Business Operations


  • Nearly nine out of 10 (87.3 per cent) of businesses are reporting capital expenditure constraints, up from 71.8 per cent just
    one year ago.
  • Nearly every owner spoken to in this Private Business Barometer identified funding
    as a challenge.
  • Only 36.1 per cent of private businesses are using social media networking tools, while almost half are not currently members of major business associations.
  • Over 75 per cent of respondents have a business plan, up from 60 per cent recorded in the first Private Business Barometer.
  • Income tax and capital gains tax are at the top of private businesses’ ‘hit list’ of imposts they would like abolished.
  • The average turnover of private businesses continues to grow and has increased by A$3.1 million since February 2007.



We have a formal business plan and not just because it’s required by a third party. We have it because we need to model everything we do and we need to be in control of it and know how our future is looking. Our business plan is five years out by month, to the extent of profit and loss, cash flow and balance sheet, and that has enabled us to have flexibility.

I don’t know how people survive without having those types of plans and models in place. We’re definitely embracing what we see as the things that work in social networking, not just jumping on it. Sharing our story with people has been a way that we’ve built relationships with people who become employees or customers. We’re both members of peer organisations.

Seeking out the appropriate mentor for a specific challenge has been the key thing for us.

We will have a formal board in place within the next six months as we feel that we’ve got to that point in time when we need one, but we’ll still continue to work with our informal mentors.


The past nine months has really forced us to shine a spotlight very, very clearly and ask ourselves
all the hard questions – ‘What is it that we do? What do organisations need?’ It made us completely flip the way we see our business on its head. We went out and conducted research ourselves to see what organisations need and what we got back was that organisations are concerned mostly about retaining customers.

We already have some social networking forums, we have a community of 9,000 executives. Over the past 12 months we’ve built a Facebook site and a Twitter presence. We work with the LinkedIn community and we have a blog through which we have two-way interaction with the industry. We’re looking to have a whole strategic planned sub-set of research that is devoted entirely to social media.


We do have a business plan in place but it is evolving, it’s like putting a book together and some chapters
are there in full.

It wasn’t so much driven by the funding, it’s just something that we needed to do to run the business properly, otherwise managers become unclear about their key responsibilities and key projects and the areas that they really need to focus on.



Click on graph to enlarge
Domestic market the focus

Private businesses generate 93.5 per cent of their revenues from Australia, with the remaining 6.5 per cent originating overseas.


Table 27: Share of sales revenue by
geographical location
New South Wales the biggest market

New South Wales is the biggest domestic market for private businesses and accounts for more than one-third of average sales revenues. Victoria remains the second largest market despite the share of revenue sourced from the state continuing to fall since the first Private Business Barometer.

Businesses are now sourcing 26.6 per cent of their sales revenue from Queensland and Western Australia, up from 25.9 per cent in March 2009 and 20.1 per cent
in February 2007.


Figure 16: Share of sales revenue by
geographical location
Brakes applied to capital expenditure

The current funding environment continues to restrict capital expenditure. Nearly nine out of 10 (87.3 per cent) of businesses are reporting capital expenditure constraints, up from 71.8 per cent just one year ago.

Businesses’ main constraint is the availability/price of debt, with more than one in two respondents saying this is holding back their CAPEX plans.


Table 28: Key constraints on capital expenditure
Lenders drive business plans

The vast majority of private businesses now have a formal business plan. Only 24.7 per cent of respondents said they did not have a plan, down from 40 per cent recorded in the first Private Business Barometer.

However, businesses are largely drawing up plans in response to lenders’ insistence that borrowers attach a plan to their loan application.

The share of businesses that drew up their plan in response to a credit application increased from 55.9 per cent in August 2008 to 75 per cent in this Private Business Barometer. Only 15.9 per cent of businesses said they drew up a plan because it made good business sense.

