The 2007 Virgin Blue National Small Business Summit.

More than 400 business, regulatory and political leaders gathered in Sydney on July 2-3 for the Virgin Blue National Small Business Summit, the peak small business event of the year.

Organised by My Business magazine on behalf of the Council of Small Business of Australia - representing more than 70,000 small business owners – the summit has emerged as a powerful forum for the airing of significant issues affecting small business including competition, leasing, red tape, taxation and changes in technology.

This year’s Summit was no exception with the Prime Minister, John Howard; the Federal Opposition leader, Kevin Rudd; the Chairman of the ACCC, Graeme Samuel, and the Tax Commissioner, Michael D’Ascenzo, being amongst the leaders who address the Summit and the Summit Dinner. Judging by the buzz surrounding the Summit, the delegates were appreciative of the quality of the presentations and the evident keen-ness of the country’s ‘movers and shakers’ to participate.

The Summit commenced with the traditional gala dinner with the Prime Minister, Mr John Howard, as the keynote speaker.

In introducing the Prime Minister, the CEO of Virgin Blue, Brett Godfrey, outlined the Virgin Blue culture and how he believes it helps the organisation to thrive. “We recruit for attitude and train for experience,” he told the audience, adding that he sees staff as a ten year, million-dollar investment that the company believes is critical to its overall success.

CEO of Virgin Blue, Brett Godfrey

Godfrey also emphasised the importance of innovation, which he said is the most important reason for Virgin Blue’s success. Other airline start-ups in Australia, he said, had been “me-too” players that tried to replicate existing carriers in every way. Virgin Blue aimed to be different from the beginning, he said, and had therefore succeeded because the flying public understood the airline’s offering and appreciated the chance for a different experience.

That differentiation, he added, was a risk. “But to win without risk is to succeed without glory,” he said, adding that he tries not to let his involvement in the carrier’s success – Virgin Blue has grown from two aircraft to 53, recently ordered over 20 aircraft for new routes and will soon launch an overseas airlines with a further seven planes – go to his head.

PM praises small business

The Prime Minister John Howard opened his address by “paying tribute to the small business who are the heart of the economic miracle that has been Australia in the last fifteen years.

Prime Minister John Howard

Mr Howard went on to say that the achievement hat “has warmed my heart more than any other” is the government’s achievement of reducing long-term unemployment by 21% in the last year alone, which he described as “a wonderful dividend” that can in part be attributed to the entrepreneurialism of Australia’s small businesses but has also been enabled by removal of the previous unfair dismissal laws.

The Prime Minister then made it clear he sees industrial relations as the area in which the government and opposition are most clearly differentiated heading into the federal election and also the area in which small businesses face the starkest choices.

“If there is a change of government our industrial relations regime will go,” he said. “Australian Workplace agreements will go and unfair dismissal will come back. The tyranny of lawlessness in the building industry will return and small business will be more affected by this change than large business.”

Mr Howard also foreshadowed ongoing fine- tuning of competition laws, but gently rejected an earlier call from COSBOA’s Chairman Bob Stanton for Australia to adopt US-style competition laws.

“I have never believed you can transplant anti-trust laws from the USA to Australia,” the Prime Minister said, going on to say that legislation alone cannot help business in many ways.

“You cannot legislate to stop a recession,” he said. “All the protection in the world cannot stop a business from growing broke. That is why government must provide a growing economy and we must not turn our back on reforms like the industrial relations laws. If we were to repeal those laws it would be the first time in a generation that Australia has turned its back on an economic reform and once you lose your nerve, you lose confidence.”

Small business, he said, understand how losing nerve or confidence hurts their ability to compete. “I admire, respect and imbibe small business values,” he concluded. “I understand what it is to start with nothing and work hard to leave a better chance for your children.”

Plenary session

In welcoming delegates to plenary session of the Summit, the CEO of COSBOA Tony Steven urged government to simplify red tape and singling out the opposition’s ‘BAS Easy’ policy as an improvement on current arrangements. “The Australian system of government has been around for more than 100 years and each year there are more laws,” he said. “The things businesses must do are more complex and it gets harder every year.”

Steven said three things can be done to ease the burden on small business, with reducing red tape at the top of the list and better information for business owners the second most needed change. Providing a fair and efficient market was the third item on his wish list, with one element of this call the availability of well-priced, fast and universal broadband services.

Steven also said that information technology in general remains an area in which small businesses are poorly served. “The issue support levels for small business IT has been ignored,” he told delegates. “The advice and assistance they get from their fellow small business is not much better and a plan needs to be formed to improve small business IT skills to get over the single greatest impediment to their growth in Australia.”

A more competitive small business sector

In the first opening plenary session – Towards a More competitive Australia - Scott Gregson of the Australian Competition and Consumer Commission outlined the new collective bargaining arrangements open to small business who wish to work together to deal with larger suppliers.

General Manager of IGA
Distribution, Carl Salem

The power of these new arrangements was highlighted by Carl Salem, the General Manager of IGA Distribution (Independent Grocers’ Association) representing thousands of smaller supermarket owners across Australia.

