Young people the ‘missing part’ of productivity conversation, says CPA

“As they expand, they often experience rapid productivity growth. However, where regulations impose unnecessary barriers to young firms’ entry, early-stage growth or restructuring, the economy loses those potential productivity gains,” Chalmers said.

However, Ord told Accountants Daily that productivity growth does not just require supporting young firms, but also young people to start a new business or acquire an existing business.

“The missing part of the conversation is not just young firms. It's young people,” he said.

A large share of business owners in Australia are over 60, Ord said, emphasising the importance of those looking to exit in establishing their succession planning options.

Ord warned of an “age cliff” approaching where owners reaching retirement age will simultaneously start looking to exit their businesses.

“Our research also said that most business owners in Australia don't have a succession plan, so we're not prepared for exit; so a strong bit of advice is to start to prepare for exit, go and speak to an adviser and prepare an exit plan,” he said.

“[Exiting] could take a few years, so you wouldn't want to be in a situation where you decided to sell the business in the next 6 months, because honestly, it is impossible to prepare a business for sale in such a short period of time, as then you're also eating into your sale price.”

CPA Australia’s Asia-Pacific Small Business Survey found that businesses owned by people under 40 are more likely to grow, create jobs, adopt new technologies, innovate, and export.

For Ord, solving the nation’s productivity problem requires a more nuanced picture, and the survey’s data paints this picture. 

“We need to look at the two angles of it. [It’s] not just about creating new businesses, but also about encouraging younger people to buy existing businesses. Both will help achieve a more productive economy.”

Ord said the incentives for younger business owners are “not there” at the moment.

 “They don't necessarily have strong business networks, and there are issues around the risk-versus-reward equation,” he said.

“It's hard work; there are a lot of long hours, so not necessarily a big payoff. Don't get me wrong, there are many businesses that do succeed; there are also many businesses that are not financially successful.”

“Younger business owners are more likely to be running growing businesses, innovative businesses and creating jobs. And it doesn't matter how old the businesses are; it could be an existing business that's been running for 20 years. If you've got a younger person running it, they're more likely to be growing and creating jobs and innovating.”

“If we can get more people to start a business, I think it [will be] good for the economy, good for jobs and good for growth.”