Formal business planning is challenging. I acknowledge that it’s hard to do as a small business because I have been in that situation, so one of the changes that we’re making now is we’re going to be a very, very strongly planned business from here on in. I will make the planning priority number one before we launch anything in the future. That’s come out of really having to look at the business under these difficult times.
Dr Catriona Wallace
ACA Research Group and callcentres.net Pty Ltd



Table 29: Frequency of business plan review


Table 30: Primary reasons for developing a business plan


Table 31: Relationship between business planning and meeting set targets
Pricing and margins key competitive drivers

Private businesses’ focus on keeping customers happy means pricing and margin compression are rapidly becoming critical competitive issues. Pricing now ranks as the sector’s biggest competitive driver, with the proportion of businesses nominating this as a competitive driver doubling during the past year.


Table 32: Main drivers of competition for new business – all industries
Competitive drivers differ by industry

The importance of competitive drivers varies by industry sector. For instance, product innovation is an important competitive driver in the manufacturing sector, whereas the availability of talent plays a minor role in fuelling competition. This situation is reversed in the finance and insurance industry, where the availability of talent is a key competitive driver and product innovation is considerably less important. However, the two industries converge when it comes to margin compression, with up to a fifth of businesses in both sectors identifying this as a driver of competition.

Pricing and margins are a growing competitive issue across all sectors.


Table 33: Main drivers of competition for new
business – manufacturing


Table 34: Main drivers of competition for new business – distribution and wholesale


Table 35: Main drivers of competition for new
business – retail


Table 36: Main drivers of competition for new
business – property


Table 37: Main drivers of competition for new
business – business services


Table 38: Main drivers of competition for new
business – finance and insurance


Table 39: Main drivers of competition for new
business – other
Funding the number one concern

Funding the business is still the number one concern for private business owners, with just about every owner spoken to in the latest Private Business Barometer identifying funding as a challenge. Half of owners nominated planning and forecasting as a challenge, while the share of owners that listed protecting/enhancing of margins rose from 16.4 per cent to 21.4 per cent during the past six months.


Table 40: Key challenges faced by
business owners
Divided decisions on directors

Private businesses are relatively divided when it comes to appointing independent non-executive directors, suggesting there are different views and levels of understanding of corporate governance issues. The majority of businesses (51.1 per cent) have already appointed an independent non-executive director, with the remainder saying they do not have such a director on their board.


Table 41: Businesses with an independent non-executive director
Income tax and capital gains tax top hit list

Income tax and capital gains tax are at the top of private businesses’ ‘hit list’. Given the choice of removing any one tax/duty that stands in the way of their growth, 37.4 per cent of businesses said scrapping income tax would be their preferred option. Just over a third of businesses said the same about capital gains tax. Twelve per cent of businesses identified payroll tax as standing in the way of their growth, while 3.4 per cent of businesses nominated the GST.


Table 42: Preferred tax to be removed to
help business to grow
Social networking take-up low

Despite the rapid uptake of social networking for personal and business applications, only 36.1 per cent of private businesses in the A$10 million–A$100 million segment have joined these online communities. The most common reason for using social networking was to stay in touch with clients or business peers, but a fifth of businesses said they used social networking to advertise products or services. LinkedIn and Facebook are the most popular social sites used, with Twitter following at a distance.

The small number of social networking users may point to a lack of understanding about how these tools can work for businesses and the reputation risks involved in mass real-time dialogue with customers.


Table 45: Reason for using social networking


Table 46: Social networking channels used
Advisers called on

Almost two-thirds (64.6 per cent) of private businesses currently employ an external consultant in different business areas. Four out of 10 businesses that use consultants have hired an information technology professional, while one in five businesses have a consultant assisting them with human resources- or strategy-related matters.


Table 43: Use of business consultants


Table 44: Use of consultants by business division
Traditional networking also limited

Private businesses are also not active in more traditional forms of networking. This Private Business Barometer finds that almost half of businesses are not currently members of any of the major business associations. Those that do participate in such associations typically join the Chamber of Commerce and Rotary/Lions Club.

Owners and decision-makers that join these groups can gain access to peers and mentors whose advice may be invaluable in steering a business in the right direction. In addition, the relationships and friendships that emerge from networking can also result in direct business opportunities.


Table 47: Business association membership