MYOB Australian Small Business Survey

MYOB Australian Small Business Survey March 2009 Small Business Survey Report Report prepared for Report prepared by MYOB Contact: AMR Interactive contact Naomi Helleren Kash Jain Public Relations Survey Project Manager Tel: (03) 9222 9951 Tel: (02) 9020 6723 Email: naomi.helleren@myob.com Email: kash.jain@amrinteractive.com.au Web: www.myob.com.au Web: www.amrinteractive.com.au 12 Wesley Crt Ogilvy House Burwood East 72 Christie St, St Leonards VIC 3135 NSW 2065

Table of Contents Table of Contents... 2 List of Tables and Figures... 3 About the study... 5 Perceptions of own business (current)... 7 Confidence in future business prospects... 9 Perceptions of own business (future).... 11 Factors underpinning expectations for business performance... 14 Expectations for future economic performance... 15 Perceptions of Federal Government performance... 18 Perceptions of State Government performance... 21 Outlook for specific business issues (positive)... 24 Outlook for specific business issues (negative)... 25 Outlook for business revenue... 26 Expectations for increases in business revenue... 28 Expectations for decreases in business revenue... 29 Expectation of investing in own business... 30 Expected amount of investment in own businesses... 32 Intention of employing or reducing staff... 33 Expectations for employment... 36 Preferred method of recruitment... 37 Domain name registered... 38 Business website... 39 Selling on website... 40 Appendix 1 Perceptions of current and future business performance... 41 Appendix 2 Confidence in business & economy outlook... 42 Appendix 3 Positive & negative outlook for specific business issues... 43 Appendix 4 Perceptions of State Government performance... 45 Appendix 5 Survey questions... 46 2

List of Tables and Figures Figure 1: Perceptions of current business performance by industry (%)... 7 Figure 1.1: Perceptions of current business performance by state (%) 8 Figure 2: Confidence in business prospects over the next 12 months by state and industry (%)... 9 Figure 3: Performance outlook for own business over the next 12 months (%)... 11 Figure 3.1: Performance outlook (better than now) for own business over the next 12 months by state (%)... 11 Figure 3.2: Performance outlook (better than now) for own business over the next 12 months by industry (%)... 12 Table 1: Factors underpinning small businesses expectations for future business performance (%)... 14 Figure 4: Performance outlook for the Australian economy over the next 12 months (%)... 15 Figure 4.1: Performance outlook for the Australian economy over the next 12 months by state (%)... 15 Figure 4.2: Performance outlook for the Australian economy over the next 12 months by industry (%)... 16 Figure 5: Federal Government s contribution to the development of small business in Australia (%)... 18 Figure 5.1: Federal Government s contribution to the development of small business in Australia by state (%)... 18 Figure 5.2: Federal Government s contribution to the development of small business in Australia by industry (%)... 18 Figure 6: State Government s contribution to development of small business (%)... 21 Figure 6.1: State Government s contribution to development of small business by state (%)... 21 Figure 6.2: State Government s contribution to development of small business by industry (%)... 21 Figure 7: Small business owners with positive outlook on specific issues (%)... 24 Figure 8: Small business owners with negative outlook on specific issues (%)... 25 Figure 9: Outlook for own business revenue in the next 12 months (%)... 26 Figure 9.1: Outlook ( increase ) for own business revenue in the next 12 months by state (%)... 26 Figure 9.2: Outlook ( increase ) for own business revenue in the next 12 months by industry (%)... 27 Figure 10: Percentage of increases in own business revenue in the next 12 months (%).. 28 Figure 11: Percentage of decreases in own business revenue in the next 12 months (%). 29 Figure 12: Expectation of investing in own business in the next 6 months (%)... 30 Figure 12.1: Expectation of investing in own business in the next 6 months by industry (%)... 30 Figure 13: Expected amount of investment in small business (%)... 32 3

Figure 14: Expectation of hiring or reducing employees within the next 12 months (%)... 33 Figure 14.1: Expectation of hiring employees within the next 12 months by business size (%)... 33 Figure 14.2: Expectation of hiring employees within the next 12 months by state and industry (%)... 33 Figure 15: Number of employees intended to hire over the next 12 months (%)... 36 Figure 16: Method of seeking employees (%)... 37 Figure 17: Business having domain name registered (%)... 38 Figure 18: Businesses with a website (%)... 39 Figure 19: Selling goods/services via company website (%)... 40 Figure 20: Small businesses confidence in business prospects and expectations for the economic performance over 12 months time... 41 Figure 21: Small businesses confidence in business prospects and expectations for the economic performance over 12 months time... 42 Figure 22: Proportion of small businesses with POSITIVE outlook for specific business issues over the next 12 months... 43 Figure 22.1: Proportion of small businesses with NEGATIVE outlook for specific business issues over the next 12 months... 44 Figure 23: Small businesses perceptions of the State Governments performance in contributing to the development of small business in Australia... 45 4

About the study This report presents the summary findings for key indicators from the MYOB Australian Small Business Survey comprising a national sample of 1,503 small business proprietors and general managers, conducted in February 2009. The small businesses participating in the online survey are defined as both non-employing and employing businesses with less than 20 employees. Results have been weighted to reflect the small business population distribution according to the Australian Bureau of Statistics (ABS) for company size, length of time operating, region and selected ANZSIC Industry divisions (refer to ABS publications Characteristics of Small Business, 2004; 8127.0 and Counts of Australian Businesses, June 2006; 8165.0) The key indicators presented in this report include: Small Business Issues: Perceptions of current business performance Confidence in future business prospects Expectations for future business performance and factors underpinning the expectation Outlook for specific business issues such as sales, cash flow, business costs and other issues Outlook for business revenue Likelihood to invest in own business within the next 6 months, and the likely amount of any such investment Expectation of employing or reducing staff in the next 12 months Methods of finding employees Government Issues: Perceptions of the State and Federal Governments performance in contributing to small business development in Australia 5

