9 things you can invest in to speed up small business growth

No small business has money to burn, so when it comes to funneling capital back into the operation it can be a daunting prospect. But you shouldn’t be afraid of investing in your venture (beyond just sweat and tears).

Sometimes you need to spend a little to gain a lot. Just make sure you’re spending money where it counts. Here are some suggestions of things you may want to invest in to help your small business grow.

1. An online booking platform

By investing in an online booking and payment solution for your small business, you can spend less time taking bookings and chasing payments, and instead use those spare hours to ensure your customers get the best service possible. It’s more convenient for them, saves you time and cuts down on cancellations and bad debts. That’s a triple win.

2. Improve your website

If you’ve built up your business mostly based on word of mouth, you may not think a polished, ultra-professional website is all that necessary. But in our technology-obsessed world, it’s important to keep your website modern and fresh.

If you don’t have the time, inclination or technical knowledge to do it yourself, a small investment in a professional team can take care of everything for you. Engage a web developer and designer with experience of what works for your type of business, and a content writer who can craft words that will not only entice people to connect with you, but help you be found organically online, too.

3. Outsource the things you don’t enjoy

In the early days, you do almost everything as a small business owner. But surely one of the perks of being your own boss is you get to decide what you do and what you delegate. So whether you outsource your social media management to a specialist or your admin to a virtual assistant, consider freeing up your time to grow the business by investing in some additional help.

4. Partner with a financial expert

Investing in a good accountant who understands your small business and your industry is worth its weight in gold. Smart accountants who know how to maximise deductions and manage cash flow are often a big part of a thriving business, and they can advise you on the best structure for your business too. Many accountants will also give you access to their accounting software, which will enable you to manage your business’s finances a lot easier.

5. Buy more efficient equipment

It doesn’t matter whether you run a pub, dry cleaning service or burger shop, getting popular means more customers – and inevitably longer wait times. But there are ways to stop customers from turning away disgruntled. Can you invest in better, faster equipment? Do you need to hire more casual staff at popular times? In most cases, a minor investment today can lead to bigger rewards tomorrow.

6. Market your small business

You’ve done everything possible to get your small business up and running – now you just need more customers. It might be time to invest in a more sophisticated marketing strategy, incorporating a mix of modern tactics such as Google Ads, SEO improvements, content marketing, social media targeting and email campaigns. If you operate locally, a good old letterbox drop can also keep your business front of mind.

7. Order more stock of what’s popular

Sounds simple enough – but investing in what’s popular can be a smart strategy. If you consistently run out of a product that customers adore, increase your order. An improved wholesale rate can boost your margin too. You may want to consider investing in a three-month trial of the larger wholesale order and see if it’s worth it.

8. Your own professional development

Running a busy small business with lots of customers to impress and staff to manage means people management should be one of your best skills. But investing in some HR training and business management seminars may be the next step to help you grow.

9. Protect yourself with business insurance

As your small business grows, you will likely take on new jobs, expand to new locations and deal with suppliers you never anticipated at the startup phase. Now’s the time to check your business insurance covers you if anything goes wrong. For example, if you’re expanding to a new premise be sure to check if your policy also covers earthquake damage.

So, you’ve done your due diligence and want to invest in your small business, but you don’t have the capital to do so? Prospa might be able to help. Get in touch to find out how.

The information on this website is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information or any loss or damage suffered by any person directly or indirectly through relying on this information.

How small business ownership can impact mental health – and what you can do about it

As a small business owner, you’ll no doubt have a good business plan in place. But, with new research revealing the stresses Kiwis face running their own business, it’s equally as important to have a stress plan in place, too.

When you start a small business, the lines between ‘work’ and ‘life’ don’t as much blur as become indistinguishable. You often throw yourself into the job because you want your new venture to be a success, and every hour not spent on the business is potentially money lost.

And that may seem like the right thing to do at the start but in the medium to long-term, it’s not a sustainable way to operate.

Research reveals small business reality

If you do have a work/life imbalance, you’re certainly not alone. A recent survey commissioned by Prospa and carried out by YouGov Galaxy found that nearly half (49%) of small business owners in New Zealand are working between six and seven days a week on their business, with one in five (20%) working seven days.

The vast majority (88%) of those surveyed also feel they miss out on quality time with their family because they’re distracted by their business, with four in five – 81% – saying they actively cut back on personal activities to work longer hours.

