Business Confidence & Growth Survey 2015 Report Cairns Region
ABOUT THE SURVEY In 2014, the Cairns Chamber of Commerce and local business People Strong undertook a survey to find out what local businesses thought was going to happen in the future and what was holding them back from business success. From that initial survey and from the great feedback we received, we decided that it would be helpful to local businesses for us to do an annual survey that focuses on business optimism, business confidence and barriers to growth. That information could then be used to assist local businesses by providing local data and information. The response rate for the 2015 survey was double that of 2014 and we would like to thank the many business owners and leaders that spent time to participate in the survey and answer the questions. We would also like to thank Andrea Tunjic of People Strong, who donated her time and effort to undertake the survey and produce this report. We look forward to receiving your comments on this survey and to seeing continued improvement in business confidence in 2016. 1
EXECUTIVE SUMMARY Business Optimism The industries reporting the highest levels of business optimism for the next 12 months are the Accommodation, Cafes and Restaurants, Education, Health and Manufacturing and Health and Community Services sectors. The lowest levels of business optimism were reported in the Construction and Retail Trade industries. Business Performance The overall results show that 47% of respondents report that their business performance is stronger or much stronger than in 2014. Profitability and Turnover have also increased for the majority of the respondents. The industries reporting the greatest levels of improved performance year on year were in manufacturing, business and property services and health and community services. The lowest levels of performance year on year were experienced by the Construction, Education and Retail Trade industries. Business Confidence A clear majority of respondents expect to see an increase in their profitability, work activity and sales over the next 12 months and over 50% of respondents are expecting an increase in competition. The manufacturing industry reported the most consistent improvement in all business confidence indicators (see from page 6), with Retail trade expecting no change in their businesses according to the confidence indicators. Barriers to Growth Local, state and national economic conditions were reported as the most significant barrier to growth for the respondent businesses. Many respondents noted that the shift from the planning of major projects to their commencement of works would improve consumer and business confidence and stimulate further business activity. 2
RESPONSE BY INDUSTRY N = 102 respondents Industry category (ANZIC) Respondents % Financial, Insurance and Legal Services 18 18% Property and Business Services 15 15% Other 14 14% Construction 12 12% Retail Trade 8 8% Education 6 6% Health and Community Services 6 6% Accommodation, Cafes and Restaurants 5 5% Manufacturing 5 5% Communication Services 4 4% Personal and Other Services 4 4% Cultural and Recreational Services 3 3% Electricity, Gas and Water Supply 1 1% Transport and Storage 1 1% Agriculture, Forestry and Fishing 0 0 Government, Administration and Defence 0 0 Wholesale Trade 0 0 3
GENERAL BUSINESS CONFIDENCE Q. Thinking about the growth prospects of your business for the next 12 months, would you say you are: much more optimistic 11% 16% more optimistic 44% 65% same as previous year 14% 33% less optimistic much less optimistic 2% 1% 4% 8% 2014 2015 Q. If you were advising a friend, would you advise them that now is a good time for them to invest in Cairns? YES 68% NO 32% 4
CONFIDENCE INDICATORS Q. How has your business performed over the last 12 months compared to the year before? 35% 38% 3% 9% 9% much weaker weaker same stronger much stronger Q. Has your turnover increased in the last 12 months? YES 52% NO 48% Q. Has your profitability increased in the last 12 months? YES 53% NO 47% 5
BUSINESS CONFIDENCE: COMMENTS Q. What would make a difference to the profitability or viability of your business? more projects to start increase in infrastructure works finding and retaining skilled staff firstly, and secondly improved management of the business particularly in the areas of productivity and financial management much of the problem lies with increasingly unnecessary regulatory constraints in the renewable energy sector - both at state level and nationally, adding to the cost of providing our services less government intervention in day to day activities of the business availability of skilled staff greater awareness for community to benefit from using our (local) services decrease in wages and increase in economic activity Some of the "proposed" investment to start. Whether that be the Aspial development, the Aquarium, the civic centre entertainment precinct, certainty around Aquis (in either direction). Something that can be seen to take us from "pipeline" to actual greater confidence in our economic growth multi industry growth increase in consumer confidence improved internal systems and as always customer service. The policy and governance systems we work with are ok - and enabling more effective use of Marketing/ IT resourcesmore Tourists, more construction, rationalisation of penalty rates tighter bottom line management and solid revenue growth strategies and increased productivity we are not seeing sustainable growth that will drive investment and employment. We need an improvement in consumer and business confidence, we need projects to commence, we need the government to do their bit, facilitate and not hamstring the region. a strong resilient and steady economy, less boom bust cycling NBN 6
