NEW: Michael Schaper

Canberra seems to have a different view of what a small business is – no wonder so many SMEs are on a policy-driven backfoot.

Do they get it?

I stood in the corridor, with my mouth just a little agape. Around me flowed a small army of public servants, filling another Canberra building. I’d been talking to one of the many people involved – at an elementary level – in devising new strategies to help local small firms.

On the spur of the moment, I’d fired the killer question: “So, what do you think a small business is?”

He looked back at me, eyes keen with enthusiasm. “I don’t know…” He stroked his chin, deep in calculation. “Probably anything with, say, less than 300 staff, eh?”

Wrong. In fact this guess, put forward by a very intelligent and earnest young public servant, was well off the mark. The typical small business in Australia in fact has only a handful of staff. About 95% of all private firms have less than 20 employees; more than 80% are deemed to be micro-businesses with no more than five people.

And a business with just five staff is light years away from one with 300, 50 or even 20 people. There’s a vast gulf in the level of sophistication, spare cash, human resources, training, office space – you name it. A micro-firm isn’t a “shrunken down corporation” – it’s a fundamentally different beast, where even daily survival is rarely guaranteed.

And it means that the rules for micro-firms ought to be different, too. BHP may well have time to deal with numerous different tax regimes and changes to IR laws, but a real small business owner rarely does.

Yet we continue to see the same rules set out. Why? I suspect it’s because politicians, public servants and the media don’t really appreciate those differences.

Being in “business” doesn’t mean that every sized business is the same; in fact, the differences between firms are often greater than the things they have in common. But that’s not something you really appreciate until you’ve worked across the spectrum – in really small firms, in large private corporations, and in government.

Many policymakers don’t have experience. Until they do, really small firms are always going to be on the backfoot.

Professor Michael Schaper is the Dean of Murdoch University Business School, has been a business owner, run a community-based SME support agency, and was previously ACT Small Business Commissioner. His focus is that governments and the community understand the “big picture” – the policies and issues that affect all of the small business sector – so that entrepreneurs have the support they need to flourish.