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The hard yards of doing business in Canberra

By Mark Parton MLA - 19 June 2017 7

Let me tell you about two of my favourite Tuggeranong businesses. One is a service and retail business and the other is a restaurant. They both have the most wonderful staff, great products and they know how to serve you. I’ve been going to them for a number of months and my expectations were always exceeded. I’ve been so impressed that I’ve recommended both establishments to my friends and I was looking forward to dealing with them for years to come.

That’s not going to happen. They’ve both closed for good. Both owners desperately wanted to continue but were forced to call it quits.

I speak of On The Rivet, the bike shop on Anketell Street in Tuggeranong and the Schnitzel Haus at Erindale in Wanniassa.

People who’ve never attempted to run a business seem to believe that it’s a licence to print money. It’s not.

No one ever opened a business intending to fail. Those who have the courage to do it put their heart and soul into it along with 60-70 hours a week. When a business closes suddenly it causes so many ripples across the community. Suppliers, workers and customers are often left in the cold as to money or products owed to them. In most cases the biggest loser is the business owner themselves.

The Dunn And Bradstreet New and Failed Business Report from 2016 showed that business failures were on a dramatic rise in the ACT. Business failures in Canberra hit a 3 year high in the 3rd quarter of last year while new business start-ups decreased. It’s tough out there.

The circumstances that led to the closure of On The Rivet were long and involved. Stuey and his Tuggeranong staff were sucked into a whirlpool of problems created by their sister shop in Phillip. They attempted to trade out of strife and couldn’t do it. Stuey had spoken to me of those problems over a number of months and told me about his efforts to stay afloat.

“If I can just make it to Spring… with all of these new residents moving in just over the road, maybe we can make it,” he’d tell me optimistically.

The next time I went into the shop it had a receivers notice at the door.

It’s so disappointing for the cycling community in Tuggeranong and for the hard working and extremely knowledgeable staff. It’s further proof that if you’re in business in Canberra and you hit a road bump, it’ll probably knock the wheels right off your car. Retail and hospitality margins are so small that if anything goes wrong, you’re screwed.

The Schnitzel Haus were forced to close the doors because the numbers didn’t work out. If you’re spending more than you’re earning, at some point you have to concede defeat. You could argue that in a town full of community clubs doing cheap schnitzels, their business model wasn’t ideal, but at the time, I thought they could make it work.

It’s my understanding that some workers have been left chasing entitlements which is never an ideal situation. When receivers are called in, the mathematical reality is that there’s not enough money to pay everyone.

We have so many restaurants in Canberra. Most of them are brilliant, but there’s only so much of the pie to go around. It’s possible to do everything exceptionally well and still fail.

I take my hat off to everyone who’s running a business successfully in this town. It’s a tough gig. This city is chock full of businesses riding very close to the edge of the cliff. Many of them boldly trade out of trouble, but some fall into the abyss.

If you have a favourite little local business near you, whatever it may be, please support it. Don’t just expect it to flourish without your love.

What’s Your opinion?


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7 Responses to
The hard yards of doing business in Canberra
web_guy 10:37 am 30 Jun 17

It’s going to be tough going for many more local businesses now that cleaning contracts in all ACT public schools have been stripped from local, loyal firms and awarded to large multi-national companies. The ACT government doesn’t place much value on it’s own people. Previous contractors were given less than 24 hours to get their equipment out of schools.

CanberraStreets 7:33 pm 21 Jun 17

dungfungus said :

ACTION should be privatised or the busses/routes sold to individual contractors and the people who use the service should pay the real cost of running it.

All the non-viable routes could be taken over by a ride-sharing service using a $30K people mover instead of a $700K bendy-bus.

It would be fair for the government to pay an annual subsidy as happens almost everywhere else. The current system is unsustainable.

We probably both agree that Government should not start or run businesses – They generally do a pretty terrible job of it.

ACTION could operate better and it could operate in a financially viable way – it just can’t do both. It is either a business or it is a public good – it can’t be both.

From a government and urban management perspective, it would be preferable for people to walk, ride a bike, catch a bus – almost anything other than driving cars around the city. As ACTION is required to have the big bendy busses to service peak load, they have to keep using them for the other times – buying people movers would merely double the capital and mainenance costs of the fleet. Ditch providing peak hour bus services, ACTION can move to people movers and anyone commuting to a towncentre for standard business hours in their own car will be part of rush hour congestion of far greater scale than we currently enjoy. Trying to think how anyone could manage split shifts for the drivers and the more esoteric aspects of running a mass transport system, for profit, in a low density City just does my head in.

