUSINESS OWNERS & MANAGERS

October 2015 report


BUSINESS PERFORMANCE

Almost half the Australian business operators expect the economy to decline over the next 12 months In the October 2015 Business Monitor survey on which this report is based, Australian small and medium business owners and managers (herein known as ‘operators’) were pessimistic about the Australian economy over the next 12 months, with 45% expecting the economy to decline and only 23% expecting it to improve. The most optimistic operators were:

Operators who had experienced increased revenue in the preceding 12 months (46% expected an improvement)

Queensland operators (33%)

Business conditions remained steady Operators reported similar levels of revenue performance over the previous 12 months to the previous survey. Under one third (30%) reported a decrease in annual revenue, and 22% reported an increase. A further 46% said revenue had been steady and 2% were unsure. Retail and hospitality businesses (32%), operators with a website or social media site (30% each), establishing businesses (30%) and exporters (30%) were more likely to have seen an improvement in revenue in the last 12 months.

19%22% 22%

26% 26%19% 20% 18% 18% 18%

22% 21% 23% 22%

39% 39%36% 34% 34%

38% 38%41% 39% 39%

34%31% 30% 30%

JUL 09 NOV 09 MAR 10 OCT 10 MAR 11 SEPT 11 FEB 12 MAY 12 FEB 13 AUG 13 FEB 14 AUG 14 FEB 15 OCT 15

Changes in revenue - previous 12 months

Revenue up Revenue down

11%

34%

31%

20%

3%1%

Decline significantly

Decline slightly

Remain the same

Improve slightly

Improve significantly

Don’t know


Expected revenue over the next 12 months declined, but sales in the pipeline for the next three months was steady, indicating a concern with revenue post 2015

While two in five operators (41%) expected their revenue to remain the same over the next 12 months, the proportions expecting revenue to decline and increase were similar (27% and 28% respectively). These results showed a decline in sentiment since the last survey when 33% expected revenue to increase and only 22% expected revenue to decline. Operators with a business website (38%) or social media site (36%) were more likely to expect their revenue to increase over the next 12 months, as did start-ups (41%), retail and hospitality (40%), exporters (46%) and importers (35%). Victorian operators were less likely to be expecting a revenue increase (only 22%). In terms of the shorter term three-month pipeline, 41% of operators commented they had the same amount of sales/work in the pipeline for the November to January quarter. A further 38% of operators said they had more in the pipeline and only 19% felt they had less in the pipeline. These figures were consistent with the results from the previous wave. Operators more likely to state they had more work/sales in their pipeline in the next three months included:

Operators whose revenue as up in the previous 12 months (70%)

Exporters (53%) and importers (46%)

Retail and hospitality businesses (48% compared to 31% of business, professional and property services)

Operators with a social media site or business website (46% each)

Gen Y Operators (45%)

37% 37%

28%33%

29% 31% 29% 30% 28%33%

36% 36% 38%

29%

21%26% 24%

30% 28% 27% 28% 27%

21% 23%20% 19%

NOV 09 MAR 10 OCT 10 MAR 11 SEPT 11 FEB 12 MAY 12 FEB 13 AUG 13 FEB 14 AUG 14 FEB 15 OCT 15

Sales/work in the pipeline - next 3 months

Total more Total less

37%

46% 48%43% 41%

32% 30% 29% 30%25%

34% 32% 33% 28%

15% 12% 12% 14% 14%20%

24% 22%19%

22% 22%18%

22% 27%

JUL 09 NOV 09 MAR 10 OCT 10 MAR 11 SEPT 11 FEB 12 MAY 12 FEB 13 AUG 13 FEB 14 AUG 14 FEB 15 OCT 15

Expected changes in revenue - next 12 months

Revenue up Revenue down


Expectations by location

% expecting Australian economy to improve in the next 12 months

% expecting increase in revenue in next 12 months

% reporting more in pipeline for next 3 months

Total AU 23% 28% 38%

New South Wales 24% 31% 43%

Victoria 17% 22% 35%

Queensland 33% 29% 36%

South Australia 19% 29% 36%

Western Australia 22% 30% 37%

Metro 22% 31% 42%

Regional/Suburban 25% 26% 35%

Rural 20% 27% 37%

Green = Significantly higher than total Red = Significantly lower than total

Expectations by industry type

Agribusiness

Business, prof. &

property services

Construction

& trades

Finance &

insurance

Manufacturing &

wholesale

Retail & hospitality

Transport, postal &

warehousing

% expecting economy to improve in next 12 months

19% 25% 22% 23% 24% 26% 23%

% expecting increase in revenue in next 12 months

26% 26% 22% 38% 28% 40% 25%

% reporting more in pipeline for next 3 months

44% 31% 42% 42% 42% 48% 31%



The weak Australian dollar, sharemarket volatility and FTAs perceived as having little impact on the cost of doing business

and consumer confidence This wave, operators were asked what impact they expected weak Australian dollar, sharemarket volatility and the free trade agreements with Japan, China and Korea would have on the cost of doing business and consumer confidence. In terms of the cost of doing business, operators felt these three issues would have no impact on the cost of doing business, with 54% - 63% stating they would have no effect. A greater proportion of operators felt that the weak Australian dollar and sharemarket volatility contributed negatively to the cost of doing business than positively, but the Free Trade Agreements were seen as slightly more positive. In terms of the impact on consumer confidence, results were similar with between 46 – 56% stating these three issues would have no impact.