BUSINESS CONFIDENCE INDICATORS Q. In your business or organisation what change do you expect to see in these areas over the next 12 months? Decrease No Change Increase Profitability 9% 20% 72% Staffing levels 11% 48% 48% Capital Investment 5% 60% 35% Average Wages 4% 50% 46% Work activity 5% 26% 69% Sales 7% 24% 70% Competition 1% 46% 53% It is great to see that respondents expect to see increases in profitability (72%); staffing levels (48%), capital investment (35%) and work activity (69%). These are all signs that we are expecting our next 12 months to be positive. However due to an increasingly attractive local economy, we are also expecting to see an increase in average wages (46%) and competition (53%) which will require the implementation of more innovative business development and revenue driving activities in our businesses Deb Hancock CEO Cairns Chamber of Commerce 7
CHALLENGES TO GROWTH: FINANCIAL Q. What are the greatest challenges to your business growth over the next 12 months from a financial perspective? (respondents could choose multiple answers to this question) Improving customer numbers & transaction value 57% Increased costs 37% Price pressures 28% Managing staffing costs 27% Managing overheads to improve margins 26% Cash flow 26% Meeting tax obligations 25% Increase in debtor days 14% None of the options 12% Obtaining finance 7% 8
CHALLENGES TO GROWTH: MARKET Q. What are the greatest challenges to your business growth over the next 12 months from a broader market conditions perspective? (respondents could choose multiple answers to this question) Local economic conditions 72% National / State economic conditions 49% Government compliance and regulations 39% Competition 34% Uncertainty 34% International economic conditions 24% Digital competition 16% Partnership opportunities 6% It is interesting to note that local economic conditions were identified as the greatest challenge for 72% of respondents, when we also see that 82% of respondents businesses under the confidence indicators section performed either the same, stronger or more stronger than the previous 12 months. Additionally, we see that 72% of businesses expect to experience an increase in profitability in the coming 12 months. We also saw 52% of businesses having experienced increased turnover over the previous year and 53% having experienced increased profitability during the past 12 months. It might be that our local economic conditions may be a perceived challenge despite many businesses performing better this year than last year. We can all agree that there is still more to be done to continue the strengthening of our local economy. Government compliance and regulations continue to be a burden on business as indicated by 49% of respondents. Deb Hancock CEO Cairns Chamber of Commerce 9
CHALLENGES TO GROWTH:LEADERSHIP Q. What are the greatest challenges to your business growth over the next 12 months from a leadership perspective? (respondents could choose multiple answers to this question) Spend more time in business development 44% Work / Life balance 35% Time Management 25% Focus and Prioritisation 24% Planning for future growth 24% Stuck working in the business 21% None of the options 15% Keeping up with industry knowledge 13% Asking for help 4% 10
CHALLENGES TO GROWTH: STAFFING Q. What are the greatest challenges to your business growth over the next 12 months from a staffing perspective? (respondents could choose multiple answers to this question) Availiablity of skilled staff 39% Wage levels / staff costs 34% None of the options 23% Staff attitudes 21% Underperforming staff 21% Workplace culture 16% Losing key staff 15% Staff training 15% Understanding IR requirements 4% 11
CHALLENGES TO GROWTH: CUSTOMER Q. What are the greatest challenges to your business growth over the next 12 months from a customer / client perspective? (respondents could choose multiple answers to this question) Meeting changing customer needs 33% Increasing prices 32% Consistent customer service 29% Predicting sales activity 23% None of the options 14% Digital competition 13% Lack of visibility 13% Disengaged staff 10% Inadequate / poorly trained staff 10% 12
CHALLENGES TO GROWTH: DIGITAL Q. What are the greatest challenges to your business growth over the next 12 months from a digital perspective? (respondents could choose multiple answers to this question) None of the options 38% Optimising website traffic 33% Using social media 29% Inefficient customer data collection 20% Regular e-communciations 15% Inactive website 13% Lack of e-commerce faciltiy 8% Linked-in profile 3% Do not use technology 2% 13
CHALLENGES TO GROWTH: INNOVATION Q. What are the greatest challenges to your business growth over the next 12 months from an innovation perspective? (respondents could choose multiple answers to this question) Improving business processes 52% Developing new products / services / technology 42% Improving current products / services 42% Improvements to service levels 23% Setting an innovation work culture 23% None of the options 12% Developing failure tolerant leadership 6% 14
