MYOB Australian Small Business Survey

MYOB Australian Small Business Survey August 2004 (Quarter 3) Small Business Survey Report Prepared for MYOB

Prepared by AMR Interactive

Prepared for MYOB Australia

AMR Interactive Contact: Chris Caley Survey Project Manager Email: [email protected] Web: www.amrinteractive.com

MYOB Contact: Caroline Jackson Public Relations Manager Email: [email protected] Web: www.myob.com.au

Address: Level 14, 235-243 Jones St, Ultimo, NSW 2007

Address: 12 Wesley Crt, Burwood East, VIC 3151

1 © 2004 Copyright strictly enforced

MYOB Australian Small Business Survey

August 2004

Table of Contents List of Tables and Charts ......................................................................................... 2 Perception of own business (current)....................................................................... 4 Perception of own business (future)......................................................................... 5 Expectations for future economic performance ....................................................... 6 Expectation of investing in own business................................................................. 7 Source of funding for investment in own businesses............................................... 8 Perceptions of Federal Government performance................................................... 9 Perceptions of State Government performance..................................................... 10 Outlook for specific business issues (positive) ...................................................... 11 Outlook for specific business issues (negative) ..................................................... 12 Activities conducted online ..................................................................................... 13 Appendix: Questionnaire items .............................................................................. 14

List of Tables and Charts Table 1: Perception of own business performance (%) ............................................... 4 Table 2: Performance outlook for own business over the next 12 months (%)............ 5 Table 3: Performance outlook for Australian economy over the next 12 months (%).. 6 Chart 1: Expectation of investing in own business in the next 6 months (%)............... 7 Table 4: Source of funding for investment in small business (%) ................................ 8 Table 5: Performance ranking of Federal Government in contributing to the development of small business in Australia (%) .................................................. 9 Table 6: Performance ranking of State Government in contributing to the development of small business in Australia (%) ................................................ 10 Chart 2: Small businesses with positive outlook on specific issues (%) .................... 11 Chart 3: Small business with negative outlook on specific issues (%)....................... 12 Chart 4: Activities conducted online (%)..................................................................... 13



August 2004

About the Study These tables present summary findings for Key indicators from a national sample of 2,722 small business proprietors and general managers, whose businesses have a connection to the Internet. These are defined as both non-employing and employing businesses up to a maximum of 20 employees. Results have been weighted to reflect the small business population distribution according to the Australian Bureau of Statistics (ABS) for company size, length of time operating, region and selected ANZSIC Industry divisions. Refer to ABS publications Characteristics of Small Business, 8127.0, 2001 and Small Business in Australia, 1321, 2001. This quarterly study follows from a benchmarking undertaken by AMR Interactive in December 2003 (n=13,212), and the first wave of the tracker in April 2004 (n=2,896). All comparisons refer to the April quarterly tracking research. For a copy of this previous report, please contact the survey project manager or MYOB Public Relations. Key Indicators presented are: •

Perceptions of current and future performance of small business in Australia.

•

Perceptions of the outlook for the Australian economy.

•

Likelihood of small businesses investing in the next 6 months, and the likely source of funding.

•

Perceptions of Federal and State government performance in contributing to small business development in Australia.

•

Business outlook for small business in terms of sales, cash flow, business costs and other issues.

•

Activities conducted online

The findings of the research are presented by industry type: Industry Sample Agriculture 150 Manufacturing 252 Construction 285 Wholesale trade 116 Retail trade 393 Accommodation, cafes, restaurants 113 Transport and storage 92 Communication services 236 Finance and insurance 198 Property and business services 348 Education 70 Health and community 164 Cultural and recreational services 61 Personal and other services 170 Information & Communications Technology 67 Tourism* 7 * Due to low base size Tourism is included in Total numbers, though not reported separately.