In terms of the impact on the cost of doing business, the weak Australian dollar was more likely to be rated positively by agribusinesses (35%) and manufacturing and wholesale businesses (29%), while the FTAs were more likely to be rated positively by manufacturing and wholesale businesses (36%) and retail and hospitality businesses (29%). Exporters and importers were also more positive across all three issues. In terms of the impact on consumer confidence, the weak Australian dollar was more likely to be rated positively by retail and hospitality businesses (28%), while the FTAs were more likely to be rated positively by agribusinesses (45%). Exporters and importers were also more positive across all three issues.

3% 3% 7%15% 10%

14%

54% 63%59%

22% 17% 9%

3% 3%3%

2% 4% 8%

WEAK AU$ SHAREMARKET VOLATILITY FTA WITH CHINA, JAPAN, KOREA

Impact on the cost of doing business

Very positive Positive No effect Negative Very negative Don't know

5% 5% 6%

16% 11%18%

46% 53%

56%

25% 22%8%

5% 6%3%

2% 4%8%

WEAK AU$ SHAREMARKET VOLATILITY FTA WITH CHINA, JAPAN, KOREA

Impact on the consumer confidence

Very positive Positive No effect Negative Very negative Don't know


Investment intentions show emphasis on pricing and margins, customer base and product proliferation In this wave, there were five areas of business in which operators were most likely to increase their focus/investment in the next 12 months:

Prices and margins on products/services sold (28%)

Customer retention (27%)

Number or variety of products or services offered (26%)

Customer acquisition (25%)

Amount paid to employees (25%) The only significant difference compared to the previous wave was a decline in the emphasis on customer acquisition strategies from 29% last wave to 25% this wave.

Key differences

Key differences were noted across a number of categories, including by age and size of the business. As seen in the tables overleaf, retail and hospitality, medium businesses, start-ups and establishing businesses were more likely to increase focus/investment in the next 12 months across a number of areas, while established businesses, construction and trades and transport, postal and warehousing businesses were much less likely to be investing. In addition, Gen Y operators, importers and exporters, franchisors, metropolitan based businesses, operators with a website or social media site, operators whose revenue was up in the preceding 12 months and cloud computing users were all much more likely to be increasing their investment across a range of issues.

12%

18%

19%

15%

16%

22%

22%

21%

21%

26%

26%

30%

26%

14%

18%

18%

18%

19%

21%

22%

19%

23%

26%

26%

27%

25%

12%

18%

17%

18%

21%

22%

20%

21%

23%

29%

26%

27%

26%

14%

18%

19%

20%

21%

21%

22%

23%

25%

25%

26%

27%

28%

Number of full time employees

The $ value of offline marketing andadvertising

Number of part time or casualemployees

Working with business advisers toenhance your business

Investment in IT systems&processes

The sale of products/services online

Sales of products/services offline

The $ value of online marketing andadvertising

Amount you pay the employees

Focus on customer acquisitionstrategies

Number or variety of products orservices offered

Focus on customer retention strategies

Your prices and margins onproduct/services sold

Where businesses plan to increase investment

Oct 15 Feb 15 Aug 14 Feb 14


Planned increase in focus/investment by age of business and size of business

Total Start ups Establishing Maturing Established Sole operators

Micro Small Medium

Prices/margin on products/services 28% 35% 35% 23% 22% 26% 31% 30% 36%

Customer retention strategies 27% 41% 34% 26% 15% 26% 24% 33% 51%

No. or variety of products offered 26% 42% 30% 22% 14% 27% 23% 29% 24%

Customer acquisition strategies 25% 37% 35% 21% 14% 24% 20% 27% 49%

Amount employees are paid 25% 29% 29% 18% 14% 19% 31% 36% 49%

Value of online marketing 23% 36% 26% 19% 10% 20% 22% 33% 44%

Sale of products/services offline 22% 36% 31% 16% 13% 22% 20% 21% 31%

Sale of products/services online 21% 32% 32% 18% 8% 21% 20% 20% 34%

Investment in IT systems/processes 21% 30% 20% 15% 14% 20% 20% 23% 39%

Working with business advisors 20% 33% 26% 16% 8% 19% 20% 22% 25%

No. of part time/casual staff 19% 24% 33% 8% 8% 17% 18% 25% 39%

Value of offline marketing 18% 28% 20% 16% 9% 18% 14% 24% 31%

No. of full time employees 14% 22% 21% 9% 4% 13% 13% 15% 39%



Planned increase in focus/investment by industry type

Agribusiness

Business, prof. &

property services

Construction &

trades

Finance &

insurance

Manufacturing &

wholesale

Retail &

hospitality

Transport, postal

& warehousing

Prices/margin on products/services

17% 31% 29% 29% 33% 41% 10%

Customer retention strategies

25% 26% 16% 50% 34% 36% 15%

No. or variety of products offered

18% 29% 18% 24% 41% 41% 9%

Customer acquisition strategies

9% 25% 18% 44% 24% 30% 19%

Amount employees are paid

18% 23% 24% 29% 20% 36% 22%

Value of online marketing

16% 24% 19% 29% 22% 34% 15%

Sale of products/services offline

23% 22% 16% 24% 28% 27% 8%

Sale of products/services online

11% 25% 10% 26% 34% 31% 9%

Investment in IT systems/processes

8% 25% 13% 31% 27% 28% 12%

Working with business advisors

19% 23% 15% 24% 23% 25% 11%

No. of part time/casual staff

17% 22% 18% 13% 16% 27% 7%

Value of offline marketing

14% 14% 10% 27% 23% 32% 15%

No. of full time employees

5% 17% 12% 16% 14% 21% 10%



Pressure points for operators declined significantly this wave When operators were asked what elements of the business environment they expected to cause an extreme amount or quite a lot of pressure on their business in the next 12 months, the pressure of all nominated issues dropped this wave. While the top five pressures remained the same, the order changed slightly, as shown below.

