#

NOW BlogRSS

The Team at NOW bring you topics of interest to owners of small businesses. Please feel free to leave a comment or let us know if there are particular topics you'd like us to cover.

Looking For Opportunities In 2011 Federal Budget

Penny Elbery - Monday, May 23, 2011

Business Success Is In Your Hands

Predictably, there was little direct help for small business in the recent federal budget. In spite of the contribution small businesses make to the general economy and to employment, the small business sector is widely ignored at budget time by federal governments of all political persuasions. As we've said before, you can't expect the government to contribute towards the viability of your business (you're not a bank after all). That's your job.

Tough or All Talk?

The government has stuck doggedly with its plan to bring the budget into surplus by 2012/13 – I'll leave it to the economists out there to discuss whether that's in the best interests of the country.

The government spruiked the budget as being "tough" but there was very little in the way of hard or controversial decisions.  It's clear that a minority government is going to steer a steady path through controversy (carbon tax and offshore refugee processing aside).

Look Strategically Beyond the Cuts and Handouts

Our advice to small business owners is to look past the immediate handouts and see whether the economic landscape has been reshaped in a way which offers indirect benefits to the strategically canny businessman.

Thinking strategically means looking at the spending as well as the savings to see what opportunities exist for your business.

There Are Opportunities

One way or another, Australia's population will have to increase to cope with the demand for labour, and all associated services will have to catch up with demand. As a business owner you need to ask yourself if you have an opportunity to supply growth areas and travel in the fast lane of WA's two-speed economy.

Looking at the budget in terms of strategic opportunities, here are some pointers:

• There is going to be spending on roads, rail, ports, health care, especially mental health.

• There are structural changes to training and workforce participation and, wait for it, a program for the installation of digital set-top boxes for pensioners.

• Education and training is a major initiative in this budget and $558m has been made available to provide training opportunities for 130,000 skilled workers.  

The Labour Outlook Remains Bleak

The education and training initiative may not be a major benefit to small businesses (unless you're in the skills training arena) because 130,000 new workers is a drop in the ocean compared to the 2.4 million skilled workers that Skills Australia estimate will be needed by the mining industry alone by 2015. So don't expect any supply driven labour cost savings in the next 10 years.

Not Only Wage Costs Will Go Up

Any strategic planning you do against the backdrop of this spending should also take into account that interest rates will probably rise - at least once over the next 6 months - and power costs will continue to increase.

Here's The Small Print

Many of the direct tax adjustments for small business are timing differences which offer short term cash flow positives but no absolute savings.  Changes include:

• lower PAYG instalments with PAYG payments set at last year's taxable income plus 4% (rather than 8%) but this only applies in the 2011/12 year.

• Businesses have the ability to claim an immediate $5,000 deduction on the cost of motor vehicles purchased in 2012/13 (plus 15% on the remainder in the first year and 30% per annum thereafter)

• In 2012-13 small business will be able to claim an immediate deduction for assets costing less than $5,000 (previously $1,000)

• Changes to the statutory formula for the calculation of FBT on motor vehicles will be phased in over the next 4 years to replace the four tier structure based on mileage with a flat 20%. If you are supplying a vehicle to employees as part of their salary package you may need to revisit the way you are calculating FBT and ensure you are minimising any cost impacts on your business.

Not a lot of cheer I'm afraid but there is little doubt that we are on the cusp of a major resources boom and substantial private funds will flow into major infrastructure. Supply to the resources sector will see continued demand and lifting State Royalties will not appreciably affect this growth. All business owners need to consider the opportunities.

Comments
John Thompson commented on 24-May-2011 01:12 PM
Hi Jon, Thanks for this information – very interesting and certainly flags the need to shift ones view and access opportunity if one wants to engage with the top tier of the two speed economy. It seems to me that there will be plenty of opportunity for
those companies and businesses who are already experienced in dealing with this level of corporate business activity. There appears to be urgency around the upcoming resources boom and I guess efficiency of providing services and getting the job done will
be important. Under normal circumstances I would expect the corporations directly involved in the boom utilizing the familiar networks and companies they have depended upon in the past. However, it sounds like not only will there be a shortage of skilled workers
but there will be a shortage of businesses who can provide the support and services the corporations need. So in the way they are looking outside of the normal networks for skilled workers (I heard an interview on radio national where this was being discussed
– The Canadians are concerned the Australians are going to Poach back the workers they previously poached from Australia, and more.) do you think they will be looking outside of their normal business networks for services and support. If that is the case it
presents a challenge to small businesses. Whilst there is plenty of training and support to transition skilled and unskilled workers from their old jobs into the resource work requirements and culture, I am not aware of two much training and support being
available to small business to assist them with gaining an entry point into providing services to this huge market. For example I have a product and service that can increase the efficiency and productivity of staff individually and collectively and there
must be a need for this. However I am not skilled in talking to people at this level about my products and services or even have experience with gaining an entry point for the discussion to take place. Are their government agencies or I courses available that
can assist those of us in small business who would like to access this booming industry. Surely this would benefit all involved. John Thompson Neurotribe.
Jon commented on 26-May-2011 10:34 AM
Hi John, Thanks for your comments. You raise a number of interesting points here: 1) It is usually the larger businesses that contract directly with the Chevron's and BHP's but once a contract is let, there is a filtering down to second, third and fourth
rung contractors. So although small business may find it hard to deal direct at the source, they need to network at the appropriate level based on their relative size and capability 2) I think that the short supply of skilled workers is going to be a problem
for many years to come. The Federal Government is speeding up the process of 457 visas and there is no doubt that skilled migration is an imperative. There are (and have been for many years) recruitment agencies working overseas specialising in recruitment
for the Australian market. 3) The last point you raise is how, if you have a new product do you get heard above the chatter and find an entry point to the multi-national businesses that might benefit from knowing about your capabilities. There are a number
of Government agencies and consultants who can help with marketing to a certain level of understanding but what you probably need to do is think outside the norm and look at specifically targeting entities that you know will benefit from your offering. This
takes planning and persistance. You have to find a contact who can give you access to an appropriate level, you have to educate and enlighten and make that first sale. It sounds difficult and there is plenty of other low-hanging fruit out there but it may
be that the more difficult targets give a more substantial result in the long run. Jon Elbery

Post a Comment




Captcha Image

Government Grants and Help for Business

The Team - Monday, April 18, 2011

We often get asked whether there are any government grants available to businesses and how you go about claiming them.

