Earning revenue of more than $2 million a year is one of the keys to staying afloat

THOSE businesses with the greatest chance of survival are those with an annual turnover greater than $2 million.

Ross Greenwood talks at the Inner West Small Business Expo at West Ashfield.

EVERY person during their life encounters a roadblock: something that halts their momentum and makes them consider change. Business is the same.

The challenges are many: too little business, too much business, too little capital, too many costs, too early with technology, too late to adopt technology, too many staff, not enough experienced staff. It goes on and on.

One of the genuine attributes of companies that make the transformation from a small business to a larger business is their ability to keep making decisive (and hopefully accurate) decisions to adapt to their circumstances.

There is another reason fledgling companies need to aspire to become larger — the faster they can get enough work to justify employees and build their turnover to $2 million a year or more, the greater their chances of survival.

Consider a company that’s gone through the past 30 years in Australia.

In that time it has had to navigate through 20 per cent plus interest rates (now falling, for business, to 7 to 10 per cent) a recession, a boom, the dollar moving from US48 cents to 110c and now back to 76c, the removal of much tariff protection, and a raft of fair trading, industrial relations, health and safety regulations. You have to keep on your toes to succeed through that lot.

And, of course, the changes to conditions and regulation will never stop coming.

Complain all you like about red tape, but all the changes to rules, tax and economic conditions are the basics of doing business.

The essence of success is to recognise this and make your organisation as capable of adapting as possible.

I was once told by one of Australia’s largest property owners and managers that business is in a state of constant change. From his perspective this means few businesses ever had the “right” amount of office, factory or warehouse space.

This bears truth for all aspects of business: too many staff and you are dragging down profit, but without the staff it might curb your ability to grab the next job that comes along.

The survival rate of emerging companies tells the full story. From the Australian Bureau of Statistics’ counts of Australian business to June 2014 there are more than 2.1 million actively trading businesses. Of businesses that existed at June 2010, 61.7 per cent were still operating four years later.

The survey shows the more employees an ongoing business had in June 2010, the more likely it would survive

Those businesses with the greatest chance of survival are those with an annual turnover greater than $2 million.

So the challenge for every emerging business appears to be to have staff and to have revenue of more than $2 million a year.

Once you get there you still need to be nimble and have your wits about you. For while this is no guarantee for success, it sure changes the odds.

FAMILY COMPANY SECURED OVER FOUR GENERATIONS

JOHN Roche was a tough man. He came to Australia in 1890 as part of the Irish diaspora and joined the army.

He was successful enough as an amateur boxer to buy his way out of the armed forces and instead became a policeman. He rose to the rank of superintendent and was the lead detective in tracking down one of Australia’s first known serial killers — Frank Butler.

When Roche left the police he began a security business with his son Tom. They lit gas lamps around The Rocks, did foot and bicycle patrols, and collected debts on behalf of the state government.

SNP Security’s Tom Roche in the company’s monitoring room at West Ryde. Picture: Adam Ward

Tom Roche eventually took over the business, SNP Security, before passing it on to his son Kevin. Now another Tom Roche, John’s great-grandson, is in charge, but the business has transformed — it turns over $270 million annually and has a large staff.

“My father (Kevin) introduced more technology and in the early ‘60s was one of the first to provide burglar alarms and monitoring services into Australia,” Tom Roche Jr says.

If you have ever stopped and looked at the uniforms of the security screening staff at Sydney Airport you will have seen the SNP logo. This is the classic example of a small family business that survived and grew into something big.

“To stay relevant we have reinvested in our business, in people, technology and our properties,” Tom says.

The company is diversified, with about half its business coming from protective services.

Today about a quarter comes from the aviation sector, including Sydney and Canberra airports.