1. Attracting new customers (last wave – 1st) 2= Competitive activity (last wave – 3rd) 2= Fuel prices (last wave – 5th=) 4. Cash flow (last wave – 2nd) 5. Profitability and price margins (last wave 4th)

Key differences for the major pressures are detailed below.

Attracting new customers Attracting new customers was a greater pressure for:

Operators who reported a revenue fall in the previous 12 months (35%)

Operators with a social media site (32%) or website (30%)

Retail and hospitality businesses (32%)

Importers (31%)

Competitive activity Competitive activity was a greater pressure for:

Manufacturing and wholesale (44%) and retail and hospitality businesses (34%)


Operators with a website (31%)

Fuel prices Fuel prices were a greater pressure for:

• Agribusiness (38%) and construction and trades businesses (32%) • Operators who reported a revenue fall in the previous 12 months (33%) • Queensland operators (32%)

12%

14%

13%

15%

18%

15%

21%

14%

20%

17%

20%

25%

27%

35%

26%

26%

15%

16%

18%

15%

20%

17%

24%

17%

27%

20%

22%

28%

30%

33%

26%

32%

14%

16%

19%

18%

21%

18%

21%

19%

22%

22%

24%

28%

30%

24%

29%

32%

11%

13%

13%

14%

14%

15%

15%

16%

17%

19%

19%

21%

22%

23%

23%

24%

Upgrading IT software, systems or…

Upgrading hardware or other…

Marketing/customer relationships

Exchange rates

Business finance/funding/overdraft

Managing bad debt

Interest rates

Cost of online technologies

Customer payment timing

Retain existing customers

Meet tax obligations

Profitability & price margins

Cashflow

Fuel prices

Competitive activity

Attract new customers

Pressure Points (% extreme/lot)

Oct 15 Feb 15 Aug 14 Feb 14


Cash flow Cash flow was a greater pressure for:

• Operators who reported a revenue fall in the previous 12 months (37%) • Manufacturing and wholesale (33%) and retail and hospitality businesses (29%) • Operators with a website (28%)

Price margins and/or profitability Price margins and/or profitability were a greater pressure for:

Manufacturing and wholesale (40%) and retail and hospitality businesses (32%)


Rural businesses (31%)

Importers (30%)


Pressure points by industry are shown on in the table on the following page. As can be seen, retail and hospitality businesses were experiencing much more pressure than other industries.


Pressure points by industry

Agribusiness

Business, prof. &

property services

Construction &

trades

Finance &

insurance

Manufacturing

& wholesale

Retail &

hospitality

Transport, postal &

warehousing

Attracting new customers

16% 22% 22% 21% 34% 32% 15%

Competitive activity 23% 14% 22% 24% 44% 34% 14%

Fuel prices 38% 12% 32% 20% 32% 15% 36%

Cash flow 27% 16% 22% 20% 33% 29% 16%

Price margins & profitability

34% 14% 19% 8% 40% 32% 16%

Meeting your tax obligations

14% 16% 22% 21% 26% 18% 17%

Retaining existing customers

19% 18% 11% 17% 33% 26% 16%

Timing of customer payments

14% 14% 25% 4% 33% 13% 14%

Online technology costs 14% 15% 18% 4% 23% 17% 15%

Interest rates 19% 8% 18% 18% 21% 20% 12%

Managing bad debt 18% 16% 14% 9% 27% 10% 15%

Business finance/ funding/overdraft

15% 10% 9% 12% 30% 18% 6%

Exchange rates 14% 12% 8% 11% 33% 19% 10%

Marketing & customer relationships

11% 10% 8% 15% 23% 14% 10%

Updating hardware or other equipment

14% 14% 10% 4% 21% 15% 12%

Updating IT software, systems or processes

9% 10% 9% 11% 20% 11% 10%



ONLINE ACTIVITY & THE DIGITAL ECONOMY

Operators were asked about which of a number of online services they currently used, and, if they used any of the following services, they were deemed to be using cloud computing:

Sell all products and services online (online store only, no premises for customers to visit)

Use online accounting software

Use online file back-up (e.g. documents, photos, videos)

Use online file sharing, storage and backup (e.g. DropBox, OneDrive, GoogleDrive)

Write, edit and collaborate documents using an online service in a web browser (e.g. Google Docs, Office365, Zoho) In total, 40% of operators were using cloud computing, representing a significant decline from the 46% using cloud computing in the previous survey. Social media used by just over one third of Australian operators, while accepting online payments used by only one quarter, compared to 40% of their New Zealand counterparts. Overall, as can be seen in the table below and on the following page, using email (55%) and online banking (48%) were the most popular online activities, followed by the use of smartphones for the business (38%). Social media (net result) was used by 35% of Australian operators, particularly Facebook (15%) and LinkedIn (14%). Accepting online payments from customers was only used by 25% of operators compared to 40% of their New Zealand counterparts.

INTERNET/EMAIL MARKETING Feb 15 Oct 15

Modify your website to improve online search results (SEO) 11% 8%

Conduct email marketing to potential or existing customers 11% 8%

Purchase online advertising or keywords (SEM) 6% 4%

BUYING/SELLING ONLINE

Accept online payment from your customers e.g. via Internet banking, a shopping cart or mobile app 31% 25%

Buy products/services online (e.g. eBay, Trading Post, Trade Me or Other Website) 29% 18%

Sell products and/or services online via your own website 14% 9%

Sell products /services online via a website other than your own 10% 8%

Sell all products and services online (online store only, no premises for customers to visit) 9% 6%


SOCIAL MEDIA USAGE

Connect with customers and fans via a business page on Facebook 18% 15%

Network with business colleagues and/or clients on LinkedIn 17% 14%

Promoted or boosted your business’ posts on social media n/a 10%

Share news and updates via a company blog (either via your own website or blog hosting site) 8% 7%

