CICA, Features

The essential role of small business

Although the “majors” dominate the headlines, it’s small business underpinning the fundamentals of the crane sector.

I have no doubt that at some stage we have all assumed that larger marketing corporations and crane hire companies who tend to headline our industry, hold a greater level of influence than others.  As a collective though, small business members, that is, crane hirer/owner companies with between one and five cranes (referred to hereafter as ‘1-5’s’) play an essential role in creating job growth, industry innovation and service provision ingenuity. It’s these small businesses who, as a collective, hold the greatest volume, with just over 45% of our crane hirer/owner membership falling in the ‘1-5’ category.  Couple that with our ‘6-10’ crane members and it accounts for a staggering 72%.

This is what drives “Industry Passion”, one of the core values held at CICA. Attend any state branch meeting, and you will see that the main demographic in attendance are constituted from these categories. It is these businesses, whose very livelihood can be compromised by any number of government or statute trade restrictions. All those in this sector suffer the greatest financial burden when government authorities add another level of unforeseen red tape. Every time we witness our industry develop greater trade barriers, there is a disincentive for these businesses to grow; to employ, to innovate and to develop, plus we stifle the confidence small business feeds and relies upon to succeed. CICA continues to place a major focus on lobbying and representation, to increase understanding and eliminate trade restriction across many government departments, including road management authorities and health and safety departments.

Our ‘1-5’s’ are generally family run businesses who find a market niche in a small geographic location. It’s usually “all hands-on deck”, with management and the workforce performing whatever task needs doing, to get the job done. This often makes them lean and flexible enterprises, able to offer that “personal touch” to their client base making them exceptionally successful and enjoyable to be a part of.  There are plenty of circumstances where I speak with crane hirers who compare their larger crane business with their business from years prior; the common complaint being, that they gained more satisfaction and often made more money during those development years compared with the larger; less flexible organisation they have become.

CICA places a large emphasis on improving access to services to help all members. We have placed a heavy focus over the past year on strengthening our communication to members though our events calendar.  We have held industry days, taken branch meetings to regional areas and expanded our business and technical workshop forums at our national conference.  This is to benefit all, but gives a particularly opportunity for our ‘1-5’s’ to gain valuable information and network with the right industry people who are able to help and offer advice if required.  For example, we have marketing members offering finance services and brokerage who are always keen to connect and plan with crane hire members.  Developing a business relationship in these ways enables the hirer to better understand how to structure their business so they can more effectively access lending support in the future.  Increasingly, the way you present your businesses historical performance during a finance approval stage, holds greater stead than the actual performance itself.

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Regardless of what market sector we are referring to, “confidence” is the key derivative in small business growth. This reigns true with our ‘1-5’ members and as most of us have experienced being in this category at some stage, we are aware of what it takes to survive and grow in this space.  If nurtured well, the business takes a life of its own, consolidates its niche and develops market prominence.  If managed poorly, the business can very quickly begin to implode as inferior cash flow management becomes a burden and stifles growth.

In the latest Sensis Business Index, which surveyed a broad range of small businesses in both metropolitan and regional areas, it was found that almost 60% are unconcerned with broader economic conditions.  That is, they are more confident in their own ability to succeed in their region without relying on any type of external government aid. We see this regularly throughout our membership where decision making to upgrade a crane fleet or to expand a workforce is much more related to very local opportunities and conditions rather than the broader macro-economic outlook.   It was also revealed that only one third in this sector took up the $30,000 immediate tax write off opportunity.  What these surveys tend to overlook is to take up this tax write off, you first need to have generated enough revenue, then have enough confidence to spend it before you can reap a benefit from the tax system. In simple terms, you need to spend $30,000 from your cash reserves to then save $8,250 off your subsequent years tax liability (given you qualify for 27.5% small business company tax rates).  Alternatively, the hirer may choose to access finance to make the acquisition possible but then may confront difficulty in gaining support from financial institutions under current lending criteria, particularly if the acquisition is speculative or unproven.

Interestingly, in our space, where capital expenditure is high on equipment acquisitions, the greatest burden restricting small business growth continues to be access to finance.  The Sensis Business Index revealed that 30% of small businesses reported greater difficulties accessing finance in the last six months than prior. This was even more exaggerated in regional areas where the full force of tighter lending criteria has been applied.  This reaffirms the importance of taking advantage of the CICA membership networking opportunities on offer, and to form strong long-term business relationships from our broader membership directory to ease these types of difficulties.

Collaboration, Industry Passion, Communication and Accountability are the values we hold firm in our association.  For all members, but with particular emphasis on our ‘1-5’s’, there are valuable development opportunities for your business by taking advantage of the CICA services on offer, along with participating in the CICA events calendar.

I hope you have all returned from your New Year break fully refreshed and ready to take on year 2020 with our shared vision for a safe and progressive industry.

Tom Smith

CICA President

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