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What are the big trends affecting Aussie small businesses in 2023 and beyond?
With Andrew Sykes, Chris Oates, and Young Han | S2 E7 PART TWO
In part two of our talkBIG double episode, Andrew, Young and Chris discuss the final four trends from our thinkBIG report on the 8 key trends impacting small businesses in 2023. If you're a small business owner or private contractor, you won't want to miss this.
First up, the talkBIG team talks about cyber security, and it's a big deal. Did you know that the dark web is now the third largest economy in the world? And a cyber crime is reported every 7 minutes! That's why it's crucial for businesses to safeguard their data and have a backup plan in case of a breach. It can cost a lot of money and even put you out of business. Don't take the risk of losing everything, tune in to learn how you can protect your business.
The next hot topic our hosts weigh in on is staff shortages. It's tough for small businesses to compete with the big guys when it comes to hiring. The talkBIG gang share some strategies to help business owners overcome this hurdle, such as using technology to automate tasks and free up your staff to focus on higher value work. They also discuss how you can showcase your unique selling points to attract top talent.
Cashflow is always a top concern for small business owners, but don't worry, there are more options than just taking out loans. Andrew, Young, and Chris suggest exploring government incentives and grants that you may be eligible for. With a bit of effort and research, you could find ways to boost your cashflow without taking on more debt.
Finally, the talkBIG team talks about virtual CFO services, a great option for businesses looking to gain financial insights without hiring a full-time CFO. You'll learn how you can get financial analysis, identify risks and opportunities, and even negotiate with stakeholders and lenders. Plus, the insights gained from forecasting can help you decide if it's time to hire a permanent CFO or not.
So there you have it, the final four trends from the thinkBIG report, delivered straight to your ears. Don't forget to subscribe to our channel for more business and finance insights, and check out our library for previous episodes that will help you make smart business decisions to keep your business thriving.
Highlights:
3:58
Cyber security and the dark web: The massive criminal economy that could steal your money
10:48
Staff Shortages: How to find employees and keep them happy by automating mundane tasks
15:52
Cashflow Options: the tax breaks and government grants that could help your business keep the cash flowing
21:20
Virtual CFO – How access to real-time data makes outsourcing your financial data analysis a compelling option
Take a listen and subscribe to talkBIG on your favourite podcast platform.
EPISODE TRANSCRIPT
00:27:45:18 - 00:28:00:14
Andrew Sykes
Well, hello everybody, and welcome to the RSM talkBIG Podcast for our next episode and part two of our review or insight into the RSM talkBIG Small Business Trends in 2023 report. Sorry, thinkBIG.
00:28:03:13 - 00:28:26:10
Andrew Sykes
We're talkBIG, but we are part of RSM and one of our RSM reports is titled thinkBIG. We encourage you to go to our website, download it, It's a free report. thinkBIG Small Business Trends in 2023. My name is Andrew. I'm being joined by Young and Chris, your regular hosts of the talkBIG podcasts.
Young Han
Hi everyone.
Chris Oates
G’day everyone.
Cyber security and the dark web: The massive criminal economy that could steal your money
00:28:26:14 - 00:28:52:02
Andrew Sykes
Okay guys let's get into it. We covered four trends in our last podcast, and now we're going to talk about data insights, cybersecurity, staff shortages and cash flow options, as well as some virtual CFO insights. Young, let's talk about cyber security.
00:28:52:02 - 00:29:13:23
Young Han
In the last episode, we talked about the data, privacy, I guess the cyber security is a bigger picture of the issues. And one of the things that are constantly coming up is about the dark web, which is like a marketplace for the people that have got someone else's data and just trade it.
00:29:14:00 - 00:29:19:00
Andrew Sykes
So, I hear the term dark web and I go, Oh, yeah, what's that? But it's massive, isn't it?
00:29:19:01 - 00:29:21:22
Young Han
It's like the third largest economy in the world.
00:29:21:24 - 00:29:22:21
Andrew Sykes
You've got to be kidding.