The findings of the research are reported by industry type: Industry Sample Agriculture 151 Manufacturing 107 Construction 281 Wholesale Trade 69 Retail Trade 198 Accommodation, Café and Restaurants 35 Transport and Storage 86 Communication, Media and Marketing Services 23 Finance and Insurance 30 Property and Business Services 222 Education 29 Health and Community Services 94 Cultural and Recreational Services 48 Personal and Other Services 86 Information & Communications Technology 44 Total 1503 The findings are also reported by state for some questions: State Sample NSW 446 VIC 351 QLD 350 SA 111 WA 170 TAS 37 NT* 16 ACT* 22 Total 1503 Note: * Sample sizes for NT and ACT are too small for reliable statistics at a State level, but are included in the total figures. 6

Perceptions of own business (current) Majority (72%) of small business owners surveyed report their business is currently performing very or quite well Figure 1: Perceptions of current business performance by industry (%) Very well/ Quite well Total 63% 9% 72% 73% 70% 74% Total by Industry IT/Information & Communication Technology 75% 11% 86% 83% 66% 62% Agriculture 70% 3% 73% 65% 60% 74% Manufacturing 69% 8% 77% 62% 77% 67% Property and business services 68% 12% 80% 78% 78% 80% Cultural and recreational services 68% 9% 77% 64% 66% 69% Transport and storage 64% 13% 77% 82% 72% 75% Finance and insurance 63% 6% 69% 71% 79% 77% Health and community services 62% 15% 77% 72% 66% 79% Construction 61% 11% 72% 82% 80% 80% Accommodation, café and restaurants 60% 12% 72% 67% 72% 81% Education 59% 13% 72% 78% 71% 79% Personal and other services 59% 7% 66% 70% 65% 72% Retail Trade 56% 6% 62% 62% 60% 63% W holesale trade 54% 5% 59% 75% 56% 68% Communication, media and marketing services 53% 3% 56% 75% 70% 81% Quite well 7 Very well

Figure 1.1: Perceptions of current business performance by state (%) Very well/ Quite well Total 63% 9% 72% 73% 70% 74% SA 68% 10% 78% 77% 72% 76% VIC 65% 11% 76% 73% 67% 76% QLD 63% 5% 68% 69% 69% 71% NSW 63% 7% 70% 71% 68% 72% W A 59% 12% 71% 79% 82% 77% TAS 39% 27% 66% 75% 63% 74% Quite Well Very Well Base: Small businesses owners (n=1503) Q: Thinking about the current performance of your own business, do you think your business is performing very well, quite well, not very well, not at all well, don t know? AMR Interactive, March 2009 The majority (72%) of small business owners surveyed report their business to be currently performing very or quite well. This is consistent with results from previous quarters. Small business owners in the IT/Information and Communication Technology sector report the most prosperous performance, with 86% reporting a very or quite well performance. This is an increase from 62% in June 2008. Following this sector are the Agriculture (73%) and Manufacturing (77%) sectors. There is a significant drop in very well/quite well current performance of small businesses in the Communication, media and marketing services industry with 56% of small business owners in this industry reporting very well/quite well, which is down from 81% in June 2008. 8

Confidence in future business prospects Over half (59%) of small business owners surveyed are confident about their future business prospects Figure 2: Confidence in business prospects over the next 12 months by state and industry (%) Extremely/Fairly Confident Total 46% 13% 59% 61% 68% 69% Total by State NSW 48% 11% 59% 61% 63% 71% VIC 46% 14% 60% 63% 67% 68% QLD 46% 13% 59% 56% 70% 66% SA 45% 14% 59% 58% 70% 74% WA 39% 12% 51% 75% 75% 70% TAS 28% 22% 48% 71% 83% 78% Total by Industry Cultural and recreational services 54% 14% 68% 65% 68% 72% Finance and insurance 54% 13% 67% 68% 73% 74% Education 54% 11% 65% 76% 64% 73% Agriculture 52% 3% 55% 59% 47% 51% Personal and other services 50% 19% 69% 66% 62% 71% Property and business services 49% 14% 63% 61% 78% 81% Communication, Media and Marketing services 48% 6% 54% 66% 70% 70% Accommodation, café and restaurants 47% 26% 73% 73% 84% 67% Manufacturing 47% 16% 63% 52% 62% 60% Constructions 45% 6% 51% 61% 74% 73% Retail trade 43% 14% 57% 58% 68% 67% Transport and Storage 41% 14% 55% 55% 74% 66% IT/Information & Communication Technology 39% 15% 54% 68% 68% 69% W holesale 35% 14% 49% 71% 62% 64% Health & Community services 33% 35% 68% 65% 69% 84% Fairly confident Extremely confident 9

Base: Small business owners (n=1503) Q: Thinking about the next twelve months, how confident do you feel about the prospects for your own business? AMR Interactive, March 2009 Over half (59%) of the small business owners surveyed are confident in their business prospects for the next twelve months. There has been a consistent decline in confidence for business prospects over the past 4 quarters ranging from 69% in June 2008, 68% in September 2008 and 61% in December 2008. Small business owners surveyed in most states have an average of fairly or extremely confident with the exception being small business owners in Western Australia, which were below average, with 51%. And there was a significant drop between December 2008 and March 2009 with Western Australia dropping from 75% in December 2008 to 51% in March 2009. In regards to industry, small business owners surveyed in Manufacturing (63%) have the most improved confidence in their future prospects, with an increase of 11% from 52% in December 2008. Small business owners in the Wholesale sector show a 22% decline in confidence since December 2008, slipping from 71% to 49% in March 2009. 10

Perceptions of own business (future) Just under half (43%) of small business owners surveyed report a better than now outlook for their business Figure 3: Performance outlook for own business over the next 12 months (%) Unsure, 10% Worse than now, 16% Better than now, 43% No change, 31% Figure 3.1: Performance outlook (better than now) for own business over the next 12 months by state (%) Better Than Now Total 43% 43% 46% 50% 56% Total by State QLD 48% 48% 53% 51% 55% VIC 43% 43% 46% 52% 53% WA 43% 43% 41% 54% 57% NSW 40% 40% 45% 47% 59% SA 37% 37% 32% 47% 54% TAS 18% 18% 54% 62% 50% 11