August 2004

Perception of own business (current) Table 1: Perception of own business performance (%)

Small businesses still performing well Very Well %

Quite Well %

Not very well %

Not at all well %

15

64

17

3

7

66

21

6

16

62

20

1

18

64

17

1

21

58

17

3

14

61

22

3

21

68

11

18

77

3

1

12

61

22

2

13

71

15

1

16

73

9

2

15

63

19

2

24

61

8

7

16

56

25

10

56

30

4

11

59

21

9

Total Agriculture Manufacturing Construction Wholesale trade Retail trade Accommodation, cafes, restaurants Transport and storage Communication, media & marketing services Finance and insurance Property and business services Education Health and community Cultural and recreational services Personal and other services Information & Communications Technology

Base: Online small businesses Note: ‘Don’t know’ responses not shown in table Q: Thinking about the current performance of your own business, do you think your business is performing?…(very well, quite well, not very well, not at all well, don’t know) *Caution low base AMR Interactive, 2004 (n =2,722 )

While still an overwhelming majority, there has been a slight decrease in positive perception of current business performance by 4% in the second quarter of the year to 79% amongst owners or proprietors of small businesses with Internet connections. This is continuation of the drop of 3% witnessed by previous quarter. However, nearly two thirds are still rating their business as performing quite well. At an industry level Health & Community are performing the best (24% Very Well), overtaking Property & Business from last quarter (down 5% to 16% very well). At the other end of the scale, Personal & Other services has the highest proportion of a negative performance rating at 34% - a 14% increase from last quarter.



August 2004

Perception of own business (future) Table 2: Performance outlook for own business over the next 12 months (%)

Owners remain upbeat about future business performance Better than now %

No change %

Worse than now %

Don’t Know %

Total

67

25

3

5

Agriculture

56

24

10

11

Manufacturing

69

23

2

6

Construction

58

34

2

5

Wholesale trade

73

14

6

7

Retail trade

71

18

4

7

Accommodation, cafés & restaurants

76

18

1

4

Transport & Storage

70

24

1

5

Communication, media & marketing services

71

21

1

7

Finance & Insurance

75

21

2

1

Property & Business Services

69

24

3

4

Education

71

28

Health & Community services

70

27

2

2

Cultural & Recreational services

63

33

1

3

Personal & Other Services

73

19

1

7

Information & Communications Technology (ICT)

67

25

7

2

1

Base: Online small businesses Q: Now thinking about the performance outlook for your own business over the next 12 months, do you think your business will perform…better than now, worse than now, no change, don’t know? *Caution low base AMR Interactive, 2004 (n=2,722 )

When it comes to owners’ perceptions of business performance over the next 12 months, there has been increase in positive outlook overall, up 3 points to 67% (similar to the benchmark in December 2003). By industry there has been some movement from the last quarter. Wholesale Trade and Cultural & Recreational Services have dropped in their optimistic outlook (each down 8% in “better than now”). However, at the other end of the spectrum, Transport & Storage, Education, Health & Community Services, and ICT have all seen increases between 6% and 13%.



August 2004

Expectations for future economic performance Table 3: Performance outlook for Australian economy over the next 12 months (%)

Expectations for general economic outlook are less optimistic Better than now %

No change %

Worse than now %

Don’t Know %

Total

32

40

16

12

Agriculture

36

45

12

8

Manufacturing

26

45

17

13

Construction

25

49

15

11

Wholesale trade

40

27

16

17

Retail trade

30

38

21

11


33

40

8

19

Transport & Storage

41

31

6

21


33

40

17

10

Finance & Insurance

35

37

20

8


26

45

18

12

Education

42

32

15

10


30

34

19

16


39

36

13

12


47

24

18

12

Information & Communications Technology (ICT)

43

33

17

6

Base: Online small businesses Q: Thinking more generally about the condition of the overall Australian economy over the next 12 months time, do you think it will perform... better than now, worse than now, no change, don’t know *Caution low base AMR Interactive, 2004 (n=2,722 )

Considering the economy in general, more small business owners are more optimistic for the next 12 months with ratings of “Better than now” and “no change” up 3% each from last quarter. This shift is partly due to a commensurate drop in negative perceptions, down to 16% from 20%. Looking generally across sectors, certain industries have greatly increased their optimistic outlook perspective from last quarter: Transport & Storage (up 10%), Personal & Other Services (up 11%), and ICT (up 8%). Amongst industry sectors, Retail Trade has the largest proportion of negative perception at 24%, followed by Finance & Insurance at 20%. Transport & Storage has the highest number of owners who are undecided, with 21% saying they don’t know.