00:29:23:00 - 00:29:23:16
Young Han
I'm not.
00:29:24:15 - 00:29:36:16
Andrew Sykes
So, this is the dark web. We access the web through like we open up, then we open our browser and that's the web. And the dark web is stuff that is out there but not accessible through, like, normal means.
00:29:37:02 - 00:29:37:22
Young Han
Right.
00:29:39:21 - 00:30:01:18
Young Han
So, people in cybercrime, it's like it's their go-to. So, I've seen a snippet of it. It's, it's like a marketplace and people put the price up and the people trade and they rate whether they get a good trade or not and whether the information they're selling is worth it or not.
00:30:01:23 - 00:30:08:07
Young Han
But like eBay, you get to see the reviews of the suppliers and customer reviews and it's exactly like that.
00:30:08:07 - 00:30:24:02
Andrew Sykes
Wow. So, it's run like a real business. But this is a criminal kind of enterprise. As I recall when we saw the Optus scandal last year and Medicare scandal, didn't they sell some of the data on the dark web?
00:30:24:07 - 00:30:56:02
Chris Oates
That's right. Yeah. Or people can ask for a ransom to get it back. It's just I think the biggest - and we touched on it in the last episode - with privacy and the penalties that can come with it too.
00:30:56:10 - 00:31:14:00
Young Han
Yeah. Because it is such a big issue in the market as well as the impact on reputation, your business and the penalty that comes with it. It is something that everybody needs to be aware of and it's not something that is “nice to have”. It's a must have.
00:31:14:19 - 00:31:39:00
Andrew Sykes
And that's because if you look at the stats and you'll see this in our thinkBIG report is that cyber crime is reported every seven minutes. So, there is a cyber crime every seven minutes. That's unbelievable. And apparently 60% of small businesses, small to medium enterprises, don't survive the impact of a cyber-attack.
00:31:39:05 - 00:31:50:04
Chris Oates
And I think somewhere between $40,000 up to sort of $3.5 million is the average the businesses suffer.
00:31:50:09 - 00:32:20:10
Andrew Sykes
Yeah, and we’re talking about most people. I started looking at this and started getting clients experiencing it. I thought this was all about big business. But we had a client, a small business, who was doing some construction work, and this is only a very small business. They were getting their office refit and they were emailed an invoice from their builder to pay $250,000.
00:32:20:22 - 00:32:38:00
Andrew Sykes
And so, it was their builder. They paid it and, and there was a new bank account on the invoice. They didn't think anything of it, but somebody had intercepted the invoice that was being emailed to them, put false details on there and they ended up losing the $250k, didn't they Young? Did they get that back?
00:32:38:10 - 00:32:55:20
Young Han
Well, it was a long journey, but at the end they did get it back. But it was quite scary because they're looking at it and it's like someone's looking at your email and what you're doing, and it happens quite a lot. Last year for the people who were looking to settle for the property they are buying.
00:32:55:20 - 00:33:12:00
Young Han
There's a lot of big deposit transactions happening. And this cybercrime- they’re looking, watching you, what you're doing, and then just interfere and then you get the wrong bank account and sometimes, you don't get it back.
00:33:12:12 - 00:33:20:16
Andrew Sykes
Yeah, but even if you get it back for a small business to lose $100k, $200k, $300,000 out of their cash flow can be terminal.
00:33:20:20 - 00:33:22:19
Young Han
And the stress that you will go through.
00:33:22:23 - 00:33:41:19
Andrew Sykes
Yeah, it is, it's very stressful. So, I think you were saying, okay, trends for 2023. I think we're going to see more and more cyber-attacks. It's a growing area, as you said, the dark web is massive. So, there's obviously a lot of criminal activity out there.
00:33:41:19 - 00:33:55:14
Young Han
Not only those things; not only business - in your personal level. If you're getting a weird text message from the ATO, you've got this tax to pay… any random text messages or emails, anything like that, just be careful.
00:33:55:14 - 00:34:05:20
Andrew Sykes
Wasn't that the theme of the pandemic? I know every text message parcel being delivered or ATO, so all of a sudden it moved on to your phone?