Figure 3.2: Performance outlook (better than now) for own business over the next 12 months by industry (%) Better Than Now Total 43% 43% 46% 50% 56% Total by Industry Finance and Insurance 53% 53% 55% 52% 63% Personal and other services 52% 52% 52% 49% 54% Health and Community services 51% 51% 50% 61% 65% W holesale trade 49% 49% 50% 56% 59% Communication, Media and Marketing services 49% 49% 54% 50% 60% Accommodation, Café and Restaurants 49% 49% 44% 65% 64% Cultural and recreational services 46% 46% 60% 49% 57% Manufacturing 44% 44% 43% 49% 58% Property and Business services 43% 43% 48% 58% 64% Transport and Storage 42% 42% 29% 47% 27% Retail Trade 41% 41% 50% 56% 60% Construction 38% 38% 38% 43% 54% Education 38% 38% 52% 59% 57% Agriculture 36% 36% 48% 34% 47% IT/Information & Communication Technology 33% 33% 48% 52% 58% Base: Small business owners (n=1503) Q: Now thinking about the performance outlook for your own business over the next 12 months, do you think your business will perform better than now, worse than now, no change, don t know? AMR Interactive, March 2009 12

Just under half (43%) of small business owners surveyed believe their business will perform better than now over the next 12 months. Consistent with the previous quarter, Queensland (48%) has the highest level of small business owners reporting a potentially better than now performance. Small business owners in the IT/Information and Communication Technology industry have the least confident performance outlook, with only 33% reporting a better than now performance outlook. The most confident sector is Finance and Insurance with 53% of small business owners surveyed from this sector reporting a better than now performance outlook. The Cultural and recreational services sector, which was the most confident in December 2008, dropped significantly from 60% in December 2008 to 46% in March 2009. 13

Factors underpinning expectations for business performance Consumer/end user trends changing favourably is the most common reason for expecting a better than now business performance Table 1: Factors underpinning small businesses expectations for future business performance (%) Factor Expectation for Future Business Performance Better than now (n=620) Worse than now (n=248) No Change (n=498) Current tax levels 6% 26% 18% Future proposed tax changes - going up 3% 14% 4% Future proposed tax changes - going down 11% 1% 4% Petrol prices too high 5% 36% 24% Petrol prices forecast reduction 10% 1% 4% Employment market favourable for employers 9% 3% 6% Lack of available trained workers to draw on 6% 10% 9% Increase in Government investment in my industry 12% 1% 6% Decrease in Government investment in my industry 0% 14% 5% Increase in competitive activity 12% 34% 20% Decrease in competitive activity 18% 4% 6% Organic growth of my industry is increasing 31% 1% 9% Decline in growth rate of my industry 3% 54% 23% Consumer/end user trends changing favourably 47% 3% 14% Consumer/end user trends changing unfavourably 2% 57% 22% Drought/Weather 0% 1% 1% Marketing/increase/Better marketing 2% 0% 0% Economy/global economy/financial international market 0% 5% 2% Other 10% 6% 6% Base: Those who responded better than now, worse than now or no change to Q3 (n=1366) Q: You mentioned that you expect your business to be Better than now, Worse than now OR Have no change over the next 12 months, what are the factors underpinning your expectation? (Multiple choices) AMR Interactive, March 2009 Of the small business owners surveyed who believe their business will perform better than now over the next 12 months (41% of sample), 47% of this group attributed this to consumer/end user trends changing favourably. This is followed by 31% who attribute this to having organic growth of their industry increase. Of the small business owners surveyed who expect a worse than now performance (17% of sample), this is largely attributed to consumer/end user trends changing unfavourably (57%), a decline in the growth rate of their industry (54%) and petrol prices too high (36%). 14

Expectations for future economic performance More than half (61%) of small business owners surveyed expect the Australian economy to perform worse than now over the next 12 months Figure 4: Performance outlook for the Australian economy over the next 12 months (%) Economy Outlook Better than now 16% 16% 17% 18% 16% No change 13% 13% 14% 21% 17% Worse than now 61% 61% 58% 49% 58% Unsure 10% 10% 11% 13% 9% Figure 4.1: Performance outlook for the Australian economy over the next 12 months by state (%) Better than now Total 61% 16% 16% 17% 18% 16% Total by State SA 69% 14% 14% 6% 12% 19% TAS 67% 6% 6% 24% 25% 11% QLD 64% 17% 17% 23% 18% 18% VIC 63% 15% 15% 15% 17% 14% W A 60% 17% 17% 20% 18% 18% NSW 57% 18% 18% 13% 19% 15% Worse than now Better than now 15

Figure 4.2: Performance outlook for the Australian economy over the next 12 months by industry (%) Better Than Now Total 61% 16% 16% 17% 18% 16% Total by Industry Agriculture 71% 14% 14% 17% 10% 13% Manufacturing 70% 7% 7% 15% 7% 14% Education 69% 20% 20% 20% 20% 16% IT/Information & Communication Technology 69% 14% 14% 7% 30% 25% Health and community services 64% 24% 24% 10% 10% 15% Property and business services 62% 21% 21% 14% 18% 16% Wholesale trade 61% 16% 16% 30% 25% 16% Constructions 60% 14% 14% 16% 18% 21% Accommodation, café and restaurants 60% 22% 22% 19% 18% 16% Finance and insurance 59% 18% 18% 27% 24% 14% Transport and storage 58% 10% 10% 20% 29% 13% Communication, media and marketing services 57% 22% 22% 20% 20% 14% Retail Trade 56% 14% 14% 18% 22% 16% Cultural and recreational services 54% 25% 25% 18% 22% 11% Personal and other services 44% 20% 20% 23% 16% 18% Worse than now Better than now Base: Small business owners (n=1503) Q: Thinking more generally about the condition of the overall Australian economy over the next 12 months time, do you think it will perform... better than now, worse than now, no change, don t know? AMR Interactive, March 2009 16

