Annex B: Industry Specialist Support
This annex outlines the principles and parameters for Industry Specialist Support to be delivered by Industry New Zealand.
The Current Situation
- There are a number of New Zealand firms with very significant growth potential that do not have the capability to manage or exploit that potential.
- Often these firms are managed by inexperienced entrepreneurs who would benefit from being taken in hand by those with more experience, to lift them to the next stage of development, while reducing the level of risk that normally accompanies rapid growth.
- Where management does have some experience, often they are so focused on day to day operations that they do not have the capacity or resources to focus on long term strategic issues or lift themselves to a new level of business performance.
- Often businesses will avoid seeking the necessary advice because they do not recognise the potential value of these skills to the firm, or are concerned about the impartiality of advice.
- Trade New Zealand is already providing advisory services in the area of export promotion, and have extended their activities to help firms develop export readiness. Technology New Zealand is also undertaking advisory services through its network of Techlink consultants focusing on advice on technology development.
- While most economic development agencies, small business enterprise centres, and BIZ providers deliver advisory and mentoring services, the provision varies from region to region, depending on the local willingness to support local economic development and their capability to access the range of central government funding available. There is also the national network of Business in the Community and Company Rebuilders mentors. Where advisory services do exist, they typically target very small struggling firms rather than firms with high growth potential i.e. mentoring rather than specialist advice. As part of the work on evaluating and enhancing BIZ, officials will be considering the national delivery of mentoring services, such as those provided by Business in the Community and Company Rebuilders.
- Accountants and other professionals may offer advisory services but specialist business advisors are more difficult to find, especially in areas outside the main centres.
Objective
The objective is to make specialist expertise and information available to more firms in order to improve their management performance and lift their potential. This service should aim to:
- reduce numbers of firms failing from problems brought on by rapid growth, that could be avoided through better management or early intervention.
- accelerate firms' responsiveness to business opportunities.
- lift firms' level of strategic thinking to cover their resource gaps, by way of partnerships, joint ventures and strategic alliances
- co-ordinate the delivery of government business assistance to high growth potential businesses.
Programme Principles
It is important that the service:
- does not crowd out private sector activity in this area and should accelerate and complement the development of private sector alternatives
- is based on partial funding so that there is both a partnership between central government and the private sector and commitment from participants
- is perceived as objective and neutral
- is client focused and accessible to target clients
- complements and co-ordinates with Tech NZ and Trade NZ advisory services
- is flexible to meet differing and evolving needs, and is accessible and relevant for the needs of Maori, Pacific Peoples and women
- is consistent with New Zealand's international trade policy obligations.
Programme Parameters
A. Industry Specialists
It is proposed that Industry New Zealand will employ and/or contract with private sector Industry Specialists. These are reputable experts that will identify firms with significant growth potential, appraise each firm's requirements to reach that potential, and facilitate the necessary expertise and resources to successfully grow the business. Support could also be offered on a group basis, for firms organised on a sectoral, regional or tribal/collective basis with a joint opportunity.
Rather than be a first round filter and appraise and advise hundreds of firms, these industry specialists would need to focus on businesses with significant growth opportunities provided through BIZ providers, Techlink consultants, Trade NZ, EDAs, etc.
The criteria for assistance should be based around unrealised growth potential. Size itself is not the issue, but many very small firms will not have the required growth potential, and the very largest firms will often have the capability to develop their own strategies.
Specialists will need to consider a variety of business processes, including:
- business strategies
- management and operational capability and systems
- marketing, product and technology potential
- financial needs including the impact of growth on required working capital.
Once the capability gaps and business risks and opportunities have been identified, strategies to fill those gaps and respond to the opportunities will be identified, such as bringing in additional management expertise, alliances and partnerships between firms, facilitating investment, etc. A key role of the Industry Specialists will be to co-ordinate the provision of relevant programmes from the full range of government industry development assistance to their clients, including Tech NZ, Trade NZ, BIZ etc.
The initial appraisal work will be carried out free of charge to the firm. Subsequent work will be referred to commercial providers. It may be necessary to provide some grant funding to assist with fees, as firms typically have difficulty in managing working capital when they are going through a rapid growth phase.
The availability of Industry New Zealand specialists will enable Trade New Zealand to focus more directly on export promotion activities, but there will need to be careful co-ordination of these advisory services to avoid overlap. Industry New Zealand specialists will complement the activities of Tech NZ consultants.
B. Specialist Support Grants Programme
In cases where clients of Industry Specialists do require additional financial support for the proposed growth strategies, Industry New Zealand will provide a specialist support grants programme to help businesses employ the specialist services they need to develop and implement strategies for business growth such as:
- Raising capital from venture capital funds or borrowing money
- Joint ventures or strategic alliances.
- Strategic and business planning
- Market research
- Establishing a sound management team
- Intellectual property protection.
The following eligibility criteria would apply:
- Businesses must be resident in New Zealand and registered for GST purposes
- Applicants should have attempted to get alternative funding
- Assistance could be offered on the basis of a maximum of 50% of costs of the qualifying projects to a maximum of $50,000. One grant per applicant per year would be available.
- Support could also be offered on a group basis, for businesses organised on a sectoral, regional, or tribal/collective basis with a joint opportunity.
Delivery
It is proposed that Industry New Zealand will employ and/or contract with private sector Industry Specialists.
Industry Specialists would be required to provide services throughout New Zealand. If practical this will be achieved by having sufficient Industry specialists (say 10) to provide services across the country, and some may be located in offices in the main centres of New Zealand. However, it is also likely to be necessary to provide services through remote mechanisms such as electronic servicing, toll free phone numbers and regular visits.
The specialist support grants programme will be both managed and administered by Industry New Zealand, and the Industry Specialists will be the filter and facilitate the application process.
Fiscal Implications
It is estimated that $3 million of Vote: Industry and Regional Development would be allocated for Industry Specialists in 2000/2001. It is estimated that $3 million would be allocated for the specialist support grant programme.
Back to Top