3.Findings: Programme outputs and participants
This chapter describes the number of participants served by the MTFS programme and the key demographic characteristics of these businesses. It concludes with an assessment of the extent to which the programme eligibility criteria were met.
3.1 Programme participants
3.1.1 Number of participating businesses April 2005 to June 2006
From commencement of the programme pilot in April 2005 to June 30, 2006, a total of 84 businesses have been enrolled in this programme. This exceeds the target of 80 enrolments in the programme. As at 10 July 2006, the programme status of the 84 businesses is as follows:
- 55 clients have had a BDP prepared and sign-off by the Account Manager. Of this group:
- 28 have been assigned Mentors to assist them with the implementation of the BDP recommendations; and
- 27 are waiting to be assigned Mentors
- 15 clients are in the process of developing their BDPs
- 14 clients (17% of total 84) have withdrawn from the programme. The withdrawals have been authorised by Account Managers where clients have been non-responsive despite efforts by Assessor and Account Manager to keep in communication or where clients have indicated that they wish to suspend participation in the programme. In most of these cases, the clients had other priorities or had significant changes in their business circumstances.
3.1.2 Delay in mentoring phase
The Account Managers estimated that at least 50% of clients (40) will still be in the mentoring phase in June with most completing July or August. Much of this is subject to client availability and nature of mentoring required.
According to the Account Managers the original timing of this programme (i.e. to serve 80 clients by end of June 2006) did not adequately take into account the dynamics of getting the programme up and running. The initial MTFS continuum between assessment and mentoring was expected to be timely and reasonably fluid. However, this has not been the case. Time has been taken in training and managing Assessors and Mentors into the programme (including training in the use of the SmartFund client information database) and managing resources between Mentors.
This initial delay led to subsequent delays in the remaining phases of the programme. In particular this meant for many clients the transition between assessment and mentoring occurred during their peak tourist season (i.e. November through to March 2006). Account Managers and Assessors have found it difficult to engage with clients to finalise their BDPs and assign mentors during this period when the clients' main focus was in their respective operations. Interviews with clients confirmed this. Only 15% of the interviewed clients thought there has been a long delay between assessment and mentoring, however, in most cases it appeared that the client bore some responsibility for not following up themselves.
The Account Managers also reported that in reviewing the BDPs with the clients, they found in some instances clients have made a shift in their priority objectives and this has been largely due to changes in circumstances and priorities (e.g. significant life changes such as marriage break-up of owner and business partner, death of spouse and business partner). Due to such delays, the timeframes in these early BDPs have been reviewed7.
3.1.3 Next phase/future clients
The Account Managers reported that many clients have encouraged their peers to join the programme and as a result they have a growing list of businesses wanting to join the programme. As of May 2006, 110 businesses have expressed interest, and it is expected that about 40-50 would be ready to undertake the programme.
3.2 Characteristics of participant firms
The following analysis of the demographic profile of participating businesses is based on client data provided by TPK as at 29 March 2006 when there were a total of 81 participating businesses.
3.2.1 Age of business
Figure 2
Figure 2 above shows the age distribution of businesses when they started the MTFS programme. Three businesses (4% of total) were under 1 year old, but all met the eligibility criteria of being at least 6 months old when they joined the MTFS. Just over half (54%) were between one and five years old and almost a third (32%) were more than five years old. Only 12% were older than 10 years.
3.2.2 Regional distribution
Figure 3
Figure 3 above shows the regional distribution of MTFS businesses. Just over a quarter are from the Rotorua region (which along with Auckland was the focus of the programme pilot), the rest are spread throughout the North Island and only 11% are in the South Island. The main reason for the relatively low number of participants from the South Island is that they were the last group of clients that the programme was rolled out to. It is likely that the number of participants from the South Island will increase in the next programme intake as they currently make up 20% of the businesses that have expressed interest in participating in the next round.
3.2.3 Employee numbers
Figure 4
Figure 5
Figures 4 and 5 above show the size of the participating businesses in terms of part-time and full-time employee numbers. Over three quarters the businesses have fewer than 5 part or full-time employees. Over 80% of the businesses who do not have full-time employees do have part-time employees. Only 7% of the businesses do not have any employees but are operated solely by the owner.
