The small business grants you could be taking advantage of

Sometimes it truly is not who you know but what you know – like which small business grants you might be eligible for, and how they could put some extra wind in your sails.

There are a host of government grants available for small businesses looking to innovate or grow, and used properly they could be the difference between a dream and a reality.

For instance, after the 2011 tsunami wiped out many of Japan’s seaweed farms, Lucas Evans (pictured below) saw an opportunity to develop a market for New Zealand’s invasive Undaria seaweed as an edible delicacy.

Evans’ Coromandel-based business, Wakame Fresh, is now using a $75,000 Sustainable Food & Fibre Futures grant (SFF Futures) from the Ministry for Primary Industries to work out if it’s commercially viable to harvest, process and export edible seaweed products (‘wakame’) to Japan.

Evans says securing the grant has been a game changer.

“The grant has provided us with the opportunity to develop a comprehensive approach to assessing the feasibility of exporting New Zealand wakame to Japan,” Evans says.

Wakame Fresh invested $114,000 into the project as a co-investment. It is now looking to identify other suitable funding pathways to support future steps.

Small business grants to take advantage of

Available small business grants in New Zealand

Not all grants are suitable for all small businesses but here are some of the key grants you could consider applying for:

Getting Started Grant: Provided by New Zealand’s Innovation Agency, Callaghan Innovation, these grants are designed to “give you a kick-start” and take your business idea from development through to commercialisation. Grant recipients receive 40% of their eligible research and development (R&D) project costs, up to $5,000. You can find out more here.

Project Grant: This Callaghan Innovation grant is for larger or more challenging R&D projects. Again, it can cover 40% of eligible R&D costs but it’s not capped at $5,000. For further information, including eligibility criteria, head here.

Provincial Growth Fund (PGF): If you’re operating in regional areas of New Zealand you may be able to tap into funding under one – or more – of the following categories: regionally-focused projects, sector-focused projects and infrastructure-based projects. You can apply here.

International Growth Fund: For those offering a product or service that is not business-as-usual, and looking to do business overseas, New Zealand Trade and Enterprise offers up to $900,000 in funding. It’s a co-investment initiative which requires you to stump up 60% of the investment. You can find out more here.

He Tupu Ōhanga – Commercial Advisors Scheme: Offered under the Te Pūnaha Hiringa: Māori Innovation Fund, successful Māori collectives are granted up to $60,000 to work with a commercial advisor for up to 18 months. Find out more here.

Regional Business Partner Capability Voucher Scheme: This voucher scheme subsidises registered business training and coaching services for eligible small businesses by up to 50% (capped at $5,000 per annum).

Small business grant application tips

There are plenty of small business grants on offer, all with varying criteria and application processes, but how do you successfully secure one?

Evans’ advice to other businesses is to do some groundwork before applying.

“You’ve got to ensure that you’re spending public money in an appropriate way and managing it properly,” he says.

“People really need to prepare for that by having a business plan, and putting governance and financial arrangements in place.”

And while a grant application process can help you bolster your own business plan, Evans says you should be wary not to unnecessarily overhaul your business’s M.O. in order to meet certain application criteria.

“There’s a risk in finding yourself bending your approach to meet the requirements of a grant pathway or funding pathway,” Evans says, “because with funding comes a number of obligations.”

That said, looking back on the process, Evans says the funding has been a significant boost for Wakame Fresh.

“It’s played a critical role in mobilising and engaging stakeholders,” he says.

If you’re not eligible for a small business grant, but you still need funds for your next big step, then there’s always a Prospa Small Business Loan. Find out more from a Prospa business lending specialist by calling 0800 005 797.

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 to find good employees without breaking the bank

Having difficulty attracting talented employees? You’re not alone.

In fact, 37% of New Zealand small business owners rate on-the-job experience and lacklustre work ethic in potential employees as an obstacle to the growth of their business.

In order to get an edge over the competition, several professional services businesses are offering innovative – even radical – employee perks, in order to help attract and retain quality staff.