00:34:05:22 - 00:34:06:16
Young Han
Yes, that's right.
00:34:07:02 - 00:34:08:01
Andrew Sykes
Email to phone.
00:34:08:06 - 00:34:16:12
Young Han
So, it's not just for the business, it's for everybody involved in, you know, their life, their business, the employees, in your daily life.
00:34:16:23 - 00:34:26:11
Andrew Sykes
Small business needs to treat this seriously. So, you've got to look at your cyber security awareness. Your plans, your processes.
00:34:26:23 - 00:34:36:17
Young Han
There's also cyber security insurance as well in place. It's a new thing. If you're really worried about it, I recommend you have a look at it as well.
00:34:36:20 - 00:34:55:18
Andrew Sykes
Get the expert to advise you on process and policies and protection you can have and not all of it's expensive. Train your staff who are responsible for payments. For example, that if a bank account changes, ring up the person who sent the invoice and say, Hey, did you change your bank account?
00:34:56:13 - 00:35:03:10
Andrew Sykes
Not all of it is sophisticated or expensive, but you do need a plan and you do need to actually do something about it.
00:35:03:14 - 00:35:16:00
Chris Oates
And I think that cyber security is about digital and businesses moving into that and, well, accelerating with the digital space. But cyber security is the key for that to be successful.
Staff Shortages: How to find employees and keep them happy by automating mundane tasks
00:35:16:05 - 00:35:45:05
Andrew Sykes
The next trend: staff shortages. In 2022, the unemployment rate in Australia dropped to its lowest level in 50 years. And you could certainly…it's not hard to pick that there's a trend that there's going to be less staff and it's going to impact on small businesses. So small businesses competing with larger businesses who are trying to get access to employees, hopefully we'll see some immigration.
00:35:45:12 - 00:35:52:14
Andrew Sykes
But yeah, we think that a big trend is going to be the continuation of that shortage of staf
00:35:52:14 - 00:36:12:21
Young Han
And I think it's that recovery process from post-COVID. So, when COVID happened there's a lot of things that impacted the staff. The job keeper was kind of helping. But at the same time, when the COVID happened and borders were closed, a lot of people chose to go back to their own country, and they never came back.
00:36:12:21 - 00:36:45:03
Young Han
And now things are coming back to normal, but it's like, well come back, but they found their life, they don't want to come back. Or they had changes in their family household as well. So that, they are taking on more responsibility to look after the kids and then they just don't want to work anymore. So as an employer and small business owners, there's less people who's willing to get back into the workforce which means that it makes it more competitive to get the high-quality staff into your company.
00:36:45:09 - 00:37:03:12
Chris Oates
And with the digital transformation, people are still the most important part of a business. The people you've got working for you in your own business. So, if there's less people out there, you want the right people in the right positions, which can mean that when unemployment’s so low, it will cost the business more because you might have to pay someone a bit more.
00:37:03:12 - 00:37:08:13
Chris Oates
So, when you're talking your small business and your cash flows that can eat into it.
00:37:09:02 - 00:37:30:24
Andrew Sykes
Yeah, it does. And I think we're getting - this has been going on a while now. While the trend is going to continue, I think one of the impacts we're going to see is that the customer is aware of this trend now. So, if you think about, you know, three or four years ago going out to a good quality restaurant and using your phone to order by yourself at the table.
00:37:31:05 - 00:37:39:12
Andrew Sykes
Yeah, you would think, oh, I'm not going to do that. I want table service. I want people to wait on me. But the customer now is quite accepting.
00:37:39:15 - 00:37:52:17
Young Han
Yeah. And you know, we get emails from childcare centres or, other businesses saying we have staff shortages, and we can't deliver that quality of service. It's going to be more time taken.
00:37:53:04 - 00:38:08:10
Andrew Sykes
Yeah. So, communicating with your customers is a really good way to cope with it, but also having a look to say, okay, well what technology can we put in place? The example of ordering yourself at the table, there's technology reducing the need for staff.