Connect with customers and fans via a business page on Google+ 5% 6%

Connect with customers and fans via Twitter 7% 5%

Use and connect with customers and fans via a business page on Pinterest 5% 4%

Connect with customers and fans via a business page on YouTube 4% 4%

Use and connect with customers and fans via any other type of social media/social networking site 4% 2%

Nett social media 38% 35%

ONLINE VOICE COMMUNICATIONS

Use internal online video/voice communication (e.g. Lync, Skype) 12% 9%

Use external online video/voice communication (e.g. WebEx, GoTo Meeting) 8% 6%

Use online video (e.g. watching or creating videos) 8% 5%

Provide live online customer support (e.g. ZenDesk, UserVoice) 5% 3%

Provide live online chat internally between employees (e.g. Lync, Campfire, HipChat) 4% 3%

ONLINE FILE SHARING AND COLLABORATION

Use online file sharing, storage and backup (e.g. DropBox, OneDrive, GoogleDrive) 17% 15%

Use online file back-up (e.g. documents, photos, videos) 20% 14%

Write, edit and collaborate documents using an online service in a web browser (e.g. Google Docs, Office365, Zoho) 8% 8%

OTHER

Use email 62% 55%

Use online banking 56% 48%

Use one or more smartphones 45% 38%

Use one or more tablets (e.g. iPad) 29% 23%

Other 1% 1%

Have internet access but do not do any / not interested in any of above activities 5% 12%


The table below and on the following page detail the usage of these online tools by industry. Selling online and social media was, as expected, more utilised by retail and hospitality operators, while social media was underutilised by construction and trades and transport, postal and warehousing operators.

Tools by industry type

Agribusiness

Business, prof.

& property

services

Construction

& trades

Finance &

insurance

Manufacturing

& wholesale

Retail &

hospitality

Transport, postal &

warehousing

INTERNET/EMAIL MARKETING

Conduct email marketing to potential or existing customers

3% 8% 2% 14% 13% 16% 5%

Modify your website to improve online search results (SEO)

5% 7% 4% 0% 13% 14% 4%

Purchase online advertising or keywords (SEM) 0% 7% 2% 0% 5% 5% 2%

BUYING/SELLING ONLINE

Accept online payment from your customers 36% 24% 28% 15% 32% 24% 12%

Buy products/services online 23% 19% 15% 7% 33% 21% 13%

Sell products and/or services online via your own website

6% 8% 4% 0% 21% 20% 4%

Sell products /services online via a website other than your own

9% 7% 4% 0% 11% 20% 2%

Sell all products and services online (online store only, no premises for customers to visit)

8% 8% 1% 0% 11% 12% 4%

SOCIAL MEDIA USAGE

Connect with customers/fans via Facebook 8% 11% 9% 26% 14% 31% 10%

Network with colleagues/clients on LinkedIn 6% 16% 11% 20% 21% 13% 6%

Share news and updates via a company blog 10% 9% 3% 12% 8% 10% 2%

Connect with customers and fans via Twitter 3% 5% 1% 8% 4% 7% 0%

Connect with customers/fans via Google+ 3% 7% 4% 5% 7% 7% 7%

Connect with customers/fans via YouTube 5% 6% 1% 0% 4% 4% 2%



Tools by industry type

Agribusiness

Business, prof.

& property

services

Construction

& trades

Finance &

insurance

Manufacturing

& wholesale

Retail &

hospitality

Transport, postal &

warehousing

Connect with customers and fans via Pinterest 0% 5% 2% 4% 6% 5% 2%

Use and connect with customers and fans via any other type of social networking site

2% 2% 0% 2% 2% 4% 0%

Promoted or boosted your business posts on social media

6% 8% 9% 18% 7% 20% 2%

Nett social media 30% 37% 24% 42% 36% 50% 19%

ONLINE VOICE COMMUNICATIONS

Use internal online video/voice communication 5% 13% 5% 10% 12% 5% 5%

Use external online video/voice communication 0% 9% 4% 10% 5% 7% 5%

Provide live online chat internally between employees

0% 4% 2% 2% 10% 2% 0%

Provide live online customer support 0% 4% 1% 0% 5% 4% 2%

Use online video 5% 4% 5% 10% 6% 4% 2%

ONLINE FILE SHARING AND COLLABORATION

Use online file back-up 14% 16% 10% 16% 18% 13% 4%

Use online file sharing, storage and backup 6% 20% 12% 22% 18% 14% 7%

Write, edit and collaborate documents using an online service in a web browser

3% 11% 7% 6% 12% 5% 6%

OTHER

Use one or more smartphones 27% 33% 40% 53% 47% 26% 46%

Use one or more tablets 19% 23% 26% 22% 30% 18% 13%

Use email 58% 45% 63% 68% 56% 52% 58%

Use online banking 53% 41% 55% 57% 55% 43% 50%


Some of the key differences noted are detailed below:

Gen Y operators were much less likely to use email (32%) or online banking (30%) compared to their Baby Boomer counterparts (70% and 62% respectively)

Operators more likely to use social media included: operators with a social media (64%) or website (53%), exporters (52%) and importers (51%), retail and hospitality businesses (50%), Gen Y operators (46%), establishing businesses (45%), operators whose revenue had increased in the previous 12 months (43%), metropolitan based businesses (42%), and females (42%).

