Establishment of the Entrepreneurs Infrastructure Programme discussion paper. SUBMISSION by the OFFICE OF THE AUSTRALIAN SMALL BUSINESS COMMISSIONER

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1 Establishment of the Entrepreneurs Infrastructure Programme discussion paper SUBMISSION by the OFFICE OF THE AUSTRALIAN SMALL BUSINESS COMMISSIONER June 2014

2 This is a submission by the Office of the Australian Small Business Commissioner (the ASBC) to the Department of Industry s Establishment of the Entrepreneurs Infrastructure Programme (EIP). The discussion paper produced by the Department of Industry in relation to the establishment of the EIP provides an overview of the proposed programme, including three key services: Business Management, Research Connections and Commercialising Ideas. The ASBC commenced operation on 2 January The role of the ASBC is to: Provide information and assistance to small businesses, Represent small business interests and concerns to the Australian Government, and Work with industry and government to promote a consistent and coordinated approach to small business matters. The ASBC s submission is provided in four sections: general comments, Business Management, Commercialising Ideas, and Research Connections. Further to our submission the ASBC is willing to be involved in further consultation in regard to the development of the EIP, particularly how it relates to and can assist small businesses. GENERAL COMMENTS The Australian Small Business Commissioner supports the initiative to establish the Entrepreneurs Infrastructure Programme. We commend the Department of Industry s recognition of the varied needs of business and the need for the EIP to have strong connections with other key programmes across government including small business programmes. The ASBC sees potential for significant benefits for small businesses who participate in the EIP. In this regard, it is important that small businesses are eligible for and have access to the EIP initiatives. Small businesses have less time and resources than larger businesses and would benefit greatly from the additional assistance, particularly in regard to improving business management skills. 2

3 In regard to the balance between facilitation and financial support, the ASBC is supportive of a facilitative approach to improving the business operating environment. Facilitation has a broader reach within the business community for the public money spent. It also builds business management skills and capabilities thereby better equipping the business to handle future challenges without the need for government assistance. Further, facilitation does not impact market drivers to the extent that financial support does. Significant steps have been taken internationally including in the United States, Canada, the UK and Singapore to set up environments which support and encourage innovation and entrepreneurialism. For example the United States recently launched Startup America. Startup America is based around five key policy initiatives: reducing barriers, unlocking access to capital, connecting mentors, accelerating commercialisation of research and unleashing new market opportunities for entrepreneurs. The Australian Government should look to leverage the learnings and experience of other countries. BUSINESS MANAGEMENT The ASBC supports the practical nature of the Business Management stream. In addition to the assistance outlined in the discussion paper we encourage the Department of Industry to give consideration to the inclusion of mentoring services by accredited mentors. Mentoring services can assist entrepreneurs who may have highly developed technical capabilities to develop necessary business management skills. This could be the difference between thriving and failing. The ASBC supports the principles behind the Business Management stream of encouraging business owners and managers to take time out from working in their business to work on it, and role of effective business planning. Business management skills are a major challenge for small business. This is supported by an Australian Securities and Investments Commission (ASIC) study of 5600 business failures in which cited poor strategic management as the most common cause of business failure. It is in this early stage of business operation that businesses need assistance to improve their management skills and to develop effective business plans. It is highly likely 3

4 that improving management skills and capabilities in this early phase of business operation will improve the number of successful businesses. The ASBC sees potential for significant benefits to the overall business operating environment in Australia through the EIP s Business Management stream. However, we are concerned that these benefits will not be fully realised due to the eligibility requirements which render businesses with less than three years operating experience or without sufficient turnover levels ineligible to access the assistance on offer. The ASBC believes that the assistance available to businesses through the EIP s Business Management stream should be open to all businesses, including small businesses and businesses which have been operating for less than three years. This is a critical time for businesses and a time within which many businesses fail. COMMERCIALISING IDEAS We see scope for improvement in the commercialisation of ideas in Australia and broadly support initiatives aimed at doing this. We commend that this stream is open to all businesses. We see two roles of Government in this space: (1) education and information, for example advisers as suggested in the discussion paper; and (2) the identification and removal of barriers to innovation and commercialisation, which will require cross-government participation and commitment. In regard to the removal of barriers, government should again leverage the learnings and experience of other countries. For small businesses with limited time and resources, finding and accessing government assistance can be problematic. This is particularly true when the assistance available is limited by either the number of places or the funding available, or when the small business is competing with larger and more established businesses for access. The proposed services for the Business Management stream include providing additional support for advanced services, which may include accessing the Commercialising Ideas stream. The ASBC is concerned that small businesses will be disadvantaged in their ability to access the Commercialising Ideas stream of the EIP due to their ineligibility for the 4

5 Business Management stream. Like the Commercialising Ideas stream, Business Management should be open to all businesses, including small businesses and new businesses. RESEARCH CONNECTIONS The ASBC is supportive of initiatives to build stronger linkages between academia and business. We believe there are two key elements which need to be considered in order to improve the current situation - communication between researchers and businesses, and the drivers of research. The ASBC agrees that there is currently a disconnect between research outcomes and business operation. In looking to improve this disconnect consideration should be given to the following questions: 1. What currently drives research? 2. What are the research needs of the business community? 3. What levers can government use to better align research outputs and business needs? The Australian Small Business Commissioner sits on the board of the Small Enterprise Association and Australia and New Zealand (SEAANZ) and has been vocal about the scope for academia to contribute more practically to the business community. We see a role for an Advisory Committee comprising representation from industry and professional associations and the academic sector to be established to breakdown communication barriers, to discuss and identify the key research needs in the business environment, and to better align business needs and research outputs. The Committee would benefit from diverse representation, including small business representatives. The Advisory Committee could also play a role in identifying research institutes with particular expertise and linking the research needs of a particular business with the appropriate research institute. In regard to government levers, the ASBC believes there is scope for government to better align research funding with business and commercial outcomes and to make assessments based on potential real world impact. 5