Executive Summary
Minister for Small Business
Parliament Buildings
Wellington
This is the first annual report of the Small Business Advisory Group.
We share your desire to create an environment in which New Zealand SMEs (the 97% of our businesses that employ 19 or fewer FTEs) can grow and prosper.
In compiling this report we have drawn on our own experience as small business owners and advisors and on information from the business people at the 24 Small Business Day events that you hosted from February to May 2004 (all of which were attended by members of our Group). We have used also the extensive business networks to which we have access and have drawn on material from overseas countries - most notably the United Kingdom.
The scope of this report - things that need to be done to enhance small business growth - was potentially huge. We decided to confine ourselves to four areas where we think the government interventions we describe in this report could make a substantive difference for SMEs. Those areas are:
- provision of advice, mentoring and practical tools
- access to finance and business support
- enhancing the environment for small business
- improvements in the regulatory environment.
Our specific recommendations for government action are as follows:
- Enhance funding to Business In The Community and/or similar providers of mentoring services to upskill their mentors and mentor co-ordinators in order to provide a superior service to clients and to market their services.
- Provide funding to SMEs with growth potential to engage an Advisory Board to assist them in the governance of their business. The Advisory Board would typically comprise 2-4 people capable of bringing to the business an impartial eye and expertise that the founder/owner does not possess.
- Support the use of existing and new local business awards programmes as a way of providing benchmarking information to firms. The expectation is that a common template would be devised that could be used by local business organisations and trade associations to establish and judge annual business awards. The template should be designed in such a way as to permit key comparisons with companies in already established benchmarking systems. The information from these templates could be fed into a central database that would provide benchmarking data for participating businesses across the country.
- Make readily and cheaply available to all SMEs a checklist of things they need to do, and the assistance that is available, when starting and growing a business. Any help-sheets that are produced must be in a consistent and user-friendly format and be kept up to date.
- Provide a complete checklist of issues to be considered when hiring an employee, together with supporting advice and guidance, quickly and cheaply for businesses.
- Undertake policy development work aimed at making access to funds easier for SMEs with growth potential (e.g. encouraging banks to lend on cashflow/character in addition to assets; loan guarantees).
- Urgently undertake a revision of rates of tax deduction for depreciation with the view of reducing taxation in the first three years of plant installation, and offsetting that with lower allowable tax deductions for depreciation in the following years.
- Develop a strategy for providing assistance to SMEs to implement sales and marketing strategies and plans.
- Ensure basic enterprise education is part of the core curriculum at Year 10 (4th form) and that provision is made for better support for enterprise education providers and for promoting careers in business to school pupils.
- Identify and remedy the barriers to government agencies purchasing from New Zealand suppliers to ensure that the government makes greater use of its procurement powers as a tool to encourage innovation and growth in New Zealand's SMEs.
- Make greater efforts to harmonise borders with Australia and make trading with our neighbour easier.
- Have each government department identify a small business advocate who would be responsible for presenting the SME perspective on any proposals being developed by the department that might impact SMEs.
- Charge a senior manager in each government department with scrutinising all the regulations designed by the department, to assess the need for them, their quality and the impact they will have on business (and SMEs).
- Measure and publish the cumulative effects of the costs of compliance with regulations passed in the previous six months.
- Ensure all business-related legislation and regulations come into effect on only one or two pre-determined days per annum. Common commencement dates, especially when coupled with advance notice and guidance, would offer a greater degree of certainty, and would help SMEs to plan and budget, and reduce their costs. In addition, businesses would know that they have to deal with regulatory changes only at fixed, predictable points in the year.
- Ensure proposals for changes to regulations that affect business are put out for a minimum three months' consultation period and do not come into force until three months after the government or Parliament agrees to the changes. This provides adequate time for SMEs to contribute to the design of the regulations and to prepare for their commencement. Listening to businesses has a number of specific benefits. It allows government to tap the widest source of information possible and thus improve the quality of decisions reached; it alerts policy makers to any concerns and issues not picked up through existing evidence; and it helps to monitor existing policy and to determine whether changes are needed.
- Have government agencies (particularly ACC, OSH and ERMA) run regular (e.g. every third Wednesday of the month) local information nights. There, businesses could learn what is required of them by way of compliance, hear what is new since last month, and have one-on-one advisory sessions (information from which is not passed on to the enforcement arm of the organisation).
- Simplify FBT on business vehicles by moving it from the FBT return to an adjustment on depreciation in the employer's income tax return and base this adjustment on the depreciated value of the vehicle.
- Rebalance the legal procedures for dismissing non-performing staff and provide qualifying periods for personal grievances for probationary staff. We believe that these are the single most important changes that could be made to the employment legislation and that they would lead directly and immediately to employment and business growth.
In addition, we have established a short list of key performance indicators that we will use to judge your performance as the Minister responsible for New Zealand's SMEs. Our evaluation of your performance against the KPIs will be contained in our second annual report.
Murray Cleverley
Cameron Moore
Peter Kitchen
Alison Quesnel
Denise L'Estrange-Corbet
Robyn Reid
Lachlan McKenzie
Stuart Wilson
Nigel McKinlay
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