August 2004

Expectation of investing in own business Chart 1: Expectation of investing in own business in the next 6 months (%)

Proportion planning to invest in own business steady Total

62%

Agriculture

63%

Manufacturing

64% 66%

Construction

73%

Wholesale trade 62%

Retail trade

73%

Accommodation, cafes, restaurants Transport and storage

45% 66%

Communication, media and marketing services Finance and insurance

55% 63%

Property and business services Education Health and community Cultural and recreational services Personal and other services Information & Communications Technology Tourism*

53% 56% 52% 62% 59% 78%

Q: Do you expect to invest in your business in the next 6 months? *Caution low base AMR Interactive, 2004 (n=2,722 )

When asked about investing in the business, about six out of ten owners said they plan to do so within the next six months. Wholesale Trade and Accommodation, Cafes & Restaurants have taken the lead as the two most likely sectors to invest in their own business in the next 6 months (each 73%). The biggest increase has been for Properly & Business Services (up 12% from Q1) followed by Construction (up 10% from Q1). These are the sectors to watch for strong growth in 2004. Owners in Agriculture have seen a drop in likelihood to invest in the short term, from their leading position last quarter (at 73%) to 63% this quarter. This may be due to the nature of the business, or depressed economic conditions within the sector.



August 2004

Source of funding for investment in own businesses Table 4: Source of funding for investment in small business (%)

Four out of ten will self fund and borrow to invest in business Fund all of it from own resources %

Combination of Borrow the entire self funding and amount borrowings % %

Don’t Know %

Total

51

40

7

3

Agriculture

42

49

8

1

Manufacturing

50

38

10

2

Construction

46

46

7

2

Wholesale trade

43

50

2

4

Retail trade

53

35

9

3

Accommodation, café & restaurants

47

46

6

2

Transport & Storage

37

42

13

8


62

29

5

5

Finance & Insurance

61

33

4

2


56

33

7

4

Education

52

46

2


63

33

3


55

38

7


62

34

0

3

Information & Communications technology

64

32

1

3

1

Base: Online small businesses who expect to invest in their business in the next 6 months Q: And in funding this investment, are you likely to use your own cash resources, raise it through borrowings or both? *Caution low base AMR Interactive, 2004 (n=2,722 )

On a whole, about half of small businesses remain to self-fund future investment, as was the case last quarter. Looking at specific industry sectors, Education has dropped from 80% to 52% this quarter. Meanwhile, Accommodation and Transport & Storage have seen rises in the vicinity of 10% for self-funded investment forecasts. The leaders this quarter in selffunded investments at just over 60% are Information & Communications Technology, Personal & Other Services, Health & Community Services and Communication, Media & Marketing Services. The sector most likely to use a combination of funding is Wholesale Trade, with about half of all business in this sector reporting that they will borrow in conjunction with their own finances. Following closely are the Agriculture, Construction & Accommodation, Café and Restaurants industries. Transport & Storage continues to be the industry that is most likely to completely borrow their expansion funds (13%) from last quarter.



August 2004

Perceptions of Federal Government performance Table 5: Performance ranking of Federal Government in contributing to the development of small business in Australia (%)

Federal government performance rated poorly by majority Very/Somewhat Poor %

Neither

Don’t Know

%

Very/Somewhat Good %

Total

44

17

21

18

Agriculture

36

18

29

16

Manufacturing

45

24

16

15

Construction

44

15

19

22

Wholesale trade

43

18

22

15

Retail trade

47

15

18

20


48

17

26

10

Transport & Storage

56

17

11

16


49

14

22

16

Finance & Insurance

45

18

22

14


40

21

23

16

Education

38

26

19

17


44

14

22

20


48

10

21

21


36

15

23

27


57

16

7

20

%

Base: Online small businesses Q: How would you rate the Federal Government’s current performance in contributing to the development of small business in Australia? Please indicate where 1 means very poor performance, 2 means somewhat poor performance, 3 means neither poor nor good performance, 4 means somewhat good performance and 5 means very good performance. *Caution low base AMR Interactive, 2004 (n=2,722 )

A majority of owners view the Federal Government’s performance in contributing to the development of small business in Australia negatively, with 44% giving a rating of somewhat or very poor. One fifth are undecided or don’t know. These results suggest that not enough is being done to help owners develop their businesses. With an election approaching, this is one cohort of voters that should not be neglected. Information & Communications Technology rates the Federal Government’s performance worst this quarter, at 57% negative. Personal & Other Services rate them the most highly, with 50% positive.



