In late June 2019, the OECD released its global report with praise for New Zealand’s well-being approach to policy, and stated the nation has stable economic growth and healthy government finances.
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.
Improve productivity with better workplace
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
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.
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.
Improve productivity with better
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.
Improve productivity with better
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
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 buddy has always advocated for improved
productivity and supported New Zealand SMEs to learn, aspire and grow.
now to develop your business on a global scale that would impress the OECD.