Small Business Challenges
Being consistent about size does matter.
Running a business is hard. Running a small business is harder.
I have blogged before about the challenges many businesses face in simply getting paid. Small Business is often hand-to-mouth.
SmartCompany stated, “Fairfax reports Turnbull will commit to bills being paid before the 20-day mark, months after the Australian Small Business and Family Enterprise Ombudsman (ASBFEO) released a report from an inquiry into payment times revealing delayed payments to SMEs from both the public and private sectors were having a significant impact on cash flow.”
This will have a massive flow on effect on to small businesses. But as I discovered this week, there is no consistent definition of small business.
So whilst I might jest that “I still consider us a startup”… at the heart of the issue is the simple question of “what makes a small business small?”. Different regulators in this country define ‘small business’ in different ways, based on the laws they administer.
Here are just three examples from the gamut of regulators in Australia:
- ASIC classifies a small business as having two out of these three characteristics:
- an annual revenue of less than $25 million;
- fewer than 50 employees at the end of the financial year; and
- consolidated gross assets of less than $12.5 million at the end of the financial year.
- The ATO defines a small business as one that has annual revenue turnover (excluding GST) of less than $2 million.
- Fair Work Australia defines a small business as one that has less than 15 employees, whether full time or part time.
I am sure there are more definitions from other government agencies. Herein lies the many complications when it comes to small business owners trying to navigate the sheer quantity of compliance requirements.
As business owners we are so busy trying to find customers, build their trust and keep them on our side… that legislation and red tape often fall to the bottom of our list. With changes to local, state, federal and governing authority legislation it is really hard to work out “which piece is relevant to my business and how do I action it cost effectively?”.
Each business owner must take responsibility and be proactive around legislation and regulation. As directors of a business we have a fiduciary responsibility to do so. However, if there was a single definition of ‘Small Business’ then that would assist. In 2012, there was a roundtable to that effect which said a uniform definition would greatly benefit productivity, as reported in The Conversation.
After 20 years of being a business owner, it might be kind of nice to know when you have graduated from startup to small business to a scale up, then to a medium and ultimately a large business.
One classification, one system will allow us to focus on our customers. And then, maybe small business will be able to capitalise on this 20-day term opportunity and get the money moving around the system.
Also published on Medium.
Patrick Itodo says
Wow……this is Amazing! I Love this; very informative and educative.