Allow employees to work remotely

Over the past decade, technologies such as cloud computing have revolutionised how we work.

Indeed, one in six New Zealand employees now have an arrangement with their employer allowing them to work from home, according to the Stats NZ Survey of working life: 2018.

Karly Boast is the People & Culture Manager at BCD Group, a Hamilton-based engineering firm that allows its staff to work remotely.

“We researched the idea and wanted to change the current way we work to better suit the 21st century,” she says.

She says the firm now has employees who work remotely from the South Island and Australia, while other employees have the option to work from their homes, some as a default, while others regularly or on an ad hoc basis.

“This initiative has had a positive impact on attracting talent in a market that has a real talent shortage,” Boast says.

“We’ve had talent directly approach us for jobs, as well as other business owners wanting to learn more about how they can implement remote working in their own business.”

The four-day work week

BCD is also trialing a much bolder strategy – a four-day work week. The idea of paying employees the same amount for 20% less time on the clock shot to international prominence in 2018 when local New Zealand business Perpetual Guardian trialed the concept with its staff.

Charlotte Lockhart, who owns Perpetual Guardian with partner Andrew Barnes, says the three-month trial was such a success that the company rolled it out as part of their permanent employment strategy last November.

“We’ve basically been running it for a year now. And the talent of people applying for jobs with us has increased enormously,” says Lockhart, who has since launched and become CEO of the not-for-profit community 4 Day Week Global.

Not only that, adds Lockhart, but staff retention rates have also improved, although she admits a small number of staff didn’t enjoy being measured on their productivity and initially left.

Lockhart says one of the unexpected benefits has been that employees now better understand how the business works, which in turn has led changes to streamline processes.

“When you say to staff, ‘We need to develop productivity measures across the whole business so that I can give you time off’, they’ll sit down with their teams and look at ways to make it happen,” she says.

More ways to attract talented staff

  1. Annual leave – offer employees more than the minimum four weeks’ annual leave each year.
  2. Acknowledge out of office work – if employees regularly answer emails or take calls outside of work hours, reward them with paid time off.
  3. Employee referrals – your best employees know what it takes to nail their job. Incentivise them to refer strong candidates from their network by setting up employee referral programs.
  4. Move to a more ideal location – no one wants to work in a dreary office setting. Consider relocating to an area that’s easily accessible via public transport and close to nice parks and cafes where your staff can enjoy their breaks.
  5. Advertise jobs on social media – the talented staff you want might often not be actively looking for a new position and frequenting online jobs boards. Instead, try going to where they are by advertising job openings on social media platforms.
  6. Highlight the ‘career opportunity’ – the number one reason people change jobs is ‘career opportunity’, according to LinkedIn hiring research. So make sure you clearly outline what career path your job can provide applicants in both the online ad and when you meet with them.

Need to hire more staff to grow and make the most of big opportunities? Talk to a Prospa business finance specialist about whether a small business loan can help get you there.

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 to find peers and support for your small business

New Zealand is a nation full of small businesses. In fact, of the 400,000 small businesses operating across the country, 70% are owned and operated by just one person.

Not surprisingly then, research from Business Mentors New Zealand has found 80% of business owners have felt a sense of isolation.

However, there are many opportunities for owners of all stripes to link up with like-minded peers to trade tips and small business advice – from chambers of commerce to meet-ups and online forums.

Join small business Facebook groups

Sam Frost, who runs his own digital marketing consultancy, keeps in touch with the business community by being a member of the Facebook group Business Networking NZ, which consists of about 1,000 members.

“As I work largely by myself and from home, it can be an isolating experience,” Frost says.

“Having peers – even if they’re just digital ones – gives me an opportunity to voice frustrations, ask for help, and have my voice heard by other business owners who may be going through similar challenges.”

Frost says since joining Business Networking NZ, he has received small business advice and developed knowledge outside his usual expertise, which has made him a more-rounded business owner.