The most common things that small business owners are sacrificing outside of time with their family include personal time (58%), hobbies (57%), exercise (48%) and spending time with their friends (47%).

All of which can have a detrimental impact on both one’s physical and mental wellbeing.

Common small business stresses

Michael Burrows, a Wellington-based clinical psychologist at Anxiety Specialists, says that he commonly sees forms of stress in small business owners, whether it’s a conscious process that they’re fully aware of or more of an automatic process that occurs due to preconceived assumptions.

“For example, say you have an upcoming meeting with a big client or potential new supplier,” says Burrows.

“You could have conscious worries about whether it will go well and how you should answer their questions. Or you could just notice you’re nervous, which is likely caused by standing assumptions in your mind that meetings may not go well, for whatever reason. That’s when your brain will automatically signal for the release of adrenaline and all you will notice is feeling anxious and stressed.”

Common issues Burrows hears about from small business owners include time management, not taking time for health-promoting activities, not trusting their decision-making skills and difficulty in dealing with conflict.

Dealing with complaints and negative feedback, particularly in retail and hospitality, and failing to engage with business networking opportunities in professional services due to anxiety and a feeling of loneliness are also common complaints.

Know your triggers

Burrows says one of the most important things small business owners can do is to identify the warning signs of stress in themselves and take active steps to alleviate it.

“Those warning signs can include difficulty getting to sleep, low appetite or comfort eating, feeling low or fatigued and staying up late watching TV or playing games to avoid going to bed and having the next day roll in,” he says.

“Some of the more obvious signs are noticeable worry about the future or rumination on past mistakes, as well as significant feelings of anxiety and stress. Keeping a diary or using an app on your phone can be very helpful in tracking the above symptoms and noticing patterns.”

Once stress has been identified, there are a number of things Burrows recommends to alleviate those negative feelings, such as scheduling time to both worry and relax.

“If you can figure out what you’re stressed or worried about, schedule it into your routine by writing it down then putting it aside until a predetermined time you have allocated for worrying,” he explains.

“This sounds simple, but it’s a well researched and massively successful technique for limiting your amount of worry.”

From there, scheduling time to relax, whether that means exercising, socialising with close friends and loved ones, having a massage or meditating, is crucial to providing feedback to your brain that it is not in constant threat and it is in fact safe to relax.

“You will probably need to structure in some incentives to help with this,” adds Burrows. “Back yourself into a corner with socialising, arrange it ahead of time so you’re less likely to back out and establish a rule that you’re not allowed any TV or device time until you’ve done a relaxation exercise.”

Need help managing your wellbeing? Wellplace NZ is a website dedicated to helping New Zealand workplaces foster wellbeing, providing practical ideas, tools and resources.

The information on this website is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisors. Although every effort has been made to verify the accuracy of the information, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information or any loss or damage suffered by any person directly or indirectly through relying on this information.

4 things to consider when investing in your small business

It’s safe to say that small businesses are the lifeblood of New Zealand’s economy. They account for 97% of all companies, employ 29% of workers and generate an estimated 26% of the country’s gross domestic product.

For the people behind these enterprises, success usually means long hours, hard work and a commitment to the future of your businesses and staff.

And, for most small business owners, that relentless dedication is being rewarded.

New Zealand small business growth: A pulse check

The latest CPA Australia Asia-Pacific Small Business Survey shows a positive trend in the growth of small businesses. Nearly 60% of Kiwi small businesses have grown over the past year, with 63% expecting further growth over the next 12 months.

This comes despite headwinds at home and abroad. Faced with a cooling global economy and cost pressures, the New Zealand Institute of Economic Research recorded that local business confidence dipped slightly in recent months with business owners now showing signs of caution around further expansion.

However, this pessimism may be unwarranted. Export demand remains strong and key domestic indicators are ticking along nicely. BusinessNZ’s recent economic summary points to “solid economic growth”, and the spectre of a capital gains tax has also been laid to rest.

Business groups – including Retail NZ and BusinessNZ – have welcomed the news, which would have curtailed small businesses’ ability to invest in their growth.

For a small business owner with a growth mindset, it’s never been easier to access capital via a small business loan. But growing a business also demands a solid strategy on your people and products, day-to-day functionality and physical location.

These are four of the key considerations for any small business owner thinking about growth:

1. Your people

For the vast majority of businesses, having the right people in place is critical. And, if you don’t have a talented team that’s invested in the business, your growth plans may fall at the first hurdle.