00:38:08:21 - 00:38:16:02
Chris Oates
Don't need as many people wandering around the restaurant. You basically are your own waiter.
00:38:16:08 - 00:38:38:17
Young Han
Yeah, but also, I think from a small business owners’ perspective the right strategy and system in place will attract more people willing to work for you. By you making a better position in the market, looking for people to work. So having those systems and other benefits in place will help you to be in a better position.
00:38:38:22 - 00:38:40:15
Young Han
When it comes down to staff shortage.
00:38:40:23 - 00:38:55:08
Chris Oates
And making sure people are doing the tasks that that really matter to your business making money. So, if you're taking out those sort of lower value tasks, if they can be automated, done with AI, it means that the people that are there are working in the right areas.
00:38:55:09 - 00:39:04:12
Young Han
And that in this generation, they are just different. They choose what they want to do.
00:39:04:21 - 00:39:28:14
Andrew Sykes
Yeah. So that's some of those jobs that are mundane. You just can't get anybody to do that. It doesn't matter what you offer to pay. But Chris, you're exactly right. And that's why we've worked with clients, to go in and talk to the staff, talk to the business owners, and have a look at the customers and understand what the real value provided is.
00:39:28:14 - 00:39:36:23
Andrew Sykes
And starting to streamline businesses. So, you're getting a higher efficiency, but you're also reducing waste in your business.
00:39:36:23 - 00:39:38:22
Young Han
And your employees are happier.
00:39:38:22 - 00:39:54:09
Andrew Sykes
Yeah, everyone's happier. Nobody likes doing mundane jobs. So going back to our last podcast, we said, you know, we use automation, to try and get rid of the mundane, try and get better value out of your employees, but also look after the ones that you have.
00:39:54:17 - 00:39:55:05
Young Han
That's it.
00:39:55:11 - 00:40:05:03
Chris Oates
So, if your competitors aren't looking after them or are doing a better job than you, you might see people starting to walk because people want people to work if they're doing something better than you.
00:40:05:16 - 00:40:17:13
Andrew Sykes
That mobility of the workforce - happy to pick up and move and go to better conditions, so be the one that offers the best conditions and a good working environment.
00:40:17:13 - 00:40:18:17
Young Han
Job satisfaction.
00:40:19:05 - 00:40:19:22
Chris Oates
Exactly.
Cash Flow Options
00:40:20:07 - 00:40:51:17
Andrew Sykes
Yep. Job satisfaction. So, cash flow is going to be a big trend as well. So, looking at cash flow options is our next trend. We’ve just seen the ninth interest rate rise from the Reserve Bank. Interest rates are going up, cash is getting tight. So, we want to have a look at some of the ways that small business owners can get a little bit less worry, sleep a little better because they're not as impacted by cash flow worries.
00:40:51:18 - 00:41:21:20
Young Han
I think this is very important - that you engage your accountant and have a look at this closely. Because last year when we had the COVID, the state government actually provided different incentives to the small businesses. So, a lot of businesses got a bit of capital injection. There’re some other tax incentives like a temporary full expensing, which means that you can still buy equipment or things like that and pay on a monthly basis.
00:41:21:20 - 00:41:22:19
Young Han
But you can-
00:41:22:19 - 00:41:30:20
Andrew Sykes
Explaining that fully. So temporary full expensing is when you can claim a tax deduction at the time you purchase the-.
00:41:30:20 - 00:41:31:22
Young Han
Correct, even the use-
00:41:31:22 - 00:41:41:05
Andrew Sykes
- the piece of equipment. Not claim it over several years. So, you may get a tax deduction over ten years, traditionally Temporary full expensing, you get it all in one year.
00:41:41:07 - 00:41:45:01
Chris Oates
So, is that the instant asset writes off? Is that what that is?
00:41:45:06 - 00:42:18:11
Andrew Sykes
Very similar. So, what we're looking at is that, traditionally, when we said, okay, well, cash is going to be short this year, we'll go out and get a loan or will inject more into our business. What we're saying is that there's other things to look at. We saw that during the pandemic where businesses experience seeing cash flow problems could turn to the government, get government grants, maximize the benefits that they got through the tax system, for example, by looking at their R&D grants and incentives.
