Renowned Australian business leader Mr Phil Ruthven AM is launching the Ruthven Institute (RI), a comprehensive online portal delivering diverse and detailed economic data and analysis targeted at boosting the performance and profitability of Australian businesses.
Subscribers to RI will have access to Mr Ruthven’s informative eBook ‘Business Success’, explaining the successful steps to achieving sustained world’s best practice (WBP) profitability; and comprehensive 25-page summaries of the 12 key external business environments impacting individual businesses, such as the business, industry, market, finance, labour, services, economic, community, national resources, world and government environments.
In addition, RI will launch online with more than 1000 succinct one-page information snapshots - in the form of a chart & short commentary - of external variables, and regular newsletters outlining topical issues impacting the economy and businesses. RI subscribers will also receive opportunities to attend outsourced workshops with the Institute’s strategic partners.
Explaining the rationale behind the RI’s formation, founder Mr Ruthven said: “Despite fewer recessions, an explosion in the number of business conferences and more than a million new Commerce and MBA graduates, over the past four decades the profitability of Australian businesses hasn’t improved. It is still very low.”
RI research shows that while Australia’s 2000 largest companies account for nearly half of the nation’s total revenue, their average profitability as a return on shareholder funds (ROSF) after tax was below seven per cent for the five years to 2016 – a wholly unsatisfactory outcome according to Mr Ruthven. The nation’s top 100 performers, however, with revenue of more than $90 billion, had an average ROSF of 63% over five years. Of our biggest 2000 companies, just 260 match WBP profitability with a ROSF of more than 20%.
“It’s concerning that a fifth of our largest 2000 companies, accounting for almost half the nation’s revenue, run at a loss over a given five-year period. It also explains why that proportion paid no taxes. Just one in 12 of our largest companies achieves WBP profitability of more than four times the normal 10-year Bond Rate (around 5.0-5.5%) – the equivalent of a more than 20% return on equity after tax in a five-year timeframe. Through the RI, we can now reveal why this is, and how those one in 12 businesses achieve it.”
“And the good news for businesses is that achieving WBP profitability isn’t determined by your industry, your size, or your ownership structure. And it doesn’t come at the expense of employee wages. What is important is knowing the keys to success, and knowing about the bigger global picture and the way Australian business fortunes are intertwined with our Asian neighbours,” he added.
Mr Ruthven noted that, whilst Australia’s more than 2.1 million businesses employ 13 million people and generate over $5 trillion in revenue, our attrition rate for new businesses is high, with almost as many organisations exiting the economy each year as entering over the past five years.
“Most new businesses are lucky to still be operating after three years,” noted Mr Ruthven, “however, once they reach a revenue of level of $2 million, their prospects improve enormously. The objective of RI is to continually research, report on and update the factors contributing to WBP profitability and success; and to help local businesses, both big and small, to achieve these goals for themselves.”
RI is forming strategic alliances with peak-body business and professional associations and institutes, university schools of business and economics and MBA providers to constantly advance, and update, the insights it provides to benefit members’ businesses.
“Our goal is to equip business owners, Boards, CEOs, C-suite executives, business students and senior managers with the guidelines, information and data they need to achieve the goal of WBP profitability,” Mr Ruthven added.
About Phil Ruthven
With almost half a century in the business, Phil Ruthven has spent the majority of his career in the fields of strategic consulting, long-range forecasting and analysis of business information and environments. A renowned public speaker and media commentator, Ruthven founded IBISWorld – the world’s largest international online market & industry database – in 1971. A Member of the Order of Australia for his significant service to business, commerce and the community, Ruthven is an Adjunct Professor at the University of Technology (Sydney), and a member of the Australian National University College of Business and Economics Advisory Board.