The hard yards of doing business in Canberra

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.

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.

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.

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.

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.

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.

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.