CHALLENGES TO GROWTH: COMMENTS Q. What are the major constraints to growth in your business or industry? Loss of revenues due to emerging digital competitors Capital Expenditure when the area's activity increases is an area that all companies can struggle with Finding qualified staff with the expectation to succeed Local business confidence and management ability to buy locally Increased land lease costs and insurance costs Reduction in Government expenditure and increase in red tape We simply need more jobs in the region High cost of labour and the low level of skilled employees available in the market place Pricing by competitor hotels and competition from SE Asian or inexpensive destinations Lack of decent work for young people in Cairns Current economic climate, people need to be more positive about the future Uncertainty of the building development sector As a new business to the region, getting our brand and name out to the marketplace Trying to get my brand noticed against our competitors in the online world. Larger wellresourced companies that are investing heavily in online marketing The costs of unnecessary regulation and constraints in the renewable energy sector, both at state and federal levels Uncertainty created by the policies of the current governments For profit providers entering into Government contracts to deliver community based programs 15
WHERE TO FROM HERE Executive Business Planning Retreat Relax, Unwind and Plan for Business Success in 2016 23-25 October 2015 It is a pleasure to advise that the Cairns Chamber of Commerce will again be hosting the Executive Business Planning Retreat in September at Palm Cove. Our region's economic clock has officially ticked into 'growth' mode. Our region has a number of projects already underway, and an even longer list of projects on the horizon - and it is imperative that we are prepared to grow and change with these opportunities as they unfold. Now is the time for you to get your businesses prepared for this growth... This is not your typical conference or retreat - this is a tailored event to suit your individual business growth needs. You are in the driver s seat! Benefits you will receive by attending: Discuss business challenges and opportunities on a one-on-one basis with local business experts in the areas of commercial law, accounting, people and leadership and business planning; Undertake a gap analysis to identify productivity leaks in your business and increase business profits; Solve the problems you are facing with intensive one-on-one sessions with our expert facilitators (receive over $2,100 value alone in expert one-on-one time); Hear about the many options available to you to structure your business for growth and ensure you are protected from a legal perspective; Know how to structure your business for growth and how to get the best out of your people; and Hear first-hand the long line of projects about to send our local economy soaring. Contact Cairns Chamber of Commerce P: (07) 4031 1838 F: (07) 4031 0883 danae.jones@cairnschamber.com.au 16
ABOUT US Deb Hancock - CEO Cairns Chamber of Commerce The Cairns Chamber of Commerce is the peak body for business representation in the Cairns region and one of the largest and strongest regional chambers in Australia. We constructively and collaboratively drive business growth outcomes for members and in the best interests of the Cairns business community. We facilitate business success for our members, through the development of a strong and resilient regional economy, through the development of a constructive business environment, and by being the voice of business. On behalf of our members, we strategically facilitate the growth of industry, support infrastructure development, and lead changes that drive increased business productivity, employment, trade and investment. The Cairns Chamber of Commerce works in partnership with our members, partner stakeholders and all levels of government to constructively create conditions for business success in the Cairns region. People Strong helps business owners and people leaders to build better workplace cultures. Andrea Tunjic - Director People Strong Culture is critical important to business success. As management guru Peter Drucker famously said: 'culture eats strategy for breakfast'. Yet, culture still seems difficult to grasp and harder to change. Andrea and the team at People Strong have developed a simple and effective program to improve business results by improving culture with many culture change with many success stories with local businesses. As experts in people management we also help with strategic human resources, employee engagement and initiatives to optimise people performance. By building confidence in the performance and productivity of their staff, the business owners / leaders are freed to prepare for the future. Andrea was awarded the 2105 CWBC Small Business Owner of the Year for her work with People Strong and will be presenting at the Executive Retreat on The Culture Advantage. She donates her time to produce this survey to give something back to the local community, F o r m o r e i n f o r m a t i o n p l e a s e v i s i t www.peoplestrong.com.au o r c o n t a c t andrea@peoplestrong.com.au 17