More than half (61%) of small business owners surveyed expect that the Australian economy will perform worse than now over the next 12 months. While only 16% of small business owners surveyed reported expecting a better than now economic performance over the next 12 months, which is consistent with previous quarters. In regards to a positive outlook for the economy, NSW is the most optimistic state with 18% of small business owners surveyed in NSW expecting the Australian economy to perform better than now over the next 12 months. While SA is the most pessimistic state, with 69% of small business owners surveyed in SA expecting the Australian economy to perform worse than now over the next 12 months. A total of 14% of small business owners surveyed in the Agriculture sector expect a better than now performance from the Australian economy, as do 7% of small business owners in the Manufacturing sector. 17

Perceptions of Federal Government performance 42% of small business owners surveyed rate the Federal Government s performance in contributing to the development of small business in Australia as poor Figure 5: Federal Government s contribution to the development of small business in Australia (%) Unsure, 11% Good/very good, 20% Poor/very poor, 42% Neither good nor poor, 27% Figure 5.1: Federal Government s contribution to the development of small business in Australia by state (%) Very/Somewhat Poor Total 42% 27% 20% 42% 47% 56% 56% Total by State SA 49% 23% 21% 49% 52% 64% 61% NSW 47% 25% 19% 47% 47% 52% 54% QLD 44% 26% 18% 44% 44% 58% 61% VIC 38% 30% 23% 38% 49% 51% 54% W A 33% 27% 22% 33% 45% 46% 54% TAS 28% 42% 14% 28% 48% 33% 39% Very/Somewhat poor Neither Very/Somewhat 18 good

Figure 5.2: Federal Government s contribution to the development of small business in Australia by industry (%) Very/Somewhat Poor Total 42% 27% 20% 42% 47% 56% 56% Total by Industry Agriculture 53% 28% 12% 53% 63% 54% 60% Manufacturing 49% 24% 20% 49% 41% 66% 60% Retail Trade 47% 28% 13% 47% 52% 51% 59% Health and community services 45% 17% 25% 45% 43% 48% 40% IT/Information & Communication Technology 45% 20% 15% 45% 35% 47% 45% Accommodation, café and restaurants 44% 25% 25% 44% 53% 76% 63% Property and business services 42% 24% 22% 42% 44% 56% 52% Finance and insurance 42% 29% 18% 42% 53% 48% 52% Construction 39% 30% 19% 39% 47% 54% 59% Education 38% 22% 21% 38% 46% 44% 43% Communication, media and marketing services 37% 30% 19% 37% 44% 38% 36% Personal and other services 36% 28% 22% 36% 34% 43% 49% Transport and storage 35% 29% 25% 35% 52% 53% 69% Wholesale trade 32% 40% 25% 32% 48% 54% 68% Cultural and recreational services 22% 26% 36% 22% 36% 32% 30% Very/Somewhat poor Neither Very/Somewhat good Base: small business owners (n=1503) Q: How would you rate the Federal Government s current performance in contributing to the development of small business in Australia? AMR Interactive, March 2009 19

Just under half (42%) of small business owners surveyed report a poor or very poor performance by the Federal Government in their contribution to the development of small business in Australia. This represents a 5% decline in the negative performance rating since December 2008. Small business owners in New South Wales and Queensland have remained consistent with 47% and 44% respectively since December 2008. 20

Perceptions of State Government performance More than half (54%) of small business owners surveyed rate their State Governments performance in contributing to the development of small business in Australia as poor Figure 6: State Government s contribution to development of small business (%) Unsure, 11% Good/very good, 9% Poor/very poor, 54% Neither good nor poor, 25% Figure 6.1: State Government s contribution to development of small business by state (%) Very/ Somewhat Poor Total 54% 25% 9% 54% 59% 61% 63% Total by State NSW 69% 15% 5% 69% 76% 76% 69% SA 65% 25% 5% 65% 58% 69% 64% QLD 49% 28% 9% 49% 50% 56% 61% VIC 47% 31% 12% 47% 56% 57% 58% TAS 44% 39% 44% 71% 50% 49% W A 37% 31% 16% 37% 50% 51% 62% Very/Somewhat poor Neither Very/Somewhat good 21

Figure 6.2: State Government s contribution to development of small business by industry (%) Very/ Somewhat Poor Total 54% 25% 9% 54% 59% 61% 63% Total by Industry Agriculture 67% 23% 4% 67% 66% 75% 74% Manufacturing 67% 20% 7% 67% 63% 65% 61% IT/Information & Communication Technology 58% 13% 11% 58% 62% 62% 50% Retail Trade 57% 26% 5% 57% 61% 62% 63% Finance and insurance 56% 22% 12% 56% 61% 52% 60% Property and business services 54% 23% 9% 54% 57% 63% 66% Construction 51% 28% 12% 51% 56% 62% 62% Accommodation, café and restaurants 51% 32% 9% 51% 77% 71% 67% Education 50% 17% 13% 50% 50% 59% 47% Transport and storage 49% 31% 11% 49% 61% 58% 76% Wholesale trade 48% 38% 10% 48% 66% 54% 70% Communication, media and marketing services 48% 24% 8% 48% 56% 59% 54% Personal and other services 48% 24% 14% 48% 53% 54% 61% Health and community services 47% 21% 14% 47% 58% 51% 43% Cultural and recreational services 44% 23% 15% 44% 61%l 50% 41% Very/Somewhat poor Neither Very/Somewhat good Base: Small business owners (n=1503) Q: How would you rate the State Government s current performance in contributing to the development of small business in Australia? AMR Interactive, March 2009 More than half (54%) of small business owners surveyed are currently unhappy with their State Governments contribution to small business, with 27% of this group rating their State Governments contribution to the development of small business in Australia as very poor. 22

New South Wales is the most dissatisfied state with their State Government with 69% of NSW small business owners surveyed reporting a poor or very poor contribution to the development of small business. There is however a slight drop (7%) when comparing the March 2009 result with the result from December 2008 (76%). Also small business owners in Western Australia are the happiest with their State Government s contribution with only 37% reporting a poor or very poor performance. 23