“It’s all too easy to be insular and ‘stick to your knitting’, but being a member of this group makes it easier and more accessible to develop knowledge in other areas of business,” Frost says. “It’s also refreshing to see many different perspectives on a topic.”

Beyond that, it has also led to more business, he says. When he provides input on his area of expertise, people see and follow up with him.

“Business Networking NZ has been an excellent resource for getting more members to my own digital marketing for business owners group, but I’m careful to not push this aggressively. The referrals come through adding value to Business Networking NZ,” Frost says.

“It’s somewhere I can go to ask questions and share my advice, and where my voice feels valued.”

Attend meet-ups

Wendy Calder, Owner of Auckland-based Calder Interiors, has been attending The Business Owners Forum meet-ups for the last nine years and says she “couldn’t speak more highly” of the group.

“There hasn’t been a single meet-up that I haven’t been interested in, or that hasn’t upskilled my knowledge,” says Calder, whose manufacturing business has been running for 23 years now.

Through forum speakers and attendees alike, Calder has learned valuable lessons on issues ranging from cash flow to staffing, employment law and legislative changes.

“They provide you with the tools and information you need to be able to plan your next year to five years, or to work through different scenarios,” she says. “We’re now in a much better position financially.”

Calder adds that the community is incredibly supportive and honest. “It’s really good for just laying your cards on the table,” she says.

“No one is there spinning a yarn because they want your business – you know that when you talk to people, you’re going to get the absolute truth and the information you need.”

The meetings – held every couple of months – have boosted Calder’s confidence and reduced feelings of isolation.

“Often a business owner will bring up a situation that someone else has gone through, and you’ll think ‘Oh my god, I’m not the only person who has had this problem’,” she says.

“It’s given me confidence that – even in the hardest times – there is an answer out there for everything.”

Almost 100 NZ-based small business groups are listed on Meetup.com, while Facebook has legions on offer for those who prefer an online approach. Other leading small business networking groups include The Networking Group and New Zealand Leaders.

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 you can use recent tax changes to fuel innovation

New Zealand has always punched above its weight when it comes to innovation and two new tax policies are aimed at further helping small businesses to continue to do so.

The new policies are aimed at reducing some of the risk of trying new things in your small business, making it easier to finance new methods and products, and are set to be in effect from the start of the 2020-2021 financial year.

So, if you’ve got a bright idea burning away at the back of your mind, now could be the time to start planning how to put these new incentives to work for you.

Tax credits for R&D

KPMG New Zealand Director, Byran Theunisen, says one of the most attractive incentives for small businesses is a new research and development (R&D) tax credit.

“Businesses will get back 15% of what they spend on qualifying R&D through a reduction in their tax bill,” he says.

To qualify, the R&D effort must be conducted systematically with the purpose of creating new ways and better processes, and services or products. It could be a new healthcare app, an algorithm or an improved method of manufacturing. Businesses must spend at least $50,000 on the R&D in a financial year for it to qualify.

Costs that are eligible for the tax credit include employee wages, depreciation on the R&D assets or the cost of plant used for the venture.

Theunisen says in addition to tax credits, businesses can also access the existing R&D grant funding, and expert and scientific assistance through Callaghan Innovation, including incubators, accelerators and researchers.

Through the combination of Callaghan Innovation and another government agency, New Zealand Trade & Enterprise, there is support for business planning and development, technology and market testing, as well as connections to international markets and capital.

Funding the feasibility ‘black hole’

In September 2019, the government also announced that from the next financial year onward, tax deductions would be available for “feasibility expenditure”.

This is money spent on pursuing a new process or product which does not ultimately lead to a depreciable asset for the business. Traditionally, these costs have not been deductible for tax purposes, making them known as black hole expenditure.

KPMG Tax Partner, Darshana Elwela, says feasibility expenditure is costs incurred to determine the practicality of a new initiative.