August 2004

Perceptions of State Government performance Table 6: Performance ranking of State Government in contributing to the development of small business in Australia (%)

Majority also rate State government performance poorly Very/Somewhat Poor %

Neither

Don’t Know

%

Very/Somewhat Good %

Total

53

18

10

19

Agriculture

57

21

6

15

Manufacturing

57

18

9

16

Construction

57

15

6

21

Wholesale trade

56

23

8

14

Retail trade

52

18

9

21


60

16

16

8

Transport & Storage

63

15

7

15


53

23

9

15

Finance & Insurance

54

14

13

19


47

20

18

15

Education

40

23

17

20


47

17

14

22


40

23

12

25


43

15

15

27


57

12

5

26

%

Base: Online small businesses Q: How would you rate the State Government’s current performance in contributing to the development of small business in Australia? Please indicate where 1 means very poor performance, 2 means somewhat poor performance, 3 means neither poor nor good performance, 4 means somewhat good performance and 5 means very good performance. *Caution low base AMR Interactive, 2004 (n=2,722 )

Small businesses are rating the Sate Government’s performance rating is worse than the Federal Government – 10% more business rate the State Government performance as being somewhat/very poor, whereas 10% less business rate the State Government’s performance as very/somewhat good compared to the Federal Government. The sectors most likely to be feeling negative about the State Government are Accommodation, Cafes & Restaurants and Transport & Storage (60% and 63%).



August 2004

Outlook for specific business issues (positive) Chart 2: Small businesses with positive outlook on specific issues (%)

Small businesses optimistic about marketing and customers

Sales

53

Profitability

52

Cash flow

23 14 14

48 8

42

Business systems (IT, accounting) Business costs

5

25

Competitor activity

8

22

Exchange rates

16

Interest rates

16

Federal government policies Local government policies

20

55

Marketing and customer relationships

0 1 1

13 8

1

Positive

Very positive

Base: Online Small Businesses Q: Listed below are a number of issues that your business will deal with over the next 12 months. Thinking only about your own business, please indicate your outlook for each of these issues where 1 is a very negative outlook, 2 is a somewhat negative outlook, 3 is neutral, 4 is a somewhat positive outlook and 5 is a very positive outlook? (If this is not applicable to your business select 6) AMR Interactive, 2004 (n=2,722 )

There are no dramatic changes this quarter in terms of the positive outlook (for the next 12 months) by businesses on specific. The majority continue to be positive or ambivalent towards most measures with Sales and Marketing and Customer Relationships being seen in the most positive light (74% and 70% respectively). Although Government Policies (12%), Exchange Rates (13%) and Interest Rates (12%) continue to attract the least positive scores, they have increase from last quarter by about 3-5 points.



August 2004

Outlook for specific business issues (negative) Chart 3: Small business with negative outlook on specific issues (%)

Interest rates and local government policies main concerns 35

2

Interest rates 27

9 3 9

Local government policies

25

Business costs

25

Federal government policies 16

3

Exchange rates

14

3

Competitor activity

12

2

Cash flow

10

1 1

6 1

Negative

Very Negative

Profitability Sales 4

Business systems (IT, accounting)

0 2

Marketing and customer relationships

Base: Online Small Businesses Q: Listed below are a number of issues that your business will deal with over the next 12 months. Thinking only about your own business, please indicate your outlook for each of these issues where 1 is a very negative outlook, 2 is a somewhat negative outlook, 3 is neutral, 4 is a somewhat positive outlook and 5 is a very positive outlook? (If this is not applicable to your business select 6) AMR Interactive, 2004 (n=2,722 )

Businesses have a more negative outlook this quarter for the major issues of Government and Interest rates. Interest rates have taken over Government to attain the top spot in terms of negative outlook (up 7% in total negative outlook from last quarter. Government performance, both at the Federal and Local level, continues to attract the high levels pessimism. Along with Interest rates, Exchange rates are being viewed more negatively (up 6% th to take the 5 position). The negative outlook with regards to other issues has not shifted greatly this quarter.



August 2004

Activities conducted online Chart 4: Activities conducted online (%)

Banking and bill payments are the most popular online activities General Banking and book keeping

82%

Bill payments (eg. B.Pay)

81%

Order of purchase goods and services for the business

46%

Pay for Insurance services

32%

Payroll services

30%

Pay superannuation contributions

23%

Process customer payments online via an IP Payment Gatew ay

11% 9%

Review Insurance services

3%

Run credit risk assessments on customers

8%

None of these

Base: Online Small Businesses Q: Which of the following does your company do via the Internet (please check all that apply) AMR Interactive, 2004 (n=2,722 )

General Banking and Bill Payments are the most popular of all activities conducted by connected small businesses online (with nearly 4 in 5 small businesses conducting these activities online). Payments for insurance have risen dramatically by 20% from last quarter to take the position of fourth most popular activity conducted online. This is followed by the increase of 5% for payroll services from lat quarter. Only 8% of small businesses do not perform any of these activities.