Outlook for specific business issues (positive) Sales remain the most positive issue for small business owners Figure 7: Small business owners with positive outlook on specific issues (%) Positive/Very Positive Sales 36% 15% 51% 52% 52% 58% Profitability 34% 13% 47% 49% 48% 50% Marketing and customer relationships 33% 18% 51% 52% 49% 57% Cash flow 31% 13% 44% 47% 51% 52% Interest rates 28% 8% 36% 34% 16% 8% Business systems (IT, accounting) 20% 6% 26% 57% 28% 31% Business costs 20% 7% 27% 27% 23% 20% Competitor activity 16% 8% 24% 25% 21% 23% Federal Government policies 14% 3% 17% 15% 7% 12% Local Government policies 9% 2% 11% 11% 7% 9% Exchange rates 8% 2% 10% 11% 8% 12% Positive Very positive Base: Small business owners (n= 1503) Q: Listed below are a number of issues that your business will deal with over the next 12 months. Thinking only about your own business, please indicate your outlook for each of these issues, where 1 = very negative outlook, 2 = somewhat negative outlook, 3 = neutral, 4 = somewhat positive outlook and 5 = very positive outlook. (If this is not applicable to your business, select 6) AMR Interactive, March 2009 As with previous quarters small business owners have the most positive outlook for Sales, with 51% reporting a positive or very positive outlook for Sales. The outlook for Marketing and customer relationship is also reported as positive or very positive by 51% of small business owners surveyed. 24

Outlook for specific business issues (negative) Business costs have the most negative outloook Figure 8: Small business owners with negative outlook on specific issues (%) Negative/Very Negative Business costs 27% 5% 32% 33% 41% 46% Exchange rates 19% 7% 26% 24% 28% 18% Cash flow 19% 6% 25% 21% 21% 19% Profitability 18% 6% 24% 23% 23% 22% Local Government policies 15% 7% 22% 21% 34% 31% Competitor activity 15% 4% 19% 19% 18% 20% Federal Government policies 14% 8% 22% 22% 34% 31% Sales 14% 4% 18% 15% 14% 13% Interest rates 9% 3% 12% 16% 37% 52% Marketing and customer relationships 5% 1% 6% 4% 5% 6% Business systems (IT, accounting) 3% 2% 5% 4% 6% 6% Negative Very negative Base: Small business owners (n=1503) Q: Listed below are a number of issues that your business will deal with over the next 12 months. Thinking only about your own business, please indicate your outlook for each of these issues, where 1 = very negative outlook, 2 = somewhat negative outlook, 3 = neutral, 4 = somewhat positive outlook and 5 = very positive outlook. (If this is not applicable to your business select 6) AMR Interactive, March 2009 The most negatively received issue for small business owners is the outlook for business costs, where 32% report a negative or very negative outlook. This is followed by exchange rates with 26% of small business owners surveyed reporting a negative or very negative outlook. 25

Outlook for business revenue Just under half (45%) of small business owners surveyed believe their business revenue will increase over the next 12 months Figure 9: Outlook for own business revenue in the next 12 months (%) Don t know, 10% Decrease, 20% Increase, 45% Remain unchanged, 26% Figure 9.1: Outlook ( increase ) for own business revenue in the next 12 months by state (%) Increase Total 45% 45% 44% 53% 58% Total by State QLD 52% 53% 46% 53% 55% VIC 46% 46% 46% 55% 54% WA 42% 42% 43% 53% 68% NSW 41% 41% 41% 50% 59% SA 39% 39% 34% 50% 60% TAS 29% 26 29% 50% 69% 47%

Figure 9.2: Outlook ( increase ) for own business revenue in the next 12 months by industry (%) Increase Total 45% 45% 44% 53% 58% Total by Industry Cultural and Recreational services 61% 61% 49% 49% 61% Accommodation, café and restaurants 55% 55% 61% 70% 70% Finance and Insurance 55% 55% 54% 56% 65% Personal and other services 52% 52% 53% 53% 51% Health and Community services 51% 51% 49% 63% 71% Property and Business services 49% 49% 48% 61% 66% Transport and storage 48% 48% 29% 53% 39% Manufacturing 47% 47% 45% 48% 58% W holesale trade Communication, Media and Marketing services Retail Trade 45% 45% 40% 45% 43% 59% 58% 45% 55% 54% 68% 40% 46% 57% 61% Constructions Agriculture IT/Information & Communication Technology Education 39% 38% 35% 29% 39% 36% 44% 52% 38% 41% 43% 45% 35% 39% 57% 65% 29% 42% 65% 52% Base: Small business owners (n=1503) Q: Do you expect your business revenue to increase, decrease or remain unchanged in the next 12 months? AMR Interactive, March 2009 Consistent with the 43% of small business owners who reported an expected better than now performance of their business over the next 12 months, 45% of small business owners expect an increase in business revenue over the next 12 months. 27

Expectations for increases in business revenue Of the small business owners who expect an increase in revenue (45%), the most common increase expected is between 6 and 10% Figure 10: Percentage of increases in own business revenue in the next 12 months (%) Expect Revenue to Increase 50% 1-5% 20% 20% 14% 22% 19% 6-10% 30% 30% 31% 33% 29% 11-15% 11% 11% 16% 17% 15% 42% 16-20% 11% 11% 14% 11% 12% More than 20% 20% 20% 19% 17% 25% Base: Small business owners that expect their revenue to increase in the next 12 months (n=651) Q: How much do you expect your revenue to increase in the next 12 months? AMR Interactive, March 2009 Of those small business owners who expect an increase in revenue over the next 12 months (45% of sample), 30% expect this increase to be between 6 and 10%. 28

Expectations for decreases in business revenue Of the small business owners who expect a decrease in revenue (20%), more than half (57%) expect this decrease to be more than 11% Figure 11: Percentage of decreases in own business revenue in the next 12 months (%) Expect Revenue to Decrease 1-5% 10% 10% 10% 12% 11% 34% 6-10% 24% 24% 26% 32% 35% 11-15% 17% 17% 18% 18% 16% 57% 16-20% 13% 13% 15% 17% 17% More than 20% 27% 27% 22% 21% 21% Base: Small businesses that expect their revenue to decrease in the next 12 months (n=301) Q: How much do you expect your revenue to decrease in the next 12 months? AMR Interactive, March 2009 Of those small business owners surveyed who expect a decrease in revenue over the next 12 months (20% of sample), 57% of this group expect this decrease to be more than 11%, with 27% of this group expecting this decrease to be more than 20%. 29

