Foundation Services
12. The service range entitled "foundation services" will represent 17% ($28 million, GST inclusive where applicable) of the combined agencies' funding in 2003/2004. This consists of $20 million (GST inclusive) for information and training services and $8 million (GST not applicable) for grants for services. Foundation services aim to build basic business capability among entrepreneurs and businesses, particularly small firms, start-ups and new exporters, through the provision of generic business information, advice and training, and limited financial assistance.
Policy Rationale
13. Running an effective business requires marshalling knowledge about day-to-day management of the many different functions of a firm, as well as longer-term strategic issues. The practical skills and knowledge required to run a business are acquired through a host of mechanisms - formal training, on-the-job learning, mentoring, networks with other business owners, the expertise of employees, and external advice. If entrepreneurs and managers have difficulties in accessing or developing the necessary skills, this could lower economic efficiency and national productivity.
14. There are a number of reasons why businesses, particularly small and young firms, may under-invest in areas that could grow their business.
15. The cost of searching for information, and the limited capacity of firms to digest that information, means that entrepreneurs and small business managers often do not devote resources to seek out and acquire up-to-date information that might be beneficial to the business. These barriers could be overcome if access to information was made simpler and business operators were provided with better opportunities to acquire the skills and knowledge to improve their management capability.
16. Complying with business regulations imposes costs upon business. This includes areas such as taxation, employment relations, occupational safety and health, ACC, resource management, the collection of statistics and so forth. While the regulations in themselves may be sound, better information on business regulations (and collection methods) and on how to deal with them will reduce the compliance costs on business and improve the application and effectiveness of regulation.
17. Small businesses and entrepreneurs often lack the financial ability to employ all the expertise they need to get new concepts and projects up and running. They also tend to undervalue the potential contribution of expert advice on key elements of their business ideas. Without such advice, they are often unable to satisfy the requirements of investors, banks and other financiers for information, including business planning, approaches to preserving the value of intellectual property, and how they plan to market their products and services. As a result, small businesses often do not realise their full potential.
Contribution to Economic Development
18. NZTE's foundation services range will support entrepreneur and business capability through the following enablers:
- Access to information and business opportunities. Having the right information at the right time is a necessary part of running a successful business. The foundation services range will make it easier and simpler for all businesses to search for, access and use relevant information to improve their business performance.
- Access to skills and management capability. Skills and capable management are crucial to a firm's ability to operate successfully and grow. The foundation services range will assist firms to improve general business skills and develop management capability.
- Supporting innovation and enhancing access to new technologies. The foundation services range will provide assistance to encourage the development of better business systems and processes, as well as the development and protection of new innovations and technologies.
- Facilitating access to finance. Appropriate access to finance is recognised as a key factor in the creation, development and growth of businesses. The foundation services range will provide businesses and entrepreneurs with information and training to improve their ability to access appropriate finance.
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