Fewer Australian operators had a business website this wave Operators were asked about their online presence in terms of having their own business website and their own business-focused social media site. As can be seen in the chart above, more than half of Australian SMEs (54%) now have an online presence. The proportion of operators with a social media site remained steady this wave, but the proportion of operators with a business website has declined this wave back to 42% from 47% the previous wave. Gen Y operators were much more likely to have an online presence (75%), while Traditionalists (30%) and Baby Boomers (42%) were less likely to have an online presence. As well as older operators, older businesses, very small businesses and some specific industries were also more likely to be laggards, specifically:

Rural businesses (65% had no online presence)

Established businesses (64%)

Transport, postal & warehousing (62%) and construction and trades businesses (55%)

Businesses with a revenue between $40 – 75k (51%) Please note: the question about having a social media site was only introduced in August 13

Sole operators (46%)

39%

47%

39% 38% 36% 38% 38% 38%42% 44%

47%42%

20%27%

31%

26%29%

Mar10

Oct 10 Mar11

Sept11

Feb 12 May12

Feb 13Aug 13Feb 14Aug 14Feb 15 Oct 15

Proportion of Australian businesses with an online presence

Website Social media site

50%

26%

8%12%

4%

43%

26%

11%16%

4%

41%

25%

12% 19%

4%

41%

29%

8%

18%

4%

41%

26%

13% 16%

5%

Do not have anonline presence

Only have abusinesswebsite

Only have asocial media site

Have both awebsite and a

social media site

Don't know

% of business with an online presence

Aug 13 Feb 14 Aug 14 Feb 15 Oct-15


Key differences by industry, operator age and size of business are shown below.

Total Gen Y Gen X Baby Boomers

Traditionalists Sole operators

Micro Small Medium

Do not have an online presence 41% 18% 37% 55% 70% 46% 43% 16% 7%

Only have a business website 26% 31% 25% 23% 21% 19% 26% 53% 46%

Only have a social media site for business

13% 21% 17% 7% - 16% 8% 4% 20%

Have both a business website & a social media site for business

16% 23% 16% 12% 10% 13% 19% 21% 24%

Don’t know 5% 7% 5% 3% - 5% 4% 5% 3%


Agribusiness

Business, prof. &

property services

Construction

& trades

Finance &

insurance

Manufacturing

& wholesale

Retail &

hospitality

Transport, postal &

warehousing

Do not have an online presence

54% 40% 55% 29% 36% 22% 62%

Only have a business website

19% 27% 24% 20% 38% 28% 15%

Only have a social media site for business

15% 13% 13% 17% 8% 17% 2%

Have both a business website & a social media site for business

6% 15% 6% 29% 17% 26% 11%

Don’t know 7% 5% 3% 5% 1% 6% 11%



Operators with an online presence were asked which of a number of business changes had occurred as a result of having an online presence. As can be seen in the table below, having a business website was perceived to have resulted in more customer leads and enquiries (44%), made it easier for customers to do business with them (39%) and enabled a more professional brand image (38%). Having a social media site provided different benefits, particularly allowing more interactions with customers (42%). Very few operators felt their website (9%) had provided no benefit to their business, but 15% commented that their social media site had provided no benefit. In terms of having a business website, micro businesses reported more success in generating more customer leads and enquiries (55% compared to sole operators 38%), as did regional businesses (50%). Regional businesses also saw more benefit in their website enabling a more professional brand image (44%) and allowing more interactions with customers (41%). Retail and hospitality and manufacturing and wholesale businesses were more likely to see benefit from a website across a range of issues. In terms of having a social media site, retail and hospitality businesses reported more benefit in allowing more interaction with customers (56%), increasing their appeal to younger customers (40%) and younger employees (27%), while exporters were more likely to state they had benefits in enabling them to compete internationally (22%).

Impact of online presence Result of having a business website Result of having a social media site

Feb 2015 (n=501)

Oct 2015 (n=423)

Feb 2015 (n=286)

Oct 2015 (n=318)

Generated more customer enquiries or leads in general 41% 44% 38% 30%

Made it easier for customers to do business with you 35% 39% 27% 24%

Enabled your business to have a more professional brand image 39% 38% 29% 24%

Allowed more interaction with customers 34% 33% 49% 42%

Enabled you to compete better with your competitors 25% 26% 25% 20%

Allowed you to sell online to customers 24% 23% 19% 12%

Increased revenue or income in general 25% 20% 21% 17%

Increased your appeal to younger customers 18% 20% 31% 26%

Enabled access to more markets 25% 19% 25% 18%

Enabled you to compete internationally/opened your market to international customers

14% 13% 13% 11%

Increased your appeal to younger employees 12% 12% 19% 15%

Has not benefitted my business 9% 9% 14% 15%

Green = Significantly better than website/social media site Red = Significantly lower than website/social media site

Significant increase since last wave Significant decrease since last wave


Hackers seen as biggest online security concern for operators, followed by the threats of losing access to and control of their data Operators were asked what online security concerns they had with their business. The most frequently mentioned issues were hackers gaining access to their business data (34%), followed by losing access to their data (29%) and losing control of their data (25%). Operators more concerned about online security concerns included:

Franchisors (only 4% stated they were not concerned about online security)

Medium businesses (12%)


Gen Y operators (16%)

Establishing businesses (24%)


Metropolitan based businesses (27%)

New South Wales operators (28%)

Users of cloud computing (28%)

More operators dissatisfied with Internet speed than cost One quarter of operators (25%) expressed dissatisfaction with the speed of their Internet connection, while 21% expressed dissatisfaction with the cost. Levels of satisfaction were very similar to the previous wave. Rural businesses were more dissatisfied with the speed of their Internet connection (37%).

