Australian start-ups expect strong growth this year

04 July 2013

Australian start-ups expect strong growth this year

Compared to more established SMEs, start-ups worked less hours for better financial reward last year and are more confident about this year’s revenue performance, according to Australia’s largest accounting software provider.

The MYOB Business Monitor report, based on the recent survey conducted by Colmar Brunton, compares the attitude, results, intentions and expectations of Australian businesses less than two years old with that of their peers.

In the year to February 2013, start-up businesses reported stronger revenue performance than SMEs on the whole. More than one third (36%) saw revenue gains in this time, compared to 18% of all SMEs. Perhaps unsurprisingly given their length of time in business, start-ups were significantly less likely to report a fall in revenue, with 27% seeing this compared to 39% of SMEs overall. 28% reported steady revenue, compared to 40%, and 8% were unsure.

MYOB General Manager, Business Division, James Scollay says, “Starting a business is one of the most challenging – and rewarding – milestones an individual can reach for. To help new business owners succeed, it’s important we understand the challenges they face and apply greater focus to making it easier to start and build a business. It’s just as important that we celebrate the success of start-ups and other small businesses.

“Australia is well-known for fostering a thriving community of entrepreneurs, but few new ventures succeed without continued industry, government and public support. MYOB was once a local start-up; having been in this position, we understand the big difference this kind of support can make in helping a business owner realise their potential.”

Start-ups most confident about year ahead but expect pressures

The research found start-up business owners and managers had far more confident expectations around financial performance for 2013 than their more established counterparts. 42% expected revenue to increase, compared to 30% of SMEs on average. They were also less likely to predict a fall, with just 17% forecasting this, while an average of 19% of SMEs expected this. 37% expected steady revenue, compared to 42% of all SMEs. The remainder were unsure.

Start-up business operators believe their biggest challenge over the year is attracting new customers. 73% reported this as a pressure for their operation, with 38% expecting this pressure to be ‘quite a lot’ (29%) or ‘extreme’ (9%).

Cash flow is also a major challenge, with 71% reporting this as a pressure and 34% expecting it to place quite a lot of (25%) or extreme (9%) pressure on them. Fuel prices ranked third, with 70% of start-ups saying they anticipate pain at the pump throughout 2013.

Investment intentions show emphasis on customer base

The customer reigns supreme for these new businesses, with almost half intending to progress their customer retention and acquisition strategies this year (42% and 41% respectively). Increasing the number or variety of products or services sold was also a key focus, coming in third at 37%.

Polly Green, co-founder of successful start-up Green Ant Toys Online Toys Store says, “Starting our own business has been both extremely challenging and incredibly satisfying. The initial challenge was the hardest – creating a business from just an idea. There are daily challenges in designing and implementing a concrete business model, plan, and operating systems. The establishment phase involves so many decisions, including website design and implementation, selection and fitting out of business premises, sourcing of stock, warehouse setup, as well as inventory, accounting and business systems implementation.

“One of the most challenging aspects of starting a new business has been creating consumer awareness and establishing a customer base. As a new online business, gaining a presence, consumer trust and customers is both expensive and time consuming.  We have trialled a variety of online and offline marketing methods as well as cultivating social media networks to gain new customers and retain them.

“Also challenging in starting a small  business is the need to effectively allocate time, and problem solve across all aspects of the business, from sales and marketing to stock receiving, web site updating, customer service, information technology, accounting and financial management, and business systems.

“Coming from a corporate accounting background, starting a business has been the hardest thing I’ve done throughout my career. There are no IT, Sales and Marketing, Stores, or Logistics Departments to rely on, but it has been hugely satisfying to start with an idea and watch a business grow.”

New business owners work less hours

Start-ups reported working fewer hours than their peers - their mean working week was 39.7 hours, compared to 40.6 hours for SMEs overall. 50% work more than 40 hours a week in their business, 37% work between 40 and 60 hours per week, and 13% work more than 60 hours per week.

Mr Scollay says, “At MYOB we actively support, recognise and celebrate the journey of start-ups and the contribution they make to the local economy. We urge the government and larger businesses to strengthen their focus as we continue to strengthen ours.

“This community is a vital and dynamic business force for Australia. Many are on their way to becoming tomorrow’s business leaders and influencers. Start-ups represent the next generation of employers, suppliers, innovators and investors in economic growth and development. And even though not every start-up succeeds, each plays a role in enriching the business environment, creating demand, testing ideas and supporting the livelihoods of many.”

For MYOB product information, research results, business tips, discussions, customer service and more visit the MYOB Business Monitor webpage, The Pulse blog, MYOB Twitter, MYOB Facebook or MYOB YouTube.

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For further comment or other information please contact:

Kristy Sheppard, MYOB Public Relations & Corporate Affairs Manager

P: 02 9089 9068 / M: 0407 450 860 / E: kristy.sheppard@myob.com

Symon Madry, Haystac Public Affairs Senior Account Manager

P: 02 8094 7779 / M: 0409 919 508 / E: myob@haystac.com.au

About the MYOB Business Monitor

Established in 2004, the MYOB Business Monitor is a national survey of small and medium business owners and managers, commissioned to independent market research firm Colmar Brunton. The most recent study ran in January and February 2013, surveying 1,005 operators from sole traders to mid-sized companies, representing the major industry sectors. The Monitor researches business performance and attitudes regarding areas such as profitability, cash flow, pipeline work, technology usage and the government. Note: the weighting of MYOB client and non-client respondents is reflective of overall market proportions.

About MYOB

Established in 1991, MYOB is now Australia’s largest business management solutions provider. It simplifies accounting, payroll, tax, CRM, websites, job costing, inventory management and much more for businesses of all ages, types and sizes. Over one million businesses in Australia and New Zealand have used one or more of MYOB’s 50+ products and services. Today, its solutions extend online, delivering innovation through cloud computing. This enables its clients to be more productive and make smarter connections with their staff, business partners, business advisors and customers. With a network of 20,000+ accountants, book keepers, certified consultants and other professional partners, MYOB provides support and tools that help make business life easier.