Start-ups need more govt support: survey
Many small operators believe they should be given more help. Photo: iStock
Small business advocates are calling for more government support, after new research showed almost a third of Australian small business owners feel neglected.
They are calling for government-funded loans for small businesses, tax breaks and subsidies for training and support.
If I didn't have to pay so much tax I could afford to hire more people, grow faster and move into new markets.
According to the survey by global serviced offices group Regus, just 28 per cent of participants think federal and state governments do a good job at helping businesses invest and grow. Thirty-seven per cent of respondents said tax breaks would help them, while 51 per cent wanted low interest loans.
Australian governments should look globally for ideas to support start-ups, says Dr Jana Matthews.
Cash flow remains a huge concern, with 57 per cent of the 400 business owners surveyed naming it their biggest challenge. This was followed by customer acquisition (49 per cent of respondents) and marketing and promotion costs (37 per cent of respondents).
“I started my own business 13 years ago and I can empathise with small businesses because when you start a business the first issue you face is funding because no bank will give you a loan without customers,” says Jacqueline Lehmann, of Regus Australia.
Lehmann says government-funded loans for small businesses would go a long way to addressing the problem.
“Most successful businesses are capital hungry early on. But to get customers in they need funds," she says. "Then just as they want to expand they have to make a large tax payment in their first year, which could be invested in the business.”
Lehmann believes the solution is tax breaks for early stage ventures. She also wants to see governments provide pragmatic support such as mentoring and grants.
Looking further afield for ideas
Dr Jana Matthews, an advisor and business strategist with Innovyz, an organisation that helps start-ups and small businesses expand, says governments have a role in helping to increase small businesses' skills.
For instance the South Australian government has invested $600,000 in an accelerator program being run by Innovyz. The money funds premises where entrepreneurs can convene.
“It's a place to be while the company is growing, with the rent underwritten by the government until the business reaches a certain stage and can get its own premises,” says Matthews.
She says there are many other examples around the world of governments providing support to start-ups that Australian governments could also consider.
In New Zealand, for instance, the government provides a subsidy of up to 50 per cent for certain small business training programs known as New Zealand Trade and Enterprise Capability Development Vouchers.
“Let's give entrepreneurs the tools and knowledge to grow a company because they will be successful if we teach them how,” says Matthews.
Help, I want to hire more people
One business owner who says he could use more government support is Spiro Pissas, commercial director and co-founder of Boom Video. The business distributes marketing videos throughout social media, and clients have included Honda and Disney.
Pissas says his biggest challenge is human resources and anything the government could do to help him find, keep and motivate staff would be welcome. Tax breaks would also help his business grow.
“If I didn't have to pay so much tax I could afford to hire more people, grow faster and move into new markets. If I was able to reduce my tax bill I could probably afford to open a Melbourne office,” he says.
Pissas also says there is scope for governments to establish a community forum for emerging businesses.
“Mentoring is important. I get caught up in the back end of the business and don't have enough time to strategise. There's room for a community forum supported by government where you could be exposed to business leaders and inspired by them.”
So many skills needed
Sharon Melamed is the managing director of Matchboard, a two-month old start-up that provides a matching service between buyers and suppliers. For instance, let's say a business needs a customer relationship management (CRM) system. It can enter its query on Matchboard and the system will produce a list of potential suppliers from its database.
Melamed says she looked into government funding when she was planning the business but was unable to access support. “I couldn't find anything I could apply for – I just didn't fit any of their categories.”
She says her biggest challenge is developing all the different skills she needs to run her business.
“You need accounting, legal, sales and project management skills – the list goes on and on. It would be great if I could call a government hotline where I could get access to subject matter experts, where you know you would be getting objective advice rather than a push by a particular vendor.”
However, it's not all about government support. Melamed agrees with the findings of the Regus survey that finding customers is a challenge, especially as start-ups don't have huge advertising budgets. She's come up with a novel way to get around this problem.
“I have a pay-as-you-get customer acquisition model. I have assigned alliances and affiliations with associations and industry bodies. They receive 25 per cent of the revenue from any new customer I get through them," she says.
"From a cash flow perspective it's a much smarter way than ads to pay for customer referrals."