Expectation of investing in own business Just under one-third (30%) of small business owners surveyed expect to invest in their own business over the next 6 months Figure 12: Expectation of investing in own business in the next 6 months (%) Unsure, 16% Yes, 30% No, 54% Figure 12.1: Expectation of investing in own business in the next 6 months by industry (%) Expect to Invest Total Total by Industry Communication, media and marketing services Manufacturing Property and Business services Cultural and recreational services W holesale trade Accommodation, café and restaurants Finance and Insurance Education Constructions Personal and other services Retail Trade IT/Information & Communication Technology Agriculture Health and community services Transport and storage 30% 43% 36% 36% 35% 33% 32% 32% 32% 31% 31% 27% 27% 24% 21% 21% 30% 37% 29% 31% 43% 46% 40% 35% 36% 33% 26% 34% 36% 36% 30% 33% 35% 51% 35% 39% 33% 52% 47% 47% 32% 35% 36% 42% 32% 34% 23% 31% 32% 43% 44% 35% 31% 34% 25% 26% 31% 36% 22% 30% 27% 38% 34% 35% 27% 46% 29% 45% 24% 45% 24% 33% 21% 26% 23% 31% 21% 25% 22% 20% 30

Base: Small business owners (n=1503) Q: Within the next 6 months, do you expect to invest money in order to help your business grow? AMR Interactive, March 2009 Over half (54%) of small business owners surveyed do not expect to invest in their own business in the next 6 months, however 30% do intend on investing money in order to help their business grow. 31

Expected amount of investment in own businesses Of the small business owners who intend investing money in their business (30%), 30% of this group expect to invest between $10,000 and $50,000 Figure 13: Expected amount of investment in small business (%) Amount Less than $5,000 23% 23% 23% 24% 19% $5,000-$9,999 24% 24% 21% 25% 21% $10,000-$50,000 30% 30% 35% 30% 33% More than $50,000 15% 15% 15% 14% 20% Don't know/not sure 7% 7% 7% 6% 7% Base: Small business owners who intend on investing money in their business (n=455) Q: Approximately how much do you expect to invest in the next 6 months to help grow your business? AMR Interactive, March 2009 Of those small business owners who do intend on investing in their own business (30%), the most common amount of expected investment is between $10,000 and $50,000 with 30% of this group reporting this amount. While 47% of these business owners expect to invest $9,999 or less. 32

Intention of employing or reducing staff 36% of small business owners surveyed are not planning to employ or reduce staff in the next 12 months Figure 14: Expectation of hiring or reducing employees within the next 12 months (%) Reduce Employees, 6% I am a sole trader and do not intend to hire, 40% Neither hire or reduce, 36% Hire more employees, 12% Figure 14.1: Expectation of hiring employees within the next 12 months by business size (%) Intend to Hire Total 12% 12% 14% 17% 19% Total by Business Size Sole Trader (no employees) 5% 5% 6% 8% 9% 1 employee 16% 16% 18% 19% 24% 2 to 4 employees 16% 16% 30% 33% 31% 5 to 9 employees 30% 30% 33% 48% 36% 10 to 19 employees 36% 36% 30% 42% 46% 33

Figure 14.2: Expectation of hiring employees within the next 12 months by state and industry (%) Intend to Hire Total 12% 12% 14% 17% 19% Total by State NSW 15% 15% 13% 13% 17% TAS 13% 13% 7% 7% 15% SA 12% 12% 13% 13% 18% QLD 11% 11% 15% 21% 16% VIC 10% 10% 14% 13% 21% WA 7% 7% 18% 29% 23% Total by Industry Manufacturing Accommodation, café and restaurants Constructions 21% 17% 17% 21% 17% 26% 21% 17% 17% 25% 32% 17% 13% 19% 21% Property and business services Communication, media and marketing services Cultural and recreational services IT/Information & Communication Technology Health and community services 14% 14% 13% 13% 12% 14% 18% 19% 24% 14% 18% 26% 26% 13% 16% 10% 21% 13% 16% 19% 20% 12% 11% 17% 20% Personal and other services 12% 12% 12% 9% 14% Wholesale trade 11% 11% 13% 24% 15% Retail Trade 10% 10% 13% 15% 17% Education 8% 8% 4% 16% 15% Finance and insurance 5% 5% 12% 15% 16% Transport and storage 4% 4% 6% 11% 12% Agriculture 0% 0% 13% 9% 8% 34

Base: Small business owners (n=1503) Q: Do you intend to hire or reduce employees within the next 12 months? AMR Interactive, March 2009 There has been a slight decline in the number of small business owners surveyed who intend on hiring more employees over the coming 12 months, with 12% intending to do so. This is down from 19% in June 2008. A total of 36% of small business owners do not intend on reducing or increasing the number of employees in their business. There has been a 50% drop from the number of small business owners with 2 to 4 employees who intended to hire in December 2008 (from 30% to 16%). While 36% of small businesses with 10 19 employees indicated they intend to hire, compared to 30% in December 2008. Small businesses in Western Australia (7%), and also the Transport and Storage sector (4%), are less likely to be hiring than other small businesses. 35

Expectations for employment Of those small business owners who intend to hire (11%), 74% intend to hire one or two employees Figure 15: Number of employees intended to hire over the next 12 months (%) Expect to Employ 1 employee 32% 32% 42% 38% 38% 74% 2 employees 42% 42% 37% 40% 40% 3 employees 11% 11% 10% 11% 12% 4 employees 6% 6% 2% 2% 3% 5 employees or more 9% 9% 10% 8% 7% Base: Small business owners that expect to hire more employees in the next 12 months (n=165) Q: How many employees do you intend to hire in the next 12 months? AMR Interactive, March 2009 As with previous quarters, of those small business owners surveyed who intend to hire additional employees over next 12 months (11% of sample), 74% of this group intend on hiring either one or two employees. 36