00:42:18:11 - 00:42:27:06
Andrew Sykes
So, research and development, access to various subsidies that increase the efficiency of their cash flow rather than looking for more cash.
00:42:27:19 - 00:42:52:01
Young Han
That's it. What it means is that you can still get the benefit of having that deduction, but it means that because there will be less tax for you to pay, which means you have more cash that stays in the business, which can be used for the increased prices of the supplies and all the other expenses that happened during COVID.
00:42:52:23 - 00:43:11:23
Chris Oates
And I do know, particularly on the R&D side and government grants: it's not a simple process. Not everybody's eligible. So, getting a professional in the industry to help look at your business, go down deep into the business and see, okay, what would you be eligible for?
00:43:12:06 - 00:43:33:06
Andrew Sykes
Yep. And you're right, Chris, it’s about getting that expert in to help you. But it's not just about getting the cash to operate your business. What it is, is looking at your business and saying, if I could fund this or if I could get access to more cash, I could improve my business, I could improve the way it works. I could develop new products.
00:43:33:06 - 00:43:49:10
Andrew Sykes
There are some great grants, not just in R&D, but looking at regional tourism, clean energy solutions. There are ways to improve your business, but get help from the government to do it.
00:43:49:23 - 00:44:22:02
Young Han
So, I guess when it comes down to cash flow, how do you achieve that? How do you increase the money that comes in? Yes, encouraging your sale is one thing, but the other thing is like tapping into those grants and incentives that allow you to have more cash coming through to your business. And secondly, with more cash flow you can invest those to improve your operation and the process saving expenses going out, which then guess what?
00:44:22:02 - 00:44:23:23
Young Han
You're going to have more cash in your business.
00:44:24:08 - 00:44:41:22
Andrew Sykes
Yeah, exactly. You're going to have a better business that's better funded and you're going to do things like develop regional tourism, like clean energy, do research and development. It's a great way to grow your business and looking at an alternate way to fund it.
00:44:42:04 - 00:44:49:09
Chris Oates
And is that only on big projects or so? Do you have to spend hundreds of thousands of dollars to get them or not?
00:44:49:09 - 00:45:11:07
Young Han
So, in the R&D incentives, you need to be in a company structure to be eligible, but also you need to lobby for you saying that you have at least a minimum $20,000 of expenditure that's spent for the research and development you're eligible for. So, if you're in a position your company's in the position that it's tax payable, it's going to reduce your tax amount.
00:45:11:14 - 00:45:15:20
Young Han
But then if it's in a loss position, you're getting that as a cash refund.
00:45:16:14 - 00:45:22:12
Andrew Sykes
Yeah. And it can be quite small business. It can access. So, this is not just for the big a lot.
00:45:22:12 - 00:45:41:07
Young Han
Or startups. If they do have the proof of concept and that's what they're doing. You just need to have a chat with the R&D experts, make sure that you're eligible to receive those incentives. And because there is a bit of process involved, you need to get the application in. And it's a claim that is a part of your tax return.
00:45:41:07 - 00:45:47:01
Young Han
So, it is important that you get advice and then get it right so that you can maximize your benefit.
Virtual CFO
00:45:48:03 - 00:46:18:03
Andrew Sykes
Excellent. So, the last trend we're going to have a little bit of a look at is Virtual CFO. It's an unusual term, but virtual CFO is what we're really looking at is saying that as a business, we don't need to go and employ someone. We can go and buy this service of a CFO externally, but generally for a lower cost and a better output than if we are hiring someone ourselves.
00:46:18:12 - 00:46:50:07
Young Han
And it's only possible because of the other trends that we mentioned in this episode, in the other episode is that digitization of the business process and how people interact and having that enabling that access to the real time data makes the virtual CFO role to do what they can do with the data that they’re getting. Because you're not waiting on someone else to print out an Excel spreadsheet to you to do the analysis, you have the real time access to the system.