“We took advantage of collective bargaining to get the prices we need from suppliers, so we could sell at a price point that lets us compete for our customers,” he said. “Collective bargaining is now something we want to use for our business infrastructure. We are good on products, but fractured with things like occupational health and safety, workers’ compensation, insurance and leasing.”

He said that he expected that collective bargaining will help the company to improve its terms of trade in all of these areas. “We have to be individuals and a collective to succeed,” he concluded.

New Directions in Business technologies

Commencing the Technology session, Hewlett-Packard’s South Pacific Vice President, Personal Systems Group, Tony Bill took the opportunity to outline his company’s environmental credentials. “The myths of sustainability say that customers do not care, that it is time consuming, that staff do not care and that it is expensive,” he told the audience, before systematically demolishing each myth and demonstrating how any business can behave more sustainably and win customers, improve staff loyalty and control costs.

Judicious use of technology was another avenue to green behaviour, he said. “If you make sure 12 PCs and their monitors always use power save mode, it is equivalent to taking a car off the road for a year,” he said, adding that HP itself has “redesigned the product lifecycle to be more energy efficient and reduce emissions.”

Harris Technology’s Business Manager for Merchandise and Supply Chain, Brod Ivory, singled out the difficulty that small businesses can sometimes experience finding a suitable IT services provider and offering his own outsourced model as one alternative. Mr Ivory also advised delegates to pay more attention to backup, a task many small businesses ignore, before noting that sales of servers have reached unprecedented levels.

Taxation & competition reforms

Addressing the Summit during the Regulatory Session, the Chairman of the Australian Competition and Consumer Commission, Graeme Samuel, outlined major upcoming reforms to the Trade Practices Act.

Chairman of the Australian
Competition and Consumer
Commission, Graeme Samuel

“It’s important to remember that the Trade Practices Act is not designed to protect small business from the rigours of normal, tough, competitive business,” he said. “What it is designed to do is protect small business from unconscionable, harsh and oppressive conduct or misuse of power by big business.”

Reforms to the Act, he hopes, will tighten the definition of unconscionable conduct. In any case he said the ACCC is “ changing our focus to take a much more aggressive attitude to pursing unconscionable conduct, and this means pushing to get more matters before the courts. By doing so we will not only test the law, we will firm up a better definition of what constitutes unconscionable conduct, thereby providing more guidance to businesses.”

Mr Samuel also foreshadowed evolution of the Franchising Code and reported on ACCC activity aimed at ensuring that sector remains free of dodgy players.

“ Our teams are scouring newspaper classifieds, searching out potentially bogus job opportunities. We are using our outreach offices in every state and territory, seeking leads from local businesses to identify any suspicious behaviour that may need to be investigated,” he said, generating murmurs of assent from the crowd.

Mr Samuel was applauded when he spoke on the issue of retail tenancy, an area in which he suggested further regulations could be avoided if landlords made their dealings with retailers more transparent, perhaps under an industry code.

The next speaker, Taxation Commissioner Michael D’Ascenzo, outlined the ATO's willingness to help small businesses simplify their tax affairs through online tools and hands on assistance to understand how they can be pressed into service.

Taxation Commissioner,
Michael D’Ascenzo

“ We can come over and hook you up to get you started online,” he promised, noting that the Australian Taxation Office’s top five products are all aimed at small business.

The Great Small Business Debate

One of the most keenly anticipated sessions at the Summit was the debate between Minister for Small Business and Tourism, Fran Bailey, and Dr Craig Emerson, Shadow Minister for the Service Economy, Small Business and Independent Contractors.

Minister for Small Business
and Tourism, Fran Bailey

Ms Bailey was quickly on the front foot pointing out the government’s strong economic performance and the benefits to small business before reminding delegates of the opposition’s hostility to legislation protecting independent contractors.

She pitched the government’s “continuous improvement plan” for small business, typified by the recently-announced inquiry into retail tenancies and contrasted this kind of activity with the threat of union demands for small business’ staff to enter into collective bargaining and union bosses’ desire for contributions from business owners to ensure industrial peace.

Dr Emerson countered that the government has not met its promises to reduce red tape for small business and outlined the ALP’s plans to do so through a superannuation clearing house and an incentive fund to spur state and local governments to abandon bureaucracy.

Labor Small Business Spokesperson, Craig Emerson

Industrial relations was of course impossible to ignore and Dr Emerson outlined Labor’s 12-month probation plan as its plan to avoid a return to old unfair dismissal laws and quashed any suggestion the ALP’s approach to independent contractors seeks to have them eligible to become union members.

He also criticised the government’s approach to dispute resolution between employers and independent contractors, noting that not a single case has reached the court s under new arrangements.

Kevin Rudd outlines his vision

The keynote Summit Luncheon speaker, Federal Opposition Leader, Kevin Rudd, outlined his plan small business which included: an emphasis on education to help ease the skills crisis; a revised approach to government procurement that will make it easier for smaller businesses to bid for work (and then ensures the government pays interest on late invoices) and universally accessible broadband and other measures designed to boost productivity.