Online security concerns Oct 2015 (n=1024)

Hackers gaining access to your business data 34%

Losing access to your data 29%

Losing control of your data 25%

Competitor access to your business data 13%

Access to your data by local government 13%

Access to your data by foreign governments 12%

Do not have any concerns about online security 33%

Don’t know 6%

8%

5%

18%

16%

21%

26%

31%

36%

19%

16%

2%

1%

Speed

Cost of plan

Satisfaction levels with Internet

Very dissatisfied Quite dissatisfied

Neither satisfied nor dissatisfied Quite satisfied

Very satisfied Don't know


SPECIAL TOPIC: INNOVATION Pace of technology perceived as about right for Australian operators Over half (57%) of Australian operators found the pace of technology innovation to be ‘about right’, with 20% stating it was too fast and a similar proportion, 19%, stating it was too slow. Manufacturing and wholesale businesses were, however, much more likely to state that the pace of technology innovation was too slow (33%).

Australian operators underinvesting in innovation compared to New Zealand

Operators were asked which activities they had invested in over the last 12 months. Investment in these activities were used as a measure of innovative businesses. As can be seen, while sole operators were less likely to have invested in these strategies, investment in innovation was not limited to larger SMEs. The acquisition of computer hardware and software was the most frequently mentioned innovation at 31%, significantly below the 47% recorded in New Zealand. On average, New Zealand operators mentioned 2.5 investment areas compared to 1.6 areas for Australian operators.

Activities undertaken in last 12 months Total (n=1024)

Sole operators Micro businesses

Small businesses

Medium businesses

Acquired computer hardware or software 31% 30% 36% 33% 25%

Acquired machinery and equipment 26% 22% 30% 36% 25%

Acquired other knowledge 22% 25% 21% 12% 12%

Conducted employee training 17% 10% 23% 36% 28%

Implemented new business strategies or management techniques 16% 13% 20% 18% 23%

Made significant changes to marketing strategies 12% 11% 16% 11% 23%

Marketed the introduction of new goods or services 11% 10% 10% 15% 26%

Conducted market research 10% 9% 9% 13% 30%

Invested in design (e.g. industrial, graphic or fashion design) 9% 9% 8% 9% 10%

Conducted an organisational restructure 7% 5% 8% 9% 17%

Operators with a website or social media site, whose revenue had increased in the preceding 12 months, exporters and importers and users of cloud computing were more likely to have invested in the nominated activities.

20%

57%

19%

4%

Pace of technology innovation

Too fast

About right

Too slow

Don’t know


Cost to introduce innovation perceived as the biggest barrier Over a quarter of Australian operators nominated the cost of introducing innovation into a business as the biggest barrier to innovation. A further 25% did not perceive any barriers affecting their business. Government regulations were also nominated by 23% of operators.

Medium businesses perceived more barriers to innovation, with only 3% stating there were no perceived barriers to innovation, and while the two significant barriers were the same (cost and Government regulation), they were more likely to mention lack of R&D funding (31%), access to investment (25%) and lack of appropriate personnel (25%). Businesses with a website or social media site, exporters and importers and users of cloud computing were also more likely to nominate barriers to innovation.

The majority of operators had not sourced any capital or

finance in the last 12 months The majority of operators (55%) had not sourced any capital or finance in the last 12 months. Of the 40% that did (5% were unsure), 18% had used one of the Big 4 banks, with family and friends and credit card companies being the next largest source of finance at 7% each.

Higher users of finance (operators who were less likely to say they did not need finance) included:

Franchisors (only 16% did not need finance) and franchisees (21%)

Gen Y operators (26% compared to 70% of Baby Boomers)


Small businesses (38%)

Metropolitan businesses (45%)

Operators with a website (45%) or social media site (46%)

Users of cloud computing (47%)

Businesses whose revenue in the last 12 months had increased (47%) or decreased (48%)

Barriers to innovation (n=1024)

Cost to develop or introduce 28%

Government regulation 23%

Lack of R&D funding 14%

Lack of marketing expertise 14%

Access to investment 12%

Lack of appropriate personnel 11%

Lack of information 10%

Lack of cooperation with other businesses 9%

Lack of management resources 8%

Access to intellectual property rights 7%

Other (please specify ) 3%

No barriers affect my business when it comes to innovation 25%

Don’t know 8%

Finance sources in last 12 months (n=1024)

Big Bank 18%

Friends/Family 7%

Credit card company 7%

Specialist loan broker 6%

Other bank 5%

Credit union or building society 5%

Investors 5%

Loan/lease from the equipment provider 4%

Home equity financing/redraw on home loan 3%

I have not required capital investment 55%

Don’t know 5%


SPECIAL TOPIC: BUSINESS ASPIRATIONS Australian business owners started their business to control their own destiny Australian business owners were asked two special questions this wave regarding why they started their business and what their long-term goals were for the business. Control, flexibility, passion and lifestyle change were the four main themes to emerge as shown in the table opposite. These results remained unchanged from the previous wave. Gen X business owners were more likely to mention they wanted a total lifestyle change (33%) or wanted to spend more time with their family (19%), whereas Baby Boomers were more likely to mention they wanted to control their own destiny (44%). Metropolitan based owners were more likely to mention wanting to control their own destiny (46%) or wanting more flexibility (36%), while retail and hospitality businesses were more likely to mention wanting to control their own destiny (52%), wanting a total lifestyle change (39%) or wanting to make money from a passion or hobby (24%).

Australian business owners’ long term goals for the business focussed on flexibility rather than growth In terms of the long term goals for their business, more than one quarter (28%) of business owners nominated flexibility, allowing them to make money but also spend time with the family and take holidays. Only one in five (19%) nominated growth as their key goal, while 16% felt it was more about a passion for what they did. Gen X business owners were more likely to mention flexibility (36%), while female business owners were more likely to mention making some money from working on something they were passionate about (22% compared to 13% of males).