There are a number of programs which offer tax concessions or cash subsidies, and here is a brief introduction to some that might offer assistance to your business. 

These programs are subject to change and some are competitive but it makes sense to check whether you might be eligible. With most of them there is substantial small print and an involved application process. We'd be happy to help you assess your eligibility and finalise your application.

Research and Development Tax Credit

The old R&D Tax Concession will be replaced in the 2010/11 year with a new R&D Tax Credit scheme which offers a refundable 45% tax credit for R&D expenditure for eligible businesses turning over less than $20 million per annum, and a non-refundable 40 per cent R&D tax credit for all other eligible businesses. 

"Refundable" means that if the credit exceeds your tax payable you can receive a cash refund. "Non-refundable" means that you cannot get cash back for any excess credit but you can carry the credit forward.

Commercialisation Australia

Commercialisation Australia is a competitive federal program offering four components of funding, these are:

Skills and Knowledge - up to $50,000 to purchase specialist advice and services. This component is aimed at assisting people new to commercialisation - researchers, individuals and small companies - who know their idea has commercial potential, but who don’t know what to do next. Applicants need to match the grant funding on an 80:20 basis, where the applicant contributes 20%.

Experienced Executives provides funding of up to $200,000 over two years (up to $100,000 per year) to engage an experienced Chief Executive Officer or other executives. Applicants need to match the grant funding on a 50:50 basis. 

Proof of Concept grants of between $50,000 and $250,000 are available to assist with testing the commercial viability of your business model or idea. Applicants need to match the grant funding on a 50:50 basis and complete this component within 12 months. 

Early Stage Commercialisation provides repayable grants from $250,000 to $2 million to undertake activities focusing on enabling a new product, process or service to be developed to the stage where it can be taken to market. Participants need to match the grant funding on a 50:50 basis and are required to repay grant monies on success of their commercialisation project. Applicants are expected to complete this component within two years. 

Export Market Development Grants (EMDG)

The EMDG scheme is administered by Austrade and provides assistance to small and medium Australian exporters seeking to develop export markets. The grant repays part of your eligible promotional expenses incurred in establishing your overseas’ markets. Applicants may qualify for up to 50 per cent reimbursement of eligible export marketing expenses above $20,000 pa to a maximum of eight grants. Up to $150,000 pa may be reimbursed.

Australian Apprenticeships Incentives Program

There are commonwealth cash incentives for the employment of apprentices:

$1,250 incentive for an employer who commences an Australian Apprentice in Certificate II training; 

or $1,500 incentive for an employer who commences an Australian Apprentice in Certificate III, IV or Diploma or Advanced Diploma qualifications.

In addition there are special commencement incentives for eligible Rural and Regional Australian Apprenticeships in Certificate III or IV level qualifications in selected non-metropolitan areas and for mature-aged workers.

Duty Clawback on Certain Imported Items 

The Certain Inputs to Manufacture (CIM) Program aims to improve the competitiveness of Australian industry by providing import duty concessions on certain imported raw materials and intermediate goods such as chemical, plastics or paper goods. Applications for the concession are primarily assessed on the basis of an independent technical assessment which demonstrates that the imported goods are substantially and demonstrably superior to comparable goods produced in Australia. 

Enterprise Connect

Enterprise Connect offers advice and support to eligible Australian small and medium sized businesses to help them reach their full potential by connecting them to independent business advisory services, business support, and a network of resources that draws together available knowledge, technology and business practices. 

Eligible small and medium businesses can request a comprehensive, confidential and independent Business Review at no cost. This is usually a 4 to 5 day review which delivers a report containing recommendations  for the development of the business. You are also usually encouraged to apply for financial assistance to help you implement the findings of the Business Review.

Enterprise Connect contributes half the cost of approved projects, up to a maximum of $20 000. 

To be eligible for Enterprise Connect your annual turnover must exceed $2m if you are based in the metropolitan area and $1.5m in regional areas, and you should not have received help from other government schemes in the past 3 years.

In addition, Enterprise Connect assistance is only available for the following industries:

Manufacturing, Creative Industries, Clean Technology, Innovative Regions, Resource Technology, Remote Enterprise, Defence Industry.

Comments

Post a Comment




Captcha Image


Recent Posts


Tags


Archive

    The NOW Experience

    • An innovative and personalised approach to small business help and advice
    • Structured programmes and personal coaching to deliver more fun, cash, time and success to the owners of small business
    • Competitively priced consultancy and help to suit your budget
    Read More

    Latest NOW Blog

    1. Sell For Success 4 - the 4 No's The Team 12-Apr-2012
    2. Sell For Success 3 The Team 28-Feb-2012
    3. Sell For Success 2 The Team 14-Feb-2012
    4. Sell for Success 1 The Team 07-Feb-2012

    Latest NOW Forum

    No forum posts found.
    #