Federal Opposition Leader, Kevin Rudd

Describing these measures as designed to assist small business achieve long-term prosperity should the minerals boom end, he said the opposition wants to “fix the roof while the sun shines” and nominated one tile in need of repair as the Trade Practices Act. “We will seek to do more with the Act, he told the Summit.

Streamed sessions

After the luncheon, the Summit divided into streamed sessions with one stream focusing on issues on retailing and leasing, and the other on financial management and ebusiness and technology matters.

Those that chose the latter were addressed by Symantec’s Steve Martin, on the online strategies that will reap greatest benefits for small business.

Among Mr Martin’s hints and tips was a reminder to small business to preserve their data and create well-cared-for archives. He also drew the occasional gasp from the audience with tales of just what happens when data is not preserved, with the story of a pest control firm that backed up rigorously but did not store its backups off-site. The business suffered a fire and, as all its data was lost, had no copy of its forward bookings on which to rely – a fatal mistake.

Mr Martin was followed by Paul Greenberg and Mike Rosenbaum of online retailer, DealsDirect.com.au, who wondered aloud why they have so much of the market to themselves, given the prevalence of online retailing in other nations. The pair recounted their experiences at a recent US conference on online retailing attended by over 4,000 e-tail ventures.

“Perhaps Australia does not shop online because we have no catalog shopping culture,” Greenberg opined, before wondering why prominent retailers like Coles and Woolworths are all-but invisible online. For aspirants in the field, he advised them to “ break through the jargon and the buzz, because e-tail is about improving the quality of experience and service for the customer.”

Those in the financial management stream, meanwhile, were listening to the Commonwealth Bank’s Michael Bloomfield, Executive General Manager of Local Business Banking. That division of the Bank has recently introduced a new networking tool that small businesses can use to chat among their peers or find suppliers, with the new initiative located at http://commbank.com.au/lbb.

Matthew Nolan, Managing Director of Provident Inventory Finance also outlined his company’s innovations, allowing businesses to borrow against the value of goods in their inventory as a way to liberate their cashflow.

Entrepreneurial perspective

With the conclusion of the streamed sessions, the Summit moved back into the plenary mode for the final session of the day: the Entrepreneurial Perspective on Business Growth.

ActionCOACH founder, Brad Sugars

ActionCOACH founder, Brad Sugars, whose business commenced in Brisbane, flew from his Las Vegas world headquarters to deliver the message that Australians are as good – if not better – than many of their international counterparts in the business arena.

He said that Australia was a tough proving ground, which taught invaluable skills that could be used to expand the business internationally, as had occurred very successfully with ActionCOACH. He described how “living in Singapore with four million people within four miles of your shop it is easy to be successful,” he told the attentive delegates “But Australia is a high wage country with highly-informed consumer, high distribution costs, and a low labour base.”

That combination, he said, means that Australian businesses must excel to survive, which means that “if you can succeed here, you will do very well in the rest of the world.”

But success will not be automatic, he cautioned. “ No-one cares overseas, so get over your ego and go and do what you did when you first started your business here, because that is what you need to do to succeed.”

Maintaining an Australian culture is important because it contributes to a business’ uniqueness. “Commit to it,” Sugars urged delegates “do not think that if it does not work, you can come back to Australia. It took us four years to get to profit in the USA and we stuck it out which is great because when export starts to work it does nice things to a business.

Mr Sugars also offered the fascinating opinion that India offers greater opportunity than China. “I prefer India to China,” he said. “ India has a decent legal structure and a good education system. I see them as the big opportunity for the next 20 years.”

The Founder and Executive Chair of women’s fitness chain, Fernwood, Diana Williams, then took to the stage. Demonstrating her typical modesty by describing herself as an “accidental” entrepreneur, she detailed how the $100 million franchise chain grew from her simple desire to attend a gym with an atmosphere in which she could exercise without feeling intimidated.

A key milestone, ironically, was a protest against the concept of a women’s only gym that saw the business become the subject of heated national debate. “We took over a lease and told the premises we were a women-only gym” she recalls. “The owners said they would find a new gym for the male members of the previous operators.” But that promise was not met, the new Fernwood was picketed by its former male members and a media frenzy ensued.

In a lesson to anyone faced with adversity in business, Ms Williams now says the event was “great exposure” that even resulted in her company being mentioned in the script of Neighbours. It helped us to get to the next level,” she says.

Another experience , which she said taught her a lot about business, was telling an aspiring franchisee that he lacked the skills to succeed as a Fernwood operator. That franchisee returned a year later having attained every skill and achieved every milestone that Williams’ first assessment suggested he lacked. That franchisee, she said, went on to win the group’s Franchisee of the Year award, and recently sold his business. That kind of experience, she said, is humbling.

“We spend a lot of time and energy developing what we do,” she concluded. “We meet a lot to discuss what we do and are we what the market wants any more?”