Tag Archives: economic development

What is an Indigenous Business? The Many Definitions Are Confusing

Indigenous Business 50% or 51%
Indigenous Business 50% or 51%

So one would think that there would be a standard definition of what is an Indigenous business. Well unfortunately there is no single definition in Australia that is legislated as to what defines an Indigenous business. This creates much confusion for those wanting to seek out an Indigenous business as a supplier or to meet their contractual requirements such as under the Indigenous Opportunity Policy (IOP).

So before we go any further lets first clarify the definition of an ‘Indigenous’ person. Australia considers an Indigenous Australian to be someone who is

So what defines an Aboriginal or Torres Strait Islander person? We will use the Australian Bureau of Statistics definition adopted from Australian legislation. I have highlighted the key words

  • a person of Aboriginal or Torres Strait Islander descent,
  • who identifies as being of Aboriginal or Torres Strait Islander origin and
  • who is accepted as such by the community with which the person associates”.

So lets begin with the first definition that was around with Indigenous Business Australia (IBA). IBA has the following criteria for a business to be identified as being an Indigenous business.

  • at least one applicant must be of Aboriginal and/or Torres Strait Islander descent
  • at least 50 per cent of the ownership of your business must be by a person(s) of Aboriginal and/or Torres Strait Islander descent.

Okay, so IBA, a Federal Government agency, uses the definition that an Indigenous business is at least 50% owned.

We now go to Supply Nation, who provides ‘certification’ for being an Indigenous business. There definition is as follows to be a certified supplier or Indigenous business

  • Ownership – at least 51 per cent ownership of the company by an Indigenous Australian(s).
  • Management – the company is led / managed by a Principal Executive Officer who is an Indigenous Australian.
  • Control – the key business decisions regarding the company’s finances, operations, personnel and strategy are made by an Indigenous Australian(s).
  • For profit – the company is able to distribute its equity to members.
  • *Trading as a business – with a minimum annual revenue of $50,000.00 and a demonstrated recent history of trade (ideally, at least 6 months trade history).
    *If your business has low turnover (less than $50k) or is a start up (no trade history), then please refer to the Emerging Supplier section.
  • Business is located in Australia

So Supply Nation uses the definition as being at least 51% owned. This is important to know as Supply Nation (formerly known as Australian Indigenous Minority Suppliers Council (AIMSC)) is listed in the Indigenous Opportunity Policy as a reference point for Indigenous business.

So who else has a definition? Well the Queensland Government has its Black Business Finder (BBF) which is used by the Industry Capability Network (ICN) for contractors to source Indigenous businesses for major contracts. Note, that in order to be eligible to tender and work on these major projects, you have to be registered with ICN. So, Indigenous businesses are required to be listed for identification on the BBF. So BBF has for its definition

“Businesses defined as an Indigenous business are:

  • a majority-owned Indigenous business.
  • a 50% owned Indigenous business.

A non-Indigenous business that employees at least 75% of Aboriginal or Torres Strait Islander workers is eligible to register on Black Business Finder.”

Confused yet?! The Black Business Finder, which is required to be used by major contractors to source Indigenous businesses includes in its listings businesses that have 75% Aboriginal and or Torres Strait Islander workers. Do we need to go further as to what the definition of “75% workers” is? Does it mean 75% of the workforce? 75% of total wages? 75% wages/workers for the year? 75% of the wages/workers for the project life? This begins to create more questions then it answers. It is especially confusing for a company contractually bound by the IOP to source Indigenous businesses and they are required to use this register, yet they are not assured by the register the business meets the IOP requirements.

So are only government organisations limited to having different definitions? The short answer is no!
At the time of writing I am unable to find the membership application for Aboriginal Enterprise in Mining, Energy and Exploration (AEMEE) to locate their definition. But their historic position on being an Indigenous business was that if you say you are an Indigenous business, then you are accepted to be so.

Pilbarra Aboriginal Contractors Association (PACA) in their Review of Contractual Arrangements Between Australian Aboriginal Enterprises and the Resource Industry (2010) identified 25% ownership as their definition of being an Indigenous business.

In conclusion, there needs to be a single legislated definition of an Indigenous business. I sympathise with those organisations that are seeking Indigenous businesses but have to battle with this definition. In my opinion in a professional capacity, I see the definition of 50% Indigenous owned as being the best step forward. I see this as the opportunity for Indigenous business to grow through 50/50 joint ventures or partnerships. Think of the number of husband and wife partnership businesses where one is non Indigenous. Once there is an adequate and stable supply of Indigenous business that meet the requirements of capability and capacity to service corporate and government procurement, then there can be a transition to the 51% definition.

The employment percentage, to me, does not stand as an adequate definition as this is subjective and can be easily manipulated. If we used the definition of whether a company in Australia was an Australian business using the employee as a definition, then the majority of companies owned by overseas owners would be classified as being Australian owned because they employ Australian workers. Ownership is shareholding, not employment.

Please note I use organisations and their definitions as examples of where there is no consistency in defining an Indigenous business. At the time of writing, I myself am a member and Director of the South East Queensland Indigenous Chamber of Commerce (SEQICC) that uses the Supply Nation definition of 51%, but also a member and President of the Indigenous Construction Group Australia (ICGA) that uses the Indigenous Business Australia definition of 50%. When I am asked what is the definition of an Indigenous business, what would be my answer?