Investment isn’t a one-way street, though, and investment in your employees should be a top priority for you, as a business owner who’s looking to grow. Without a focus on the career development of your key workers, wider expansion may not succeed.

According to the Human Resources Institute of NZ, the loss of a staff member who has been with a company for over a year can cost the business three times that worker’s salary.

Begin by setting goals for your employees and aim to consistently give them a clear purpose and direction, aligned with your growth plans.

Once this is in place, review your training, remuneration and working benefits (such as working from home and flexible hours) on a continued basis.

2. Your products and services

Having a strong product offering, that has potential to grow, evolve and expand, is as critical as having the right people in place. While services that are either embedded into or sold alongside goods also play an important role in trade.

Ensure you have the right technology and processes in place to help you identify cross-sell and new product opportunities.

3. Your functionality

How well are your business processes and functionality set up for growth? Are they well established, tried and tested, and scalable? Or do they need creating and refining?

Many New Zealand business owners are turning to technology to achieve business efficiencies.

In the past two years alone, 28% of businesses have introduced automation technology to help process data, increase productivity, reduce human error and improve the quality of products and services they offer, according to Stats NZ. What have you implemented?

4. Your location

For all businesses, expansion usually involves relocating to larger premises or moving into new territories.

Aside from the physical structure of any new building, it’s essential to consider its wider geographical location. Direct concerns include access to transport hubs, road networks and public transport.

Also, does the location profit from proximity to related businesses? By clustering in one area, similar businesses – and those along supply chains – can increase productivity and profitability through economies of scale.

The tech clusters in Wellington and Canterbury are examples of the positive impacts of similar businesses locating and working together.

Building a small business is as challenging as it is rewarding. But with careful planning and access to the right finance, small businesses in New Zealand can best ensure that any investment – financially and emotionally – will provide healthy returns over the long term.

The information on this website is provided for general information only and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from financial, legal and taxation advisers. Although every effort has been made to verify the accuracy of the information, Prospa, its officers, employees and agents disclaim all liability (except for any liability which by law cannot be excluded), for any error, inaccuracy, or omission from the information or any loss or damage suffered by any person directly or indirectly through relying on this information.

4 different types of finance to help your business grow

A new wave of lending is revolutionising the way small businesses in New Zealand access finance. Here are some of the game changers you need to know about.

Cash flow lending

Cash flow loans are usually short-term loans to help you maximise a business opportunity or manage a lumpy cash flow.

Alternative lenders like Prospa offer small business loans up to $100,000 with no security required, so you don’t have to put your family home on the line. Other positives include faster applications and less paperwork, cash-flow friendly repayments and transparency around the total amount to be repaid.

Keep in mind that not all lenders are created equal: some don’t offer a fixed upfront price, leaving owners susceptible to interest rate rises, while others may include hidden fees and charges. Look for a lender with specific expertise in small business, a reputable track record and great customer feedback.

Invoice finance

Invoice finance helps small businesses and tradies maintain cash flow when waiting for customers to pay. There are two types of invoice financing:

  • Invoice factoring: Where you sell your invoices to a third party at a reduced cost in exchange for instant payment.
  • Invoice finance: Where you use an invoice you have issued as security to get a loan.

Some invoice finance providers offer 100% of the invoice value in exchange for a small drawdown fee and an ongoing weekly interest rate. Invoice financing is a good tool to have in your kit if you often have to wait for payment after completing projects and purchasing materials. To use invoice finance you need to be the kind of business that issues invoices – like a professional services firm, rather than a cash-based business like a café.

Crowdfunding

Popular in the social and charitable space, crowdfunding has recently matured in the business arena, with platforms like Snowball Effect facilitating substantial amounts of private investment in New Zealand.

The most common crowdfunding model is based on rewards and incentives. A ‘backer’ pledges money to support your business or product idea in exchange for a discount on the new product or another reward. Rewards can be anything from a percentage of revenue to free products or the opportunity to help in the design process.

On the upside, business owners keep full ownership and clients are investors – providing direct access to market feedback. For investors, there is low risk for small amounts.

On the downside, some platforms are all or nothing, with no access to funds if the overall goal isn’t reached. Business owners need to commit time to promoting the campaign and dealing with backers, and still need to deliver on their promises if things don’t go to plan.

Crowdfunding is a form of equity funding – meaning you usually have to give up equity in the business, and is best suited to a start-up rather than an established business. It’s not a viable solution if you need help managing cash flow.

