Three hurdles for small business
A new study has revealed the three factors that are impacting small to medium businesses in Australia.
Speaking at the Institute of Public Accountants national conference on the Gold Coast, Australian Small Business and Family Enterprise Ombudsman Kate Carnell said barriers to investment included access to capital, red tape and energy prices.
Ms Carnell said removing barriers to investment would give small businesses confidence to grow and boost jobs.
Despite recent claims by bank executives that lending to small firms is booming, Ms Carnell said this wasn’t the case for borrowers who don’t have equity in property.
“Traditional bank loans are backed by real property mortgages and although alternatives are emerging, they are not currently mature and affordable,” she said.
“Young aspiring small business operators are particularly disadvantaged and increasingly rely on their parents to provide seed finance.”
This means the “Bank of Mum and Dad” was often called on to help young entrepreneurs.
“This offers convenience and flexibility, but it puts people’s retirement savings at risk,” she said.
“It also raises social equity issues in that the children of affluent parents have greater opportunities to buy and grow businesses.”
The Ombudsman’s study also takes aim at red tape, saying past reduction efforts have largely been “window dressing”.
Ms Carnell said a successful pilot in Parramatta to make compliance requirements seamless should be extended to other areas.
“It was found there were more than 50 pieces of regulation which applied to setting up a hospitality business in Parramatta and the regulation meant it took up to 18 months to commence trading,” she said.
“Regulation wasn’t removed but was instead sped up and made invisible. Information provided once was used to automatically complete forms in other areas of bureaucracy.
“This is a smart way of using systems and technology to relieve regulatory burdens on business.”