Reasons for starting the business Business owners (n=766)

I went into business to control my own destiny 39%

I needed flexibility in a role to do what I want, when I want 32%

I started my own business because I am passionate about what I do 29%

I wanted a total lifestyle change from what I was doing 27%

I went into business so I can spend more time with my family 13%

I thought that I could make money from a hobby or an interest 12%

I started it as an investment strategy to make more money for the future 11%

The business is our family business and I had to take it over 9%

I was offered a partnership opportunity by someone else 7%

I had reached retirement age but wanted to continue working 6%

Long term goals for the business Business owners (n=766)

I want to make some money and give myself flexibility at the same time, to spend time with the family, to take holidays etc 28%

I want to grow my business and make a good profit and income for myself 19%

I want to make money from what I love doing. It’s more about working on things I am passionate about 16%

I want to make some money, but it is more a semi-retirement 14%

I want to build a successful business that I can sell for a good profit 8%

I want it to be a family business I leave to my children 5%

I want to sell the business and do something else 4%


EMPLOYMENT

Almost two-thirds of employing businesses experience some pain point with regard to employing staff In terms of employing staff, four key pain points emerged for employing businesses:

Finding new staff

Dealing with payroll compliance

The process of hiring new staff

The ability to dismiss employees While 35% of employing businesses stated they had no pain points in terms of employing staff, small businesses and Gen Y were more likely to disagree, with only 24% and 21% respectively stating they had no pain points in this area.

Over two-thirds of operators use some form of teleworking Over two thirds of Australian operators (68%) utilised some form of teleworking within their business, while 31% had employees working only from their business premises. The proportion of teleworking remained constant this wave, but has increased quite significantly over the last two years from only 57% in February 2013. Teleworking was more likely to be used by:

Franchisors (88%)

Construction & trades businesses (86%) and business, professional and property services (76%)

Exporters (79%)

Establishing businesses (79%)

Sole operators (75%)

Gen Y operators (74%)

Pain points in employing staff (n=483)

The ability to find new staff 27% Dealing with payroll compliance – eg student loans, parental leave, child support payments 21%

The process of hiring new staff 19%

Ability to dismiss employees 19%

Demand for flexible working hours 17%

End of year paperwork eg payment summaries 16% Understanding health and safety compliance (employers’ responsibility etc.) 10%

Other (please specify) 3%

I do not have any pain points with regard to employing staff 35%

Don’t know 5%

43% 38% 36% 32% 31% 32%

32%27% 28% 33% 32% 34%

25% 37% 37% 35% 37% 34%

Feb 13 Aug 13 Feb 14 Aug 14 Feb 15 Oct 15

Incidence of teleworking

Work mainly from a location other than our business premises

Work partly from a location other than our business premises

Only work from the business premises


WORK-LIFE BALANCE AND HOLIDAYS

Satisfaction with work-life balance jumps this wave Almost two-thirds of Australian operators (65%) stated they were satisfied (19% very satisfied; 46% satisfied) with their work life balance this wave. The proportion of operators satisfied with their work-life balance has jumped considerably since the last wave – up 14% since February 2015. Those segments most satisfied with their work life balance included:

Baby Boomers (70%) compared to 58% of Gen Y operators

South Australian operators (82%) compared to 56% of Victorian operators

Businesses who reported a revenue increase in the previous 12 months (74% compared to 56% of those reporting a decline)

Fewer than one in five of operators expecting to take more than a week off over December/January period To coincide with the festive season, operators were asked what holidays they were planning to take over the December/January period. Only 19% of operators were taking off more than a week, with 71% planning to take only statutory holidays or the period between Christmas and New Year before heading back to work. Retail and hospitality operators were much more likely to take just the statutory holidays (43%), while age was also a significant differentiator. Gen Y operators were more likely to take off between Christmas and New Year (50%, while only 13% took off for a longer period). Baby Boomers were less likely to take off between Christmas and New Year only (26%), opting instead to take off either the statutory holidays only (41%) or for a longer period (25%).

50%

-23%

56%

-20%

47%

-27%

51%

-23%

65%

-14%

TOTAL SATISFIED

TOTAL DISSATISFIED

Work-Life Balance

Aug-13 Feb-14 Aug-14 Feb-15 Oct-15

34%

37%

19%

10%

Holidays

No, just the statutory holidays

Yes, but just between Christmasand New Year

Yes, for a longer period

Don’t know


GOVERNMENT

Dissatisfaction with Federal Government drops The level of dissatisfaction with the Federal Government declined this wave from 33% in February 2015 to 26% this wave – the lowest level of dissatisfaction recorded in the Business Monitor. Interviewing for the survey commenced just prior to Malcolm Turnbull’s installation as prime minister, with the majority of interviews conducted after the change. Higher dissatisfaction was noted by Gen X operators (33% compared to 19% of Gen Y operators) and businesses that reported a revenue fall in the prior 12 months (34%).

State Government dissatisfaction levels continued to decline Dissatisfaction with the level of support from State Government declined slightly this wave from 34% to 30%. Levels of satisfaction remained constant at 28%. Dissatisfaction levels were highest amongst Baby Boomers (34% compared to 18% of Gen Y operators), Queensland operators (41% compared to 20% of New South Wales operators).