“This is where a business is looking to invest in a particular asset, either to construct or acquire a piece of plant and equipment, and there are costs associated with exploring how they do that,” he says.

“It will help businesses to make investments by providing greater certainty over the tax treatment of their project costs.”

Under the new rules, businesses will be able to write off the entire cost of any feasibility expenditure up to $10,000 in the same financial year. For larger sums, the expenditure can be written off over a period of five years.

Kirk Hope, the CEO of small business peak body BusinessNZ, says the current cost of exploring new enterprise is a “significant barrier to innovation”.

“This new tax rule will make it easier for more businesses to innovate and become more productive,” he says.

The type of costs that can be written off under feasibility expenditure include seeking relevant professional or expert advice about a new initiative, market research on a new product or market segment, or engineering surveys and environmental studies for a new building.

For instance, a café that is hoping to open a new location might hire a contractor to survey foot traffic flows in different areas to help it determine which area is the most suitable. Under the new rules that expenditure would be deductible.

Got your own bright idea for innovation? Talk to Prospa about how a small business loan could help turn the idea into reality.

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

What type of short-term hire will work best for your holiday rush?

Many small business owners are all too familiar with the holiday rush. Just as most of the country is starting to wind down and think about how they’ll spend the festive break, many in retail and hospitality are facing their busiest times of the year.

Making the most of the holiday shopping and festive season frenzy often means bringing more hands on deck. And that’s where it can get complicated.

There is more than one way to hire temporary staff. So how can small businesses hire the right sort of help while keeping up with any compliance requirements?

Temps vs casuals: What’s the difference?

Employsure Senior Employment Relations Adviser, Michael Wilkinson, says small businesses need to be aware of the different requirements and responsibilities when hiring temporary workers and casuals.

“When you use the word temp, you need to understand what that actually means,” he says. “It’s usually referring to a temporary contract, meaning a fixed-term employment agreement for a set period of time.”

Employment New Zealand says a temporary employee is someone who is hired for a specific time period or when a particular event occurs, for example, a worker covering for another employee’s parental leave or a person engaged for a seasonal peak to complete a project.

A fixed-term agreement must include a “genuine reason based on reasonable grounds” for the shorter-term contract, which must be made known to the employee. For example, this could be the end of the holiday period or the completion of a project.

On the other hand, a casual worker is one who is employed on an intermittent basis, without regular shifts or the obligation to accept the work.

Under New Zealand employment law, casual workers need to know their work hours will vary and that they’re not obliged to come to work whenever the employer might need them.

By law, all employees – whether casual, fixed-term or permanent – must also have a written employment agreement. This should explicitly state if the employment has a fixed term and why, or whether it is of casual nature with an expectation of varying hours.

Unemployment at historic lows

Employsure’s Wilkinson says small businesses should assess their staffing requirements for the holiday season and the predictability of their work flows, before hiring staff.

He says, amid increasing unpredictability in retail trading, some employers choose the flexibility of casual staff so they can meet fluctuating customer demands.

But if the work flow is predictable, he says small businesses can engage a fixed-term worker to meet demand – provided they have a reason for the role to end.

But he advises employers to consider what they are “locking themselves into”.

“A casual employee you don’t have to roster. There’s no obligation to do that, whereas a permanent or fixed-term employee needs to be provided with the hours guaranteed in their employment agreement.

“There are always trade-offs.”

The time to act is now

Kirk Hope, the CEO of small business peak body BusinessNZ, says there are already many employers searching for workers and finding skilled staff is a “top concern” for small businesses.

“The labour market is currently very tight in New Zealand,” he says.

“Unemployment is around 4% – an historically very low level. There are many casual job openings in retail in Auckland and in horticulture in regional areas, along with other types of casual vacancies, in the pre-Christmas period.”

Wilkinson says given the approaching peak trade for the retail and hospitality sectors, employers should act immediately to recruit and train their additional staff. Finding yourself short of staff during a peak trading period can very easily mean you leave potential profits on the table.