I have not seen any financial modelling on how/if ACTION could reach a break even point while still meeting the broader community objectives set for it by Government. I imagine that increased population density, increasing road congestion, increasing costs and charges associated with maintaining a car and driving it into the town centres will certainly help to make ACTION more financially viable (and therefore saleable) in the long term.

dungfungus 12:23 pm 21 Jun 17

CanberraStreets said :

As the author points out, people that start businesses are optimists and many of us genuinely believe that following our passion will see us through. In many ways being passionate about your business idea is a two-edged sword – you need the passion to give you the drive to take on the sheer hard work required to succeed, but you also need to be dispassionate enough to make the hard decisions that every business requires to succeed.

It is sad that more than half of Australian small businesses cease trading in the first 3 years (The ABS puts it at about 60%). The annual report from ASIC ‘Insolvency statistics: External administrators’ reports (July 2015 to June 2016)’ notes the three major nominated reasons for insolvency across Australia were inadequate cash flow, poor strategic management and poor financial control.

As a customer, we should support good local businesses with our money, but also recognise that it won’t always be enough.

Regarding the issue of ACTION, it seems to me it is on a hiding to nothing. ACTION has been badged as a business, but has performance requirements that place it firmly in the Public Good segment (like health, education, law enforcement). ACTION could become financially viable if it was not required to service rush hour requirements and was permitted to ditch the non-viable bus routes.

ACTION should be privatised or the busses/routes sold to individual contractors and the people who use the service should pay the real cost of running it.

All the non-viable routes could be taken over by a ride-sharing service using a $30K people mover instead of a $700K bendy-bus.

It would be fair for the government to pay an annual subsidy as happens almost everywhere else. The current system is unsustainable.

CanberraStreets 8:37 am 20 Jun 17

As the author points out, people that start businesses are optimists and many of us genuinely believe that following our passion will see us through. In many ways being passionate about your business idea is a two-edged sword – you need the passion to give you the drive to take on the sheer hard work required to succeed, but you also need to be dispassionate enough to make the hard decisions that every business requires to succeed.

It is sad that more than half of Australian small businesses cease trading in the first 3 years (The ABS puts it at about 60%). The annual report from ASIC ‘Insolvency statistics: External administrators’ reports (July 2015 to June 2016)’ notes the three major nominated reasons for insolvency across Australia were inadequate cash flow, poor strategic management and poor financial control.

As a customer, we should support good local businesses with our money, but also recognise that it won’t always be enough.

Regarding the issue of ACTION, it seems to me it is on a hiding to nothing. ACTION has been badged as a business, but has performance requirements that place it firmly in the Public Good segment (like health, education, law enforcement). ACTION could become financially viable if it was not required to service rush hour requirements and was permitted to ditch the non-viable bus routes.

Holden Caulfield 3:41 pm 19 Jun 17

Some very valid comments made by the OP.

In addition to slim margins in the hospitality and retail sectors, it can also be difficult to hire and keep good staff.

True, a customer should always expect good service at a minimum and this is the responsibility of the business owner to do their best to ensure this is the case. But if you’ve had a less than stellar experience somewhere, before going on a social media to tell the world about how wronged you think you were, spare a moment to at least consider the potential impact of your words and if there may be valid reasons to explain a business not reaching its own standards.

Nobody opens a business to go broke, and nobody turns up to work in hospitality/retail with a view of ruining their customers’ day.

Mark Parton MLA 2:11 pm 19 Jun 17

dungfungus said :

Even successive Territory governments have tried starting up businesses (for whatever reason is never fully explained) and all, without exception, have ended up spectacular failures losing millions of dollars in the process.

The light rail, which will compete only with an existing government owned money losing “business”, is next in the queue.

The only difference in the outcome is that the individuals in the government that are responsible just pass the losses on to the taxpayers while the real risk takers lose everything including their houses and sometimes their families.

There is nothing worse in business when the stage is reached when closing the doors loses less money than leaving them open.

And we must always understand that anyone who has chosen to run a small business is by definition, an optimist. When the going gets tough, most small business people will just tough it out…sometimes to their detriment.

dungfungus 9:15 am 19 Jun 17

Even successive Territory governments have tried starting up businesses (for whatever reason is never fully explained) and all, without exception, have ended up spectacular failures losing millions of dollars in the process.

The light rail, which will compete only with an existing government owned money losing “business”, is next in the queue.

The only difference in the outcome is that the individuals in the government that are responsible just pass the losses on to the taxpayers while the real risk takers lose everything including their houses and sometimes their families.

There is nothing worse in business when the stage is reached when closing the doors loses less money than leaving them open.

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