It’s a great time to be a small business. The local and global economy have stabilised after the financial crisis, owning a business can be a fantastic lifestyle choice, it can be a way to shore up your investment future, and New Zealand is ranked third in the world for ease of doing business. Over 97% of NZ businesses have fewer than 20 employees, contributing almost 30% of our GDP, meaning there is a huge network of peers to collaborate with, learn from, and inspire each other.
With the recent release of the government’s 2014 Small Business Report, the Xero team are really proud to see that we are championing many of the core themes outlined in the paper. For example, spending time growing your business and not wasting hours managing your financials and navigating red tape.
I’m a massive NZ Inc fan and a massive champion of growth. If you’re not going down the growth path, whether from a micro business level or as a country, the other road looks awfully painful. With our small businesses being such an important part of the local economy, what concerns me are the challenges that are clearly still being faced which impede the ability for NZ businesses to compete and grow.
- The New Zealand small business market is not growing, which is troubling.
- The lower rate of innovation amongst our SMBs compared to offshore companies.
- We’re in a global marketplace these days, competing hard for products and services as well as talent and investment dollars. We can’t afford to be on the back foot.
- The internet has gone way beyond just sharing and finding information (our predominant uses). Leveraging the cloud for collaboration is key. Despite New Zealand being a village, we’re less collaborative than our SMB peers globally.
Why is growth important? Because the statistics show it’s our smallest businesses that are significantly more vulnerable to ‘death’. There are a number of ways to reduce the likelihood of business death;
How do you ensure that ‘death’ doesn’t happen in small business?
- We MUST free up our SMBs to focus on growing and adding value into their businesses. This means a complete commitment to removing red tape which burdens a business owners operation. Reducing unproductive time means the lifestyle aspects of the business remain possible. I am highly supportive of the gains our government is making in this space, it’s just that the proposed ‘ten year’ plan is too long!
- To compete locally and globally, we have to increase small businesses access to capital. The newly created R&D tax loss initiative from this year’s budget is one policy that will help small innovative companies.
- To export small businesses need confidence, talent, and networks. The export market is perhaps the most challenging area of them all, and is the biggest vulnerability for us as a nation when you consider global technology and consumer trends.
A number of activities spring to mind as immediate solutions to building growth opportunities;
It is time for NZ businesses to embrace cloud wholeheartedly. With access to capital, talent, and networks (which are key to survival), cloud services are the key to innovation and growth. That means:
Embrace cloud tools
I worry that New Zealanders still resist cloud services (and let’s face it, change can be daunting), while our global peers are storming ahead and embracing technology that will help drive their businesses forward. If we hold back it will be increasingly difficult for us to lift our game, be it raising productivity locally, or competing globally. There is no room for second mover advantage here.
NZ business should be open to embracing cloud based tools for all aspects of their operations;
- Collaboration: cloud tools work as seamlessly globally as they do locally
- Training and development — it’s so easy and cost effective in the cloud
- Social media networks — which make personalised local and global marketing so much easier as well as being great for local and global business networks
- Xero — which gives you and your financial partners daily visibility of your financial position no matter where you are.
Broadband for all
By the end of 2014 the majority of SMBs will have access to significantly faster broadband services through fibre. I hear the cynics voices saying ‘Why would we need this?’. My challenge back would say ‘Can we afford to leave ourselves vulnerable as the rest of the world charges on embracing technology?’
What’s interesting is the growth in SMBs in regional NZ, particularly the lower South Island. I may be putting two and two together here and getting six, but it doesn’t surprise me that the top five towns in Chorus’s Gigatown competition (competing for super fast broadband) are all from the South Island. Having spent time in these Gigatown aspiring communities, the leaders there definitely understanding the need for infrastructure, cloud and capital.
Learn the tools
Skype, Google Hangouts, GotoMeeting, Google Docs, Trello, Smartsheet are the tools of the internet. Tools that allow you to collaborate remotely and be part of the global conversation and global supply chain. If your organisation isn’t using Google Hangouts, try it out. Bookeepers and business coaches have you seen Google Helpouts? You can earn $50 an hour answering questions from your own home.
Eye on exporting
Set a clear export goal. 12 months from now could you earn 20% of your annual revenue through exporting? Looking further ahead, what is your 3 year goal??
We seem to have forgotten we are a small island nation. New Zealand’s economy isn’t (and shouldn’t only be) just about manufacturers, tourism operators, or protein. Small countries need to export and play a part in the massive global supply chain. The internet makes the exportation of service product offerings accessible. NZ labour rates are less than 60% of employee costs in Australia- we should be taking advantage of this. Using the cloud we have seen web designers, engineers and even accountants exporting to Australia, UK, USA, and beyond.
Change is good
While innovation, capital, talent and networks are often big challenges for SMBs, I think there’s a much bigger one quietly lurking in the shadows. And that’s change.
I’ve been thinking recently that maybe here at Xero we need to put more focus on how we support businesses and people through the ups and downs that change can bring. Talking to my team we’ve discussed how to smash together our marketing and sales approach with the great change management tools out there, because ultimately this is what it’s about. Do you remember back in the ‘old days’ when we walked to the mailbox to post letters, waited in really long lines in government departments, stood by the fax machine to send a 20 page contract and then followed up with a phone call immediately after to make sure it got there? We’ve quickly forgotten all the pain of those changes we went through (and yes at the time we did find all this new ’technology’ painful!). Will it be the same with cloud, in five years time will we wonder how we ever lived without it?!