Need to ramp up your staff numbers ahead of the summer season? Talk to Prospa about how a small business loan could help provide cash flow support, so you can meet extra wage demands.

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.

Building your business strategy for long-term success

Having a great idea is just the start for any successful small business. That great idea must be backed by a strategy for long-term success. Here’s our step-by-step guide to help you build a solid foundation from which your great idea can grow.

1. Start with the end in mind

First things first – you need to know, and be able to articulate, what you want your business to be. What’s the vision?

You may want to be the café of choice on Lambton Quay, or maybe you want to expand your design company into the South Island. Whatever it happens to be, your big idea will allow you to see what the finish line looks like – and then you can work out what you need to do to get there.

2. Know what makes you special

What truly sets your business apart from your competitors? What is your point of difference that makes what you do so much better – or be so different – than anyone else? If you’re unsure, your customers won’t know either.

It’s natural to find this difficult – often, small business owners are too close to their day-to-day operation to truly see what makes them unique. In that case, talk with your customers and your staff to get a sense of what they value about what you do. It could be your customer service or the quality of your products, or it could be something completely different.

3. Identify what your audience needs

While talking to your customers about what they value about you, take the opportunity to ask about their lives, and their needs too. Understanding how often they go on Facebook or Instagram, for example, may not seem immediately relevant, but it will help you define your marketing strategy. Talking about other products and services they use regularly will help identify product areas worth exploring, or new directions to take your business in.

The best way to conduct this research is by having one-to-one conversations, while you could also complement this with an online survey. Offering an incentive is a smart way to increase the number of people giving you feedback. Provide the option of anonymity too. While the feedback may be painful to read, it will enable people to be brutally honest. Ask the tough questions and be prepared to act on the results.

4. Be aware of your competition

While it would be lovely to have a monopoly on the market, very few companies do. So, you need to know who your competitors are and what they are doing. What products do they stock? What services do they offer? What’s their customer service like? Use this information to improve what you’re doing, and more deeply define your point of difference.

Just because someone else is doing something doesn’t mean you should copy. However, if someone is doing a smart promotion or adding a new service, take note of what works and then think about how you could improve on it.

5. Set SMART goals

Now you’ve gathered information about your business, your customers and your competition, it’s time to define some goals around what you want the business to achieve.

For example, one of your goals might be to increase sales. However, just saying ‘I want to increase sales,’ doesn’t give you much to go on.

A common approach to goal setting is to follow the SMART method. That means setting goals that are specific, measurable, achievable, relevant and timely.

  • Specific: Rather than ‘increase sales’, pick specific stock categories of which you want to increase sales in.
  • Measurable: How much more do you want to sell? Put a number on it.
  • Achievable: Be realistic. It must be achievable, otherwise it’s meaningless.
  • Relevant: Is this goal going to help you achieve your business vision?
  • Timely: The timeframe needs to work for you, your customers and your type of industry.

An example of a SMART goal would be: Increase sales of summer skirts by 20% between October and January.

From there, you need to work out what’s required to do it – do you need more staff, a wider range of stock or a different marketing campaign?

Having your goal is one thing – achieving it is another.

6. Investing in the future

With a clear business vision, understanding of your audience and clarity around how you’re going to achieve your goals, you can now make informed and educated decisions on business finance.

Can you achieve it all with your current finances, or do you need to seek additional investment, such as taking out a small business loan?

If you’re not sure you’re ready to invest, think about where you want to be in five years’ time or even in 12 months’ time, and work backwards to see precisely what needs to happen to get there.

7. Don’t set and forget

Business plans are great, but they should grow and change with you. It should be a living document that you review and evolve regularly.

Opportunities emerge and changes happen in industries, so your business plan should keep on top of that.

Schedule a recurring time to revise your business strategy. If you’re not on track or a new opportunity has come up, be flexible. An ever-evolving plan is the only one that will be able to keep up with your changing business.

