However, business owners need to be aware that the nation’s productivity and earnings remain relatively low in comparison to other OECD nations.
The OECD suggested policy changes to support innovation, business and competition would help.
New Zealand has a high number of small business and in 2016, the Ministry of Innovation, Business and Employment (MBIE) reported SMEs represented 97 percent of all businesses.
MBIE stated that collectively, small businesses employ 30 per cent of New Zealand’s working population and produce around 27 per cent of New Zealand’s gross domestic product.
“Anecdotally, it would seem less likely that small businesses with one to 19 employees will have resources to invest in innovation,” says Kirsten Hawke, BUSINESS buddy CEO.
“Also, smaller businesses are unlikely to achieve economies of scale that a big business can generate but there are definitely actions smaller businesses can take to improve productivity.”
SMEs make a significant contribution to the global economy and BUSINESS buddy felt improving productivity is so important that we have the following suggestions for entrepreneurs.
1. Improve productivity with better workplace systems
It is important to set targets and goals for businesses, but it is even more important to have systems that support achieving those goals.
Business must capitalise on digital systems that create efficiencies in task planning, information sharing and assessment of productivity.
Managing a team of employees and contractors solely with notes in a diary is slow, non-transparent and risky.
If the diary holder is off work sick, out on a job or resigns, how do other staff members and the business owner access the paper-based system to understand what that person knows?
Using digital systems improves the business owner’s ability to monitor time spent on tasks, profitability of jobs and keep track of work-in-progress.
The OECD says small businesses are relatively slow to engage in digital technology, and it believes a significant digital disruptor is needed to get SMEs using online business tools.
2. Improve productivity with employee training
Skills shortages are a global issue and small businesses struggle to be much more than a one-man-band because employing people is a real challenge.
Small businesses may not want to invest in training staff but the number of people enrolling in in diploma and certificate study continues to decrease, which affects SMEs. People studying higher level education, remains steady. See Education Counts, Participation Rates in Tertiary Education.
If New Zealand businesses are to become more productive, they need to invest in training of employees to ensure they are better equipped to carry out their jobs.
Upskilled staff have lower error rates, require less supervision and are more likely to stay with their employer because they can see opportunities for professional development.
With higher skill levels, staff can take greater ownership of tasks, freeing business owners for other tasks, such as business development and sales generation.
3. Improve productivity with better management skills
Many small business owners in New Zealand are just winging it. They have little understanding of their business’s financial reports, managing HR issues, planning or digital systems.
We are a nation of jacks-of-all-trades, masters-of-none and this means we become distracted doing things we should pass onto someone else, leaving business owners to become more specialised.
There are multiple free business courses, relatively cheap business courses and business advisors who can guide SMEs towards better management practices.
Contact your BUSINESS buddy to learn more about our management support and training for SMEs.
4. Improve productivity with better compliance systems
Government compliance is inevitable and business owners need to get on with finding effective and efficient tools to help them manage those requirements.
There are multiple apps and cloud-based systems to help sectors with high compliance requirements, such as early childhood education centres and aged care homes. However, many of these organisations persist with paper-based systems that are unreliable, inefficient and take up mountains of filing cabinet space.
Business owners and staff members don’t have to be techie people to use contemporary information technology. If you can send an email or follow Facebook, you can use the latest compliance system software systems.
5. Improve access to business finance
Many SMEs start out with a great idea and a lot of enthusiasm but very little money. It is difficult for start-ups to access business finance unless they have a rocket ship concept that could secure government funding from Callaghan Innovation.
There are finance companies that specialise in business loans to SMEs as well as crowd funding options. See more about applying for business finance in our blog, When you need money to expand.
The catch with most of these sources of business finance is that – the lender needs to see the SME has good operational systems, compliance reporting and management skills.
All of the above recommendation to improve productivity are even more important if you need money to make your entrepreneurial idea fly. And, most lenders want evidence that you are prepared to financially back your own idea, that is mortgage your home to support your business.
BUSINESS buddy has always advocated for improved productivity and supported New Zealand SMEs to learn, aspire and grow.
Contact us now to develop your business on a global scale that would impress the OECD.