Venture capitalists and angel investors

If you need a large cash injection to start up or take your business to the next level, angel investors or venture capitalists could be good people to meet.

Angel investors

Angel investors are often business owners or high net worth individuals who see the potential in your business and want some involvement. They usually invest in industry sectors they’re familiar with and will want a targeted return on their investment. They may structure their involvement as a loan, or as equity, or a combination of both. Angel investors often come on board in the early stages of a business and contribute their experience and knowledge in addition to funding. It’s important to choose an investor who can add value and has the same vision for your business that you do.

In the technology sector, angel investment is having a big impact, particularly in Wellington.

Figures from this year show record levels of early-stage investment, with combined funding from New Zealand-based angel investors and domestic crowdfunding increasing by 35% to $112 million. Angel and crowdfunding investments into the tech sector have risen at an annual growth rate of 18% over the past four years.

Angel Association New Zealand is a great place to start if you’re looking for this type of investment in your small business.

Venture capitalists

Venture capitalists are investment companies or fund managers who provide cash in return for part-ownership of your business. They tend to look at larger businesses and differ from angel investors in that they typically want to invest larger amounts and have more comprehensive requirements.

VCs may not want to play an active role in the management of your business, instead taking a seat on your board. To find out more about venture capital opportunities in NZ, check out the NZVCA.

When opportunity knocks for small businesses, there’s a range of new choices for raising funds. Prospa can help you access the funds to manage cash flow or take advantage of opportunities when they arise. Talk to our team on 0800 005 797.

What fintech means for your business

New Zealand’s financial services sector is alive with unprecedented disruption that’s changing the business landscape. If that sounds a little dramatic (and exciting), it is.

Driven by a wave of tech finance startups offering endlessly smart solutions, mixed with rapidly emerging technologies such as AI and a hungry consumer appetite for intuitive online services, it’s more a case of what isn’t fintech.

Fintech has been around for a while, and you’re probably already using it – like Xero and PayPal taking the hassle out of paying, receiving and tracking money. Is anyone still using a spreadsheet?!

Fintech is so popular because it’s displacing old ways of doing things with easier – and more productive – solutions. According to Forbes, US$27.4 billion worldwide poured into fintech startups in 2017, up 18% from 2016.

So how are we going in New Zealand? NZ’s FinTech Survey 2017, published by PwC, noted that 15% of global annual turnover in financial services is devoted to fintech, but in New Zealand, that figure sits at just 6%.

Local businesses and consumers are being readied for the digital finance revolution, with the survey also finding that 91% of the financial services respondents expect that they will partner with a fintech in the next three to five years.

The local fintech industry is represented by FinTechNZ, with representatives from the tech and finance industries, entrepreneurs, venture capitalists, banks and government. Everyone is in  and for good reason.

It’s all pointing to the rapid adoption of a new norm, where people expect to be able to manage all their business  and their finances  online.

And it’s not just about managing money, but sourcing and securing funds. Fintech’s alternative banking options are making it easier for anyone with a good idea and a sound starting point to grow much faster than with the constraints of traditional lending.

How fintech is changing the landscape for small businesses

Here are some of the main ways fintech is helping Kiwi businesses grow.

1. Cloud accounting

Cloud-based software like Xero has quickly become the norm for SMEs, accountants and advisors.

Log on anytime and see exactly what’s going on in your business. And when you need a cash injection for a growth spurt, it’s easier to show lenders or investors what’s happening within your accounts.

2. Global payments

It used to be a pain to accept payments from someone in another country, but thanks to services like PayPal small businesses can sell worldwide with fewer hassles and a much bigger market.

3. Easier and faster access to money

It’s not uncommon for business owners here in New Zealand to borrow from family and friends to avoid the often-arduous process of traditional loan applications via the banks. As a result, the lines between personal and business finance can often become blurred.

Traditional lenders also usually look for security to borrow against, along with years’ worth of financial data, which of course you may not have from the early days.

We understand that small businesses need finance to run and have made accessing money far easier with funding available in 24 hours.

4. Online lending for small businesses

Prospa shares the principles that Kiwis value in their banks – such as building personal relationships, clear vision and honesty – and applied them to products and services that the small business community has told us they need. And we’ve done this all online so our customers can spend less time on paperwork and more time working on their business.

Prospa has funded over $540m (AUD$500m) in loans and helped over 12,000 small business owners. Find out how your business could thrive with a cash flow boost from Prospa.