Preferred method of recruitment Friends, family and other employees remains the most common source of finding new employees Figure 16: Method of seeking employees (%) Recruitment Method Through family/friends/other employees in my company 58% 58% 58% 54% 58% By advertising in newspaper 27% 27% 25% 29% 27% Via professional association 19% 19% 24% 21% 24% By advertising on the Internet 16% 16% 19% 18% 23% Through recruitment agencies 13% 13% 14% 16% 13% Other 13% 13% 2% 12% 11% Base: Small businesses that have one or more employees (n=942) Q: How do you find your employees? (Multiple responses) AMR Interactive, March 2009 Of those small businesses with one or more employees (63% of sample), recruiting potential employees through family, friend and other employees (58%) remains the most common method for recruitment. This has remained consistent since December 2008. 37

Domain name registered Over half (52%) of small businesses surveyed don t have a domain name registered Figure 17: Small business having domain name registered (%) Have Domain name Mar 09 Dec 08 Sep 08 Yes 44% 44% 45% 41% No 52% 52% 51% 55% Unsure 4% 4% 4% 4% Base: Small business owners (n=1503) Q: Does your business have a domain name registered? AMR Interactive, March 2009 While 52% of small business owners surveyed don t currently have a business domain name registered, 44% do. These figures have remained consistent since December 2008. 38

Business website 39% of small businesses surveyed have a website Figure 18: Small businesses with a website (%) Have website No 60% 60% 59% 65% 59% Yes 39% 39% 40% 35% 41% Base: Small business owners (n=1503) Q: Does your business have a website? AMR Interactive, March 2009 More than half (60%) of small businesses surveyed don t currently have a business website, which is consistent with the previous quarter. The current 39% of small businesses with a website almost mirrors the result from December 2008. 39

Selling on website Of those small businesses with a website (39%), 30% of this group sell goods or services on their wesbite Figure 19: Selling goods/services via company website (%) Sell on wesbite No 68% 68% 66% 62% 70% no Yes 30% 30% 32% 37% 29% yes Base: Small business owners that do currently have a website (n=657) Q: Do you sell goods or services via your website (e.g. an online shopping or e-commerce facility)? AMR Interactive, March 2009 Of the small businesses who do have a website (44% of sample), the majority (68%) of this group don t currently sell goods or services via this business website. However, 30% of these small business owners do. 40

Appendix 1 Perceptions of current and future business performance Figure 20: Small businesses confidence in business prospects and expectations for the economic performance over 12 months time % 77 65 74 74 54 56 70 50 73 72 46 43 November 2007 (n=1997) March 2008 (n=1436) June 2008 (n=1693) September 2008 (n=1462) December 2008 (n=1385) March 2009 (n=1503) Proportion of small businesses that expect their business performance to be BETTER THAN NOW over the next 12 months (%) Proportion of small businesses that perceive their current business performance to be very or quite well (%) Base: Small business owners (n=1503) AMR Interactive, March 2009 41

Appendix 2 Confidence in business & economy outlook Figure 21: Small businesses confidence in business prospects and expectations for the economic performance over 12 months time 76 72 69 68 61 59 % 24 12 16 18 17 16 November 2007 (n=1997) March 2008 (n=1436) June 2008 (n=1693) September 2008 (n=1462) December 2008 (n=1385) March 2009 (n=1503) Proportion of small businesses that expect the Australian economy to perform BETTER over the next 12 months (%) Proportion of small businesses that are extremely or fairly confident about their business prospects over the next 12 months (%) Base: Small business owners (n=1503) AMR Interactive, March 2009 42

Appendix 3 Positive & negative outlook for specific business issues Figure 22: Proportion of small businesses with POSITIVE outlook for specific business issues over the next 12 months 71 % 62 64 59 62 55 53 58 57 52 53 52 50 51 51 49 48 46 47 47 44 November 2007 (n=1997) March 2008 (n=1436) June 2008 (n=1693) September 2008 (n=1462) December 2008 (n=1385) March 2009 (n=1503) Sales Marketing and customer relationships Profitability Cash flow Base: Small business owners (n=1503) AMR Interactive, March 2009 43

Figure 22.1: Proportion of small businesses with NEGATIVE outlook for specific business issues over the next 12 months 59 52 % 40 26 22 21 46 36 30 31 28 41 37 34 33 32 21 22 22 16 12 November 2007 (n=1997) March 2008 (n=1436) June 2008 (n=1693) September 2008 (n=1462) December 2008 (n=1385) March 2009 (n=1503) Interest rates Business costs Federal Government policies Local Government policies Base: Small business owners (n=1503) AMR Interactive, March 2009 44

Appendix 4 Perceptions of State Government performance Figure 23: Small businesses perceptions of the State Governments performance in contributing to the development of small business in Australia % 51 55 63 61 59 54 November 2007 (n=1997) March 2008 (n=1436) June 2008 (n=1693) September 2008 (n=1462) December 2008 (n=1385) March 2009 (n=1503) Proportion of small businesses that perceive the STATE Government's performance to be POOR (%) Base: Small business owners (n=1503) AMR Interactive, March 2009 45

Appendix 5 Survey questions S1. Are you the owner, general manager, or a key decision-maker of this Business? 1. Business owner 2. General Manager but not a business owner 3. Key decision maker 4. Other (specify) S2. Not including yourself, approximately how many full time employees does your company have in Australia? 1. No other employees apart from me (sole trader) 2. 1 full time employee 3. 2 full time employees 4. 3 full time employees 5. 4 full time employees 6. 5-9 full time employees 7. 10-19 full time employees 8. 20-50 full time employees 9. 51-100 full time employees 10. More than 100 employees Q: Thinking about the current performance of your own business, do you think your business is performing? 1. Very Well 2. Quite well 3. Not very well 4. Not at all well 9. Don't know/unsure Q: Thinking about the next twelve months, how confident do you feel about the prospects for your own business? 1. Extremely confidant 2. Fairly confidant 3. Neutral 4. Fairly worried 5. Extremely worried Q: Now thinking about the performance outlook for your own business over the next 12 months, do you think your business will perform... 1. Better than now 2. Worse than now 3. No change 9. Don't know/unsure Q: You mentioned that you expect your business (***) over the next 12 months, what are the factors underpinning your expectation? Please select all that apply Current tax levels Future proposed tax changes - going up Future proposed tax changes - going down Petrol prices too high Petrol prices forecast reduction Employment market favourable for employers Lack of available trained workers to draw on Increase in Government investment in my industry Decrease in Government investment in my industry Increase in competitive activity 46

