This week the Australian Businesswomen’s Network provided an initial submission to the Productivity Commission’s study into Regulator Engagement with Small Business, or as it’s commonly known, the Red Tape Enquiry. We made the following points:
Women are starting small businesses at twice the rate of men.
Research by Bankwest using Australian Bureau of Statistics data revealed strong growth in the rate of women starting up businesses over five years (7 per cent) compared with men (1.9 per cent) to February 2011. There has also been a faster increase in the number of women running a business over ten years, up 18.5%, compared to 6.0% growth for men.
The fastest growing small business sector is the “micro” business.
Of new business entries in 2010-11, 94.6% were “non-employing and employing micro business” (businesses employing between 0–4 employees).
The comparative ease of starting a business is not matched by the ease of running a business.
For example, in the World Bank’s “Doing Business” global rankings of 185 countries, Australia ranks 2nd in the category “ease of starting a business.” But ranks 48th in “paying taxes” with the World Bank estimating Australian businesses spend around 109 hours a year on tax compliance. Other areas where Australia underperforms are property registration (37th), getting electricity (36th) and trading across borders (44th) – all related to regulation.
Regulation is a cost burden that constrains growth.
While large companies have finance and HR departments to handle compliance, many small to medium business, without that internal capacity, still have to undertake the same levels of compliance, in some areas. This is a cost burden for smaller businesses. But for small, young and home-based businesses, which are more likely to be started by women, the compliance is often undertaken by the founder /owner and becomes a barrier to business growth.
Cutting compliance costs to micro and small businesses would be a practical way to facilitate economic growth.
The Productivity Commission will release its draft report in June. What do you think? Are compliance costs or red tape hampering your business growth? What could be done to make life easier for micro and small business?
