Profit and confidence slumps for family business: Survey

Australia’s family and private businesses are increasingly worried about their financial performance, with most believing the federal government is not doing enough to support them and have little faith the opposition will either, a survey has found.

The survey, by Victorian university RMIT with accounting firm MGI, found that in 2013, 58% of family businesses are concerned about their financial performance, a sharp rise from 27% in 2003.

It found 37% of family business owners had seen profitability decline over the past three years, with 39% saying it was about the same, and 24% said it had increased.

Expectations for the future were mixed, with 43% having negative expectations, 36% were positive, while 21% were uncertain.

The survey is part of a 20-year study of Australian family and non-family businesses tracking their concerns and motivations.

“What we’re seeing is a gradual loss of optimism,” Sue Prestney, chairman of MGI Australasia, told StartupSmart.

“It’s just reflective that things are changing and not all businesses can keep up with that change,” she added, noting the impacts of the high Australian dollar and fallout from the global financial crisis.

Prestney says there needed to be more incentives for family and small businesses to innovate, be more productive and give them the confidence to invest in new technology, suggesting targeted investment tax breaks.

The survey found 91% of family businesses thought they were not receiving enough support from the federal government and 83% believed the federal opposition was also not doing enough to offer policies that support small and medium businesses.

In a speech last month, shadow treasurer Joe Hockey emphasised his family business roots and highlighted troubles faced by his cousin, Gus, whose menswear business went broke.

The opposition has pledged that small business would be a cabinet portfolio within the Treasury department if the Coalition wins the federal election.

The survey also found the carbon tax would have some impact on the bottom line for 76% of family businesses in pre-tax dollars, with 16% saying it would have a large impact.

The high Australian dollar had also hit profit margins of 43% of family businesses, which had cut costs, postponed expansion plans, reviewed product and service lines and sourced materials and services from overseas to compensate.

Reflecting the parlous state of manufacturing in Australia, the survey found 20% of family businesses in 2013 were in manufacturing, down from 40% in 2003. Wholesaling or retail made up 29% of family businesses, almost unchanged from 30% in 2003, while 8% of family businesses were in the technology sector, up from 5%.

This article first appeared on StartupSmart.