Smart companies will need to prepare for three months of very choppy sailing. Any positive signs on the global front won’t matter a damn because we are about to see history repeat itself on the political front and it is going to affect SMEs.
Malcolm II is about to do a Malcolm I. For those not old enough to remember, Malcolm Fraser blocked Whitlam in the early 1970s claiming big spending, bloated budgets were irresponsible.
Enter Malcolm II, who is going down the same path and will block the budget strategy. At the same time he is also setting the Coalition up as the saviour of those small businesses with the announcement today of a six-point plan to help small businesses through the downturn, including a proposal that would allow SMEs to recoup up to $100,000 from their previous tax payments.
But his plan to block the budget strategy will create massive turbulence for SMEs and nothing will be sorted until after August.
Plus his plan whereby SMEs are able to offset operating losses incurred during the downturn by claiming back some of the taxes they have paid over the previous three years will reward the guys that fail (copying the AIG, GM, HIH model). Instead his plan should be to support the companies that have got what it takes to be innovative creative and entrepreneurial.
What Turnbull should do is take Lindsay Tanner’s plan one step further. Tanner’s plan, which was to start by assisting the consumer, then build long term infrastructure, is excellent. But what they have not addressed is job creation and small business.
Clearly Swan and Tanner need to work with Ken Henry to bring down a long term sustainable profitability proposition that integrates payroll tax abolition, climate change management and innovation investment incentives that are all measured in terms of a ten percent increase in SME employment.
This will be a rolling development plan that starts with the current efforts to stimulate domestic demand, support manufacturing sector retention and import substitution and provide necessary support to those impacted by the GFC such as pensioners, veterans and others on fixed incomes who have also seen real losses (not just small business owners)
The next stage will be a complete overhaul of superannuation, the health and insurance sectors and hidden subsidies to large companies that increase their executive payouts by cutting back on labour costs to create paper profits. This includes forcing full transparency and penalties for use of tax havens, book profits and the ability of $1 companies to attempt to force retail investors to fund their follies.
The long term requires the integration of Federal and State financial plans to create a sustainable profitable basis for international export activity, building on high speed broadband and enhanced infrastructure investments that stimulate growth in productive efforts rather than short term housing and renovation of a tired economy.
We face a three-month wait for signs that the short term politics is not going to leave us with ten percent unemployment, declining markets and commercial turmoil rather than a genuinely bi-partisan, federation wide commitment to going for growth. Let’s leave the xenophobia behind and focus on business building and an international orientation.
Instead, it will be time to follow the simple three step plan:
1. Take the time to look at your business and marketing plans and focus on growth over the next year and stay close to your bank to ensure their support.
2. Adopt the triage model (see earlier column) to grow your customer relationship and maintain your goodwill (and good humour).
3. Invite your key customers to share their development requirements in the next couple of months so that you are well placed to cut costs and focus on growing the segments of your business that are looking to expand in the coming year.
Dr Colin Benjamin is Entrepreneurship and Strategic Thinking Consultant at Marshall Place Associates, which offers a range of strategic thinking tools that open up possibilities for individuals and organisations committed to applying the processes of innovation, creativity and entrepreneurship. Contact: CEO Dr Jane Shelton.
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James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