ATO $20k tax incentive used by only a quarter of SMEs to date

One quarter (25%) of operators had used the ATO’s tax deduction for small businesses, with a further two-thirds (68%) stating it had not been used. The remaining 7% were unsure. Understandably there were some significant differences:

Franchisors were much more likely to have utilised the incentive (51%)


Businesses who reported a revenue increase in the previous 12 months (38%)

Establishing businesses (35% compared to 19% of established businesses)

Gen Y operators (34% compared to 19% of Baby Boomers)

Operators with a website (29% compared to 22% of those without)

14%19% 17%

12%18%

14% 15% 16% 17%

25% 23%27% 29% 28%

46%43%

46%53%

46%50% 51% 49%

43%40%

36%33% 34%

30%

JUL 09 NOV 09

MAR 10

OCT 10 MAR 11

SEPT 11

FEB 12 MAY 12

FEB 13 AUG 13

FEB 14 AUG 14

FEB 15 OCT 15

Perceptions of State Government support for SMEs

Total satisfied Total dissatisfied

39%

31%

38%

48%

56%52%

57%54%

49%

32%37%

33%

26%21%

29%

21%

14% 14%11%

17%14% 16%

24% 23%27%

30%

JUL 09 NOV 09MAR 10 OCT 10 SEPT 11 FEB 12 MAY 12 FEB 13 AUG 13 FEB 14 AUG 14 FEB 15 OCT 15

Perceptions of Federal Government support of small business

Total dissatisfied Total satisfied


Not needing to purchase anything cited as the main reason for not using

the incentive

Operators who had not used the incentive cited not needing to purchase anything as the main reason for not using the incentive (38%), followed by not having the available cash to purchase anything (19%). Small (25%) and medium sized businesses (41%) were more likely to say the incentive did not apply to their business, while Gen Y operators were more likely to state they didn’t know about the incentive (20%).

The instant tax write off and simplification of BAS were viewed favorably by operators Operators were also asked about policies or initiatives that might influence their vote for or against the party promoting them. As seen in the table below, the most popular initiatives were keeping the $20k instant asset tax write off (63% would vote for a party offering this policy) and significantly simplifying the GST/BAS reporting process (62%). At the other end of the scale, introduction of paid parental leave for all businesses with a revenue over $5m was more likely to cause operators to vote against the party proposing it (32%), as did the removal of the threshold at which GST is collected on goods purchased from abroad (28%). Gen Y operators were less likely than Baby Boomers to vote for almost all the nominated policies, with the exception of the introduction of a paid parental leave levy on all businesses over $5m revenue, which they were much more likely to support (40% compared to only 13% of Baby Boomers).

Policies or initiatives that business operators would vote for/against For Against

Keeping the $20,000 instant asset tax write-off for businesses under $2m revenue 63% 11%

Policies that significantly simplify the GST/BAS reporting process 62% 10%

Reducing the company tax rate from 30% to 28.5% 58% 13%

Assigning a proportion of Government procurement contracts to small businesses 57% 9%

Increased Federal Government funding for skills, training and apprenticeship programs 57% 10%

The establishment of an incentive bonus for businesses employing people over age 50 56% 10%

More Federal Government investment in transport infrastructure in our major States and cities 55% 10%

Increased Government funding for innovation, research and development by Australian businesses 53% 10%

Offering a wage subsidy for employing young Australians 51% 12%

Exempting FBT on the purchase of work-related portable electronic devices 50% 11%

Remove the threshold at which GST is collected on goods purchased from abroad 37% 23%

Implementation of Free Trade Agreements with Japan, China and South Korea 32% 19%

Introducing a paid parental leave levy for all businesses with revenue over $5m 23% 32%

Reasons for not using the ATO’s tax incentive Non-users of incentive

(n=698) Don’t need to purchase anything 38%

Have not had sufficient cash available to buy anything 19%

It doesn’t apply to this business 14%

Aren’t making enough profit to need to offset the tax allowance 13%

Didn’t know about it 10%


About the study

The MYOB Business Monitor researches business performance and attitudes regarding areas such as profitability, cash flow, pipeline work, technology usage and the government. This report presents the summary findings for key indicators from the MYOB Business Monitor comprising a national sample of 1,024 business owners, managers and directors (operators), conducted from September 22 – October 12, 2015. The businesses participating in the online survey were both non-employing and employing businesses. All data has been weighted by industry type, location and number of employees, which are in line with the Australian Bureau of Statistics (ABS - Counts of Australian businesses, including entries & exits - 8165.0).

This research report was prepared by Gundabluey Research and fieldwork was completed by Colmar Brunton (a Millward Brown Company) for Sarah Beyrath, Public Relations & Corporate Affairs Manager – Australia, MYOB Australia ([email protected] | http://myob.com.au

Industry Weighting No.

Agribusiness*2 9% 36

Construction & trades 17% 155

Finance & insurance*2 8% 45

Manufacturing & wholesale 8% 70

Professional & business services 27% 306

Retail & hospitality 11% 145

Transport & warehousing*1 6% 48

Other industries**2 (incl. in total results) 14% 219

TOTAL 100% 1024

Location Weighting No. New South Wales 33% 344

Victoria 26% 254

Queensland 20% 224

South Australia 7% 80

Western Australia 10% 82

Other 4% 40

TOTAL 100% 1024

1 Caveat: There is high margin of error of +/-15% @ 50% on these small bases 2 Other Industries, which have been combined to minimise their margin of error, include these sectors: Communication Services; Cultural & Recreational Services;

The generations were categorised as follows:

Generation Y: 18 – 34 years of age

Generation X: 35 – 49 years of age

Baby boomers: 50 – 69 years of age

Traditionalists: 70+ years of age

Length of time in business was categorised as per the following:

Start up: in business fewer than 2 years

Establishing: 2 to 5 years

Maturing: 5 to 10 years

Established: 10+ years

Education; Electricity, Gas & Water Supply Services; Health & Community Services; Mining; and Personal & Other Services

Number of employees/business type Weighting No. 0 employees/sole traders 61% 623 1-5 employees/micro business 24% 248 6-19 employees/small business 11% 112 20-199 employees/medium business*2 4% 41

TOTAL 100% 1024

mailto:[email protected]

http://myob.com.au/

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