August 2004

Appendix: Questionnaire items Q1a. Is your business a subsidiary of a non-Australian based business? Yes No Q2. Does your business operate out of a household or a home office? Yes No Q3. And does your business conduct most of its day-to-day work at these premises, or away from these premises? At premises Away from premises Length of time operating Q4. How long has your business been operating? Less than 1 year 1 to less than 2 years 2 to less than 3 years 3 to less than 5 years 5 to less than 10 years 10 years or more Annual Turnover Q5. Which of the following broad categories describes your company’s annual turnover? Under $50, 000 $50, 000 to less than $100,000 $100,000 to less than $500,000 $500,000 to less than $1 million $1 million to less than $5 million $5 million to less than $10 million $10 million or more Don’t know Q6: Thinking about the next twelve months, how confident do you feel about the prospects for your own business? Extremely confidant Fairly confidant Neutral Fairly worried Extremely worried.



August 2004

Key Indicators Perceptions of own business (current) Q6a. Thinking about the current performance of your own business, do you think your business is performing… Very well Quite well Not very well Not at all well Don’t know Perceptions of own business (future) Q6b. Now thinking about the performance outlook for your own business over the next 12 months, do you think your business will perform… Better than now Worse than now No change Don’t know Perceptions of the economy (future) Q6c. Thinking more generally about the condition of the overall Australian economy over the next 12 months time, do you think it will perform? Better than now Worse than now No change Don’t know (don’t read out) Q6d. Listed below are a number of issues that your business will deal with over the next 12 months. Thinking only about your own business, please indicate your outlook for each of these issues where 1 is a very negative outlook, 2 is a somewhat negative outlook, 3 is neutral, 4 is a positive outlook and 5 is very positive outlook. (If this is not applicable to your business select 6) Sales Cash flow Business costs Profitability Competitor activity Federal Government policies Local Government policies Exchange rates Interest rates Business systems (IT, accounting) Marketing and customer relationships Business Investment Q6e. Do you expect to invest in your business in the next 6 months? Yes No



August 2004

IF 6e(1) ASK 6f. Q6f. And in funding this investment, are you likely to use your own cash resources, raise it through borrowings or both? Fund all of it from our own resources Borrow the entire amount Combination of self-funding and borrowings Don’t know Perceptions of Government performance Q6g. How would you rate the Federal Government’s current performance in contributing to the development of small business in Australia? Please indicate below where 1 means very poor performance, 2 means poor performance, 3 means neither poor nor good performance, 4 means good performance and 5 means very good performance. If you really have no idea, then select “Don’t know”. Very poor performance Poor performance Neither good nor poor performance Good performance Very good performance Don’t know Q6g. How would you rate your State Government’s current performance in contributing to the development of small business in your region? Please indicate below where 1 means very poor performance, 2 means poor performance, 3 means neither poor nor good performance, 4 means good performance and 5 means very good performance. If you really have no idea, then select “Don’t know”. Very poor performance Poor performance Neither good nor poor performance Good performance Very good performance Don’t know Q7. Which of the following does your company do via the Internet? Please check all that apply Bill payments (eg. B.Pay) General Banking (eg. funds transfer between accounts) Payroll services Review Insurance services Pay for Insurance services Run credit risk assessments on customers Process customer payments online via an IP Payment Gateway (eg Using ANZ’s eGate) Pay superannuation contributions Order or purchase goods and services for the business



August 2004

Demographics Almost finished! We just need some general details to help us analyse responses. D1. Which state is your company predominantly based in? 1. NSW 2. VIC 3. QLD 4. SA 5. WA 6. TAS 7. NT 8. ACT D2. What is the postcode where your business is located? If you have more than one office please indicate the postcode where your business Head Quarters are based? ____________ D3. What is the main product, service or activity that your business provides? ____________ D4.

What industry does your business operate in?

Agriculture Manufacturing Electricity, gas and water supply Construction Wholesale trade Retail trade Accommodation, café and restaurants Transport and storage Communication, media and marketing services Finance and insurance Property and business services Government administration and defence Education Health and community services Cultural and recreational services Personal and other services Other (specify)