00:46:50:07 - 00:47:01:16
Young Han
You know what they're doing. And because another advantage will be that having someone outside of the organization gives you that different input because they’re not in the business day-to-day.
00:47:01:20 - 00:47:28:08
Andrew Sykes
You are 100% right. So as the technology gets more sophisticated, what businesses are no longer doing is paying to have data prepared. So, they prepare high quality data themselves, but they're paying to have it interpreted. I really look at this as technology gets more sophisticated, it gets less accessible.
00:47:28:08 - 00:47:43:19
Andrew Sykes
And it's only the outputs. The best way I've thought of this is if I think of the car that I bought when I was at university 30 years ago, it was this beautiful 1975 valiant VJ Ranger. Lime in colour.
00:47:44:03 - 00:47:45:23
Chris Oates
Still dreaming about it, still driving.
00:47:45:24 - 00:48:09:05
Andrew Sykes
It was a wonderful car, but I could fix everything on that car. I could service that, I could do the timing, the brakes. It wasn't much that went wrong in that car that I couldn't fix. If I went and looked at a modern car, I wouldn't even know where to start. So as cars have gotten more sophisticated, we've really said, well, we need to get the experts. I’ll pay a mechanic to fix it for me because all I want is a car to run.
00:48:09:19 - 00:48:22:22
Andrew Sykes
And we're seeing the same trend in business where I'll pay the expert to come in and tell me what I need to know. And I’ll prepare the data and develop it myself. But when it comes to expertise, I'll bring that in from the outside.
00:48:22:22 - 00:48:46:17
Young Han
And more importantly, I think this will give you that life work life balance that you want. You’d rather spend that time for developing your business and then free up your time and be less stressed because you can do that. When you free up that time and have energy to develop your business, you can afford to have another virtual CFO.
00:48:46:22 - 00:49:05:01
Young Han
In the past, I think a lot of people think that ‘We’re not a big enough business to afford a virtual CFO.’ Think again, because the money that you save and the energy the mental energy and the stress that you save is far less than the benefit that you're going to get from having a virtual CFO.
00:49:05:03 - 00:49:22:02
Chris Oates
The amount of business owners that work in the business during the day and then go home and have to do the numbers and the books and everything. If you've got the data, if you got the digital data there, it's the old, as we talked about with the data insights and having the single source of truth and everything feeding in, it'll just give you that freedom, as you said.
00:49:22:02 - 00:49:22:08
Chris Oates
Yeah.
00:49:22:14 - 00:50:06:14
Andrew Sykes
Yeah, exactly right. And it's about why do I spend hours doing bookwork? It's how I can get the results at the end of it. So, we shortcut to the why and we get things like three-way models and, you know, forecasts and budgets that help us actually operate our business a bit better. The democratisation of advice, things like Xero, if you look at something like Xero, it really brings what big business had ten, twenty years ago down to the small business for a fraction of the cost;, small monthly fee, and you're getting an automated accounting system that gives you real advice.
00:50:06:14 - 00:50:13:24
Andrew Sykes
And then if you had a virtual CFO service on top of that, you're maximising what you're getting out of the data that you produce.
00:50:13:24 - 00:50:34:00
Young Han
And I think we talked about all these different trends that eight trends in that we’re expecting to see in 2023. They are not silos. If you are looking at it, they are interrelated. So, have a look through, read the report. If you do have any questions, get in touch with us so we can guide you through to the right direction.
00:50:34:08 - 00:51:00:11
Andrew Sykes
Stay ahead of the game in 2023 for small business owners. Well, guys, we've reached the end of this episode. Thank you very much. Young and Chris and from the team at RSM and our talkBIG podcast. Thank you very much for listening. I encourage you to subscribe on your favourite podcast platform and if you get the opportunity, refer a friend to our podcast, would be great to have more listeners.
00:51:00:24 - 00:51:04:01
Andrew Sykes
My name's Andrew, and from the team, Thank you very much.