Decrease in competitive activity Organic growth of my industry is increasing Decline in growth rate of my industry Consumer/end user trends changing favourably Consumer/end user trends changing unfavourably None of these Other (please specify) Q: Thinking more generally about the condition of the overall Australian economy over the next 12 months time, do you think it will perform. 1. Better than now 2. Worse than now 3. No change 9. Don't know/unsure Q: How would you rate the Federal Government's current performance in contributing to the development of small business in Australia? 1. Very poor performance 2. Somewhat poor performance 3. Neither good nor poor performance 4. Somewhat good performance 5. Very good performance 9. Don't know/unsure Q: How would you rate your State Government's current performance in contributing to the development of small business in your region? 1. Very poor performance 2. Somewhat poor performance 3. Neither good nor poor performance 4. Somewhat good performance 5. Very good performance 9. Don't know/unsure Q: Listed below are a number of issues that your business will deal with over the next 12 months. Thinking only about your own business, please indicate your outlook for each of these issues by using the following scale where 1. Very positive, 2. somewhat positive, 3. Neutral, 4. Somewhat negative, 5. Very negative, 6. Not applicable Sales Cash flow Business costs Profitability Competitor activity Federal Government policies Local Government policies Exchange rates Interest rates Business systems (IT, accounting) Marketing and customer relationships Q: Do you expect your business revenue to increase, decrease or remain unchanged in the next 12 months? 1. Increase 2. Decrease 3. Unchanged 9. Don't know/unsure If Q (1) ASK; Qa: How much do you expect your revenue to increase in the next 12 months? 1. 1-5% 47

2. 6-10% 3. 11-15% 4. 16-20% 5. More than 20% If Q (2) ASK; Qb. how much do you expect your revenue to decrease in the next 12 months? 1. 1-5% 2. 6-10% 3. 11-15% 4. 16-20% 5. More than 20% Q: Within the next 6 months, do you expect to invest money in order to help your business grow? 1. Yes 2. No 9. Don't know/unsure If Q (1) ASK; Qa: And approximately how much money do you expect to invest in the next 6 months specifically to help grow your business? 1. Less than $5,000 2. 5,000 - $9,999 3. 10,000 - $50,000 4. More than $50,000 9. Don't Know / Unsure 98. Will invest nothing to grow the business Q: Do you intend to hire or reduce employees within the next 12 months? 1. Hire more employees 2. Reduce employees 3. Neither hire nor reduce 4. I am a sole trader and do not intend to hire 9. Don't know/unsure If Q (1) ASK; Q: How many employees do you intend to hire in the next 12 months? 1. 1 employee 2. 2 employees 3. 3 employees 4. 4 employees 5. 5 employees or more If Q (2) ASK; Q: How many employees do you intend to reduce by in the next 12 months? 1. 1 employee 2. 2 employees 3. 3 employees 4. 4 employees 5. 5 employees or more Q: How do you usually find your employees? Please select all that apply 1. By advertising in newspapers 2. By advertising on the Internet 3. Through family/friends/other employees in my company 48

4. Via professional association 5. Through recruitment agency 6. Other (specify) Q: Does your business have a domain name registered? 1. Yes 2. No 9. Don't know/unsure Q: Does your business have a website? 1. Yes 2. No 9. Don't know/unsure Q: Do you sell goods or services via your business website (e.g. an online shopping or e- commerce facility)? 1. Yes 2. No 9. Don't know/unsure D. What is the main product, service or activity that your business provides? (open-ended) D. What industry does your business operate in? 1. Agriculture 2. Manufacturing 3. Electricity, gas and water supply 4. Construction 5. Wholesale trade 6. Retail trade 7. Accommodation, cafe and restaurants 8. Transport and storage 9. Communication, media and marketing services 10. Finance and insurance 11. Property and business services 12. Government administration and defence 13. Education 14. Health and community services 15. Cultural and recreational services 16. Personal and other services 17. IT/Information & Communications Technology 18. Tourism 19. Other (specify) D. Which state is your company predominantly based in? 1. NSW 2. VIC 3. QLD 4. SA 5. WA 6. TAS 7. NT 8. ACT D. What is the postcode where your business is located? If you have more than one office please indicate the postcode where your business headquarters are based. (open-ended) D. Does your business operate out of a household/home office? 1. Yes 2. No 49

D. How long has your business been operating? 1. Less than 1 year 2. 1 to less than 2 years 3. 2 to less than 3 years 4. 3 to less than 5 years 5. >5 to less than 10 years 6. 10 years or more D. Which of the following broad categories describes your company's annual turnover? 1. Under $50, 000 2. 50, 000 to less than $100,000 3. 100,000 to less than $500,000 4. 500,000 to less than $1 million 5. $1 million to less than $5 million 6. 5 million to less than $10 million 7. 10 million or more 9. Don't know/unsure D. Does your business sell products or services primarily to other businesses or consumers/customers? 1. Businesses 2. Consumers/ customers 3. Both 4. Other (specify) 9. Don't know/unsure D. What percentage of your overall business expenses does each of the following areas account for (your best estimate is fine)? Percentages must add up to 100%. Rent and property costs Salary/wages Software and hardware Plant equipment, furniture, materials and inventory costs Marketing, advertising and sales Energy use - electricity, gas, water, oil/petrol Research & Development costs Administrative costs - human resource management, accounting, finance Other (specify) D. What is your gender? 1. Male 2. Female D. Which of the following categories best describes your age? 1. Under 18 years 2. 18-24 years 3. 24-29 years 4. 30-39 years 5. 40-49 years 6. 50-59 years 7. 60-65 years 8. Over 65 years 9. I don't wish to answer this question 50