*UPDATE: On the 31st July 2014 the “Forrest Review” by Andrew ‘Twiggy’ Forrest on Indigenous Employment and Training was made public. As part of this, the review identified the significance of Indigenous business in contributing to employment outcomes and economic development. As part of the recommendation, the review gave the following part of its criteria for an Indigenous business for the purposes of being eligible for tax free status as being ‘…. At least 25% Indigenous ownership and board membership….’.

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Brisbane Lord Mayors Economic Development Business Forum- Rapid Business Growth

The night was one of two excellent speakers. Both young at age 36. I also invited along with me a young entrepreneur in the making. Dean is 25 and wanting to learn about business. I am glad I invited him to attend this particular forum.

Ian Davies, Managing Director and CEO of Senex Energy gave an excellent presentation of how he took a public company with $20m turnover in 2010 to become a $200m turnover business in 2014. All of this from a man who is only 36 years old. Ian noted the struggles his company faced as an energy explorer, from a flood wiping out roads and bridges and having to build new ones. To then be hit by another flood that wiped out that road and having to build another one higher. Some of the key points I took away from Ian’s presentation

  • Systems and Procedures– Ian noted that once you start to grow a business, the importance of systems and procedures becomes even greater to ensure the business is running course. Growth means more people, increasing the need to manage them more efficiently and keep them on course with a given framework of how the business is to operate.
  • Mentors– Ian as a young MD and CEO was targeted early by his now mentor to take on his current position. He quickly had to learn about all facets of the business. Ian stated that he is not a geologist, but he can talk with the best of them from his having to understand the core business of exploration. He did this by finding mentors whose knowledge and experience he could draw upon.

Anthony Yap, Managing Director of Good Price Pharmacy gave an inspiring presentation. From the time he left university aged 21 Anthony had one ambition, to own his own pharmacy. He started as a manager at a pharmacy working tirelessly to learn about how they ran their business. In one year he had purchased his first pharmacy. That quickly began to grow in numbers where the second pharmacy he bought for $270k he sold one year later for $1.2m. Anthony also told of his fight against a major competitor who setup a discount pharmacy only doors down from his own. At a meeting with his competitor, they told him they had the budget to drive him out of business. Anthony stood his ground to now run 44 stores. Some of the key points I took away from Anthony’s presentation

  • Systems and Procedures– This was the first thing Anthony learnt about while managing a pharmacy. He wanted to know every process that was involved in running a pharmacy so he could implement them into his own. This is how he could buy a business for $270k and sell it one year later for $1.2m.
  • Passion and Persistence– You need to be hungry for business to drive you to work at it. Anthony was asked “How do you know if you have a passion for business?” his response was “If you have to ask yourself that question then you don’t have the passion”. Persistence is what got him his first store and allowed him to endure the ordeals of his competitors.
  • Directors and Shareholders Agreements– As one of 4 partners initially, Anthony went through the ordeal of buying out his partners where there was no partnership agreement in place setting out the agreed buy out/exit procedure for a partner. This cost both time and money, taking a toll on the business.

 

Brisbane Lord Mayors Economic Development Business Forum- Building an Online Presence

I am in the process of having a provisional patent done for a phone app idea I have. So this was a great event to attend to find out more about why business should have an online presence in our global online economy and what is being done in Brisbane to promote our IT innovations.

George Fidler, General Manager of Kixeye, gave his experience as a start up IT business. What I took away from George is that you have to persist. You learn more from your mistakes then you do from your successes. And as a result your mistakes make your business stronger. I agree, if you are going to make mistakes, make them early in your business life and make plenty of them. If you don’t make mistakes, then you aren’t pushing your limits! George also made reference to the book “Lean Start Up”. In talking to George after the presentation, he again gave me the advice to read this book (or listen as an audio!) for my future phone app project. He also gave me the advice to find a programmer to work on my project referencing the IT incubator, River City Labs, as a starting point.

Bob Dunne, Principal at Strateneering, gave his story of how he started capitalrater.com. He initially started with a local focus of Sydney and Brisbane but quickly expanded it to be a global provider. He doesn’t understand why anyone in business isn’t online and looking beyond their local geographical boundary. Business is made easier with the internet! I asked Bob on his advice on putting together a start up IT team and who he would bring on. He said he would bring in people he already knew, who complimented his own skills and had the ability to go into a start up business.

Kieran O’Hea, Brisbane’s Chief Digital Officer gave an interesting, but rushed, presentation on both the digital economy and Brisbane’s role in this. For Example, over 66% of people in Australia have a smart phone and use its additional features. 41% of phone users over 50 have a smart phone. Hopefully the organisers will send out his slide presentation!

At this event I met some other interesting people

Jim is the Development Executive at Scan Conversion Services. He assists organisations to convert their paper documents to an electronic document on mass. Handy if you have documents that need to be stored in electronic format.

Jeanette is a Business Development Manager from Commonwealth Bank. It was good to meet Jeanette as I want to find out more about her role on the Not For Profit Working Committee of the Institute of Chartered Accountants Australia (ICAA). Foley Business Management is a service provider to the NFP or Social Enterprise sector.

Clinton is a Patent and Trade Marks Attorney for Cullens. Clinton was incredibly helpful discussing the benefits of having a patent for IT ideas you are wanting to take to concept and then taking it to a full patent. Clinton is someone I will likely be wanting to talk to when I develop a working concept of my phone app.

To find out what other events I will be attending in the future go to my Where I Will Be page.

~ Damien Foley