How Small and Medium-Sized Business Can Help Lift the Economic Performance of New Zealand

NZ has been languishing near the bottom of the OECD tables for average GDP per capita since the mid-late 70’s. According to the boffins, the initial drop was a direct result of the wool price collapse in 1967, which was then exacerbated by a number of factors including the loss of free entry to British markets for dairy products in the 70’s. Our reliance on food and agriculture exports hit hard then, and continued to have impact as our GDP growth rates have failed to stack up in comparison to other OECD countries.

Fast forward to 2009 and food and agriculture continue to make up the bulk of our exports. Compare with countries with a similar agricultural basis, such as Denmark. They have leveraged this agricultural grounding to grow high value industries through innovation, thus catapulting ahead of us. It is our slow growth and reluctance to pursue value-added products that is holding us back from improved economic performance and ultimately improving our wealth and wellbeing.

Creating a significant shift in GDP growth rates is a complex issue, however, a focused effort in an area of broad impact, can go a long way.

New Zealand’s small and medium-sized enterprises (SMEs) currently represent 97% of all enterprises, 40% of the economy’s total output on a value-added basis and 31% of all employees. By enabling improved business performance in the largest segment of the NZ economy – SMEs – the outcome would have a significant impact on our economy’s performance.

Business growth centre, The Icehouse, is committed to creating an environment that inspires, supports and celebrates business and economic growth. We are on a mission to lift the international competitiveness of the NZ SME sector leading to a material impact on the economic performance of New Zealand over the long term.

We’ve identified that New Zealand needs 3,000 new internationally capable and successful businesses by 2020 to move back into the top half of the OECD for GDP per capita and we are committed to delivering 1,000 of these Businesses of International Quality (BIQs) – a business which experiences international growth and/or successfully defends its local market position in the face of fierce international competition.

But how do we this?

Business growth is significantly limited by the capability of those running the business, and in the vast majority of NZ SMEs, that person is also the business owner. We are a nation of guys and gals with expertise in doing the business, not running the business. To grow our SMEs, there is a real need to grow the managerial capability of our business owners. To help them step out of the day to day and work on their business, rather than in the business.

Research conducted by BNZ, in conjunction with The Icehouse, last year uncovered what is keeping business owners up at night, where they think they need assistance, and the types of capability building programmes that are most appealing.

The results confirm that SME owners know they need help. 8 in 10 business owners want access to experts or consultants in specific areas of business, but only 4 in 10 have undertaken business education. The limiting factors were clear; time away from the business and value for money.

With 13 years of experience in delivering programmes that improve the capability and drive the ambition of NZ business owners, The Icehouse, with the support of BNZ, has developed a new offering of short, sharp, topic-specific workshops to help Kiwi SMEs grow and ultimately get New Zealand GDP back into the top half of the OECD.

The workshops are available across 10 regions in New Zealand and have been developed to be short, accessible and flexible so business owners can raise their capability while still running their business. They cater specifically for the operational needs of SMEs and rather than pushing content, focus on applying the knowledge shared in the workshops directly to the business through action oriented planning.

The topics are wide ranging covering finance, HR, sales and marketing, governance, and leadership to name a few. All of these chosen as a result of what business owners said they find challenging in combination with needs identified through another new initiative developed by The Icehouse, the BIQ™ Barometer.

The BIQ™ Barometer is an online self-completion tool for business owners to gauge their business performance. Sort of like an in depth health check. After spending about an hour reflecting on the business, owners are armed with a personalised report detailing how their business performs in six key areas as well as highlighting areas for further development to chart their journey to become a Business of International Quality.

Ultimately, the goal of improving our OECD GDP ranking cannot be achieved by any single entity, but through The Icehouse’s goal of enabling a third of the required businesses of international quality, we will build awareness of the importance of growing the capability of business owners to realise potential business growth.

As the global economy picks up again, and business confidence improves, we need to ensure that we don’t rest on our laurels or we’ll continue to slide, and come 2020 we’ll look back and say, ‘yes we grew, but everyone else grew faster.’ New Zealand needs an infection of ambition and a good dose of improved awareness and capability to produce a more concerted fusing of our agricultural grounding and innovative essence. With better quality businesses, growing faster, adding more value, look out OECD rankings.