3.2.4 Turnover
Figure 6
Figure 6 above shows the size of MTFS businesses in terms of their 2004 turnover. The majority (61%) have turnover of under $100,000. Almost a quarter reported turnover of less than $30,000. Figure 7 indicates that a third of these businesses are not the primary income sources for their owners.
Figure 7
3.2.5 Duration of involvement in the programme
Figure 8
Figure 8 shows that as at June 2006, the longest a business has been in the MTFS programme is 12 months, i.e. the earliest they started the programme was June 2005. About two-thirds of the businesses started the MTFS programme between September and December 2005. The average length of time participants have been in the programme was 7 months.
3.2.6 Type of tourism service/product
Figure 9
Figure 9 above shows the types of tourism businesses that participate in the MTFS programme. The businesses offer a wide range services. Almost 1 in 5 are in the accommodation business and 28% are in adventure (water and land-based) tourism activities. This distribution of types of tourism business participating in the MTFS appears broadly representative of the total population of Maori tourism businesses (based on the 357 businesses in NZMTC's database). The only significant differences are that the MTFS participant group appear to have slightly higher number of accommodation (19% of MTFS compared with 15% of the total 357) and performing arts businesses (9% of MTFS compared to 5% of the total 357).
3.2.7 Type of business entity
In terms of type of business structure, about half (53%) of the MTFS businesses are limited liability companies, 13% are charitable trusts, 10% are partnerships, 10% are sole traders and the others are classified as incorporated societies (4%).
3.2.8 Incorporation of Maori aspects in products/services
Almost all (97%) of the businesses in MTFS indicated they included Maori aspects in their products or services, and the remaining two businesses considered themselves to have the potential to include Maori aspects in their business. As incorporation of Maori aspects is a necessary eligibility criterion, it is important that the potential of these businesses to do so is demonstrated as part of their Business Development Plan.
3.2.9 Were eligibility criteria met?
3.2.9.1 Necessary criteria
According to both Account Managers, the four necessary criteria were easy to apply. They thought the criteria regarding length of time in business needs to be tightened. All of the clients in the MTFS programme met the criteria of having been in business for a minimum of six months. The Account Managers considered a six month minimum as too short and should be extend to a minimum requirement of 12 months in business.
One of the Account Managers emphasised that the most important criteria is the willingness of clients to participate fully in the programme. However, a few of the Assessors who were interviewed were concerned that some of the clients they work with do not appear to have the necessary commitment to participate fully in the programme, e.g.
The programme has potential to meet the needs of Maori tourism businesses. However it needs the full cooperation and participation of operators for MTFS to work effectively. I would say that around 50% of my clients have not taken full advantage of what MTFS offers and that this is not the fault of MTFS and more to do with operator motivation, seasonality, time and resources.
The discretionary criteria of "business operator is willing to invest in mentoring, advice and learning (time and/or money)" seems an important part of the necessary criteria "willingness to participate fully in the programme". Since these two criteria are related and hard to separate, having the one as discretionary and the other as necessary criteria may contribute to confusion and the resulting situation of accepting businesses into the programme that do not have the necessary commitment to benefit from the programme.
3.2.9.2 Discretionary criteria
A higher percentage of participants did not meet some of the discretionary programme criteria:
- 24% had turnover in 2004 of less than $30,000. The Account Managers pointed out that some discretion is important when applying this criterion as the previous year's turnover may not be a good indication of this year's turnover for the business;
- 33% indicated the business was not the operator's primary source of income;
- The Account Managers reported that contrary to expectation, many clients were not in the growth phase of their business, but were still in start-up phase, needing to secure financial stability to be able to progress goals.8
Further discussions with TPK and the Ministry of Tourism confirmed that growth potential is an important eligibility criteria and clarification with an objective definition would enable better application of this criteria. It is therefore proposed that ‘growth potential' be defined as having a willingness and plan to develop the business to achieve annual growth exceeding a target rate. This target should be defined by TPK with assistance from the Ministry of Tourism and Ministry of Economic Development.
3.2.9.3 Client interviews
Among the 21 businesses which were interviewed for this evaluation, six did not appear to be suitable for the programme in terms of a combination of factors such as being part-time operations, having low growth capability (e.g. resources, skills, energy), lack of growth potential, and lack of commitment to the programme.
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