And if you need a little help or advice, there are plenty of business coaches, planners, financial advisors and fellow business owners who can help you pull your plan together – and keep it on track.

8. Embrace the challenge!

Being a business owner is tough – that’s why not everyone does it. However, running your own business is also extremely rewarding. Hopefully, you’re excited at the prospect of having a road map for your business’s success. If you have the strategy – and the motivation – to succeed, then you’re giving your business the best possible chance.

Is investment part of your plan to succeed and grow? At Prospa, we provide small businesses across New Zealand with small business loans to suit a variety of growth needs. Call our team on 0800 005 797 or apply online.

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.

An accountant’s guide: Transitioning from a sole trader to a limited company

If you have big plans for your sole trading business, you may be thinking about how the structure of it might change in the coming years. For many sole traders, transitioning to a limited liability company is a logical next step.

Of course, it is a decision that should be made at the right time, and for the right reasons. We asked Jarrod Walton, a chartered accountant and director at Chapmans Chartered Accountants in West Auckland, to share the key things to consider when making the transition.

What is the difference between being a sole trader and a limited liability company?

As a limited liability company, all of a business’s assets, debts, profits and liabilities are listed under a registered company name.

“Anyone can be a sole trader,” says Walton. “All you have to do is declare your annual income to the Internal Revenue Department, and pay the required income tax on those earnings.”

When your income as a sole trader reaches NZ$60,000, you are also required to register for, collect and pay GST.

And, while this doesn’t require you to become a limited liability company, Walton says he believes reaching the GST threshold is often a good time to consider a switch.

What are the benefits of becoming a registered business?

“The first thing is that being a registered business legally provides additional protection from liabilities you could face as an individual,” says Walton.

Any risks when you’re a sole trader are in your name, he explains.

If you’re selling clothes or mowing lawns, these risks may be minimal. But if you’re offering services or providing products that expose you to any liability, it’s worth considering having that under a separate entity.

This is also particularly important if you have, or plan to have, employees.

Secondly, there are tax advantages.

“Being a limited liability company enables accountants to structure your business affairs to save on income tax, and other claimable expenses,” says Walton.

The third reason for moving on from your sole trader status is precisely that – status.

There is undoubtedly an element of professionalism that comes with doing business under a company name, rather than as an individual. Sometimes this perception is just what you need to amplify your offerings (and income)!

Walton also notes that, if you wish to introduce any additional shareholders, you’ll need to be trading as a limited liability company.

What are the downsides of becoming a registered business?

For someone who wants to run their sole trader business with a minimum of fuss, it may seem like becoming officially registered is more work than it is worth. There are added costs ($160 to register and $45 per annum), and you will need an accountant to take care of all the extra administration required each year to ensure everything is done correctly.

But, as Walton notes, any potential downsides are often mitigated with the added tax benefits of trading as a limited liability company.

So how do you become a limited company?

The best place to start is by talking to your accountant or contacting a trusted business advisor.

“Many accountancy firms offer obligation-free discussions on making this transition,” says Walton. “It’s what we do daily – we need to make sure you understand everything about your obligations before moving forward.”

The process itself isn’t too difficult (depending on your business structure) and the first step is to register your company with Companies Office – this is known as incorporating a company.

You’ll be able to check that the company name you want is available, reserve it and register it by paying a fee. You will then be given an NZBN (New Zealand Business Number) that you will use when dealing with the government, suppliers and customers. Every registered business also has to declare information about the company’s directors and shareholders – even if there is only one.

Following this initial stage, there are other processes to complete, including establishing a bank account for the company and transferring assets into the company’s name. It is best to do these tasks in consultation with your business accountant.

New Zealand is a country built on small enterprises. But Walton explains that knowing what it means to become a limited liability company is crucial for many New Zealand sole traders to ensure they are running their business efficiently and effectively.

“It’s important because people should have a structure and plan in place from the outset, as not doing it right can cause headaches down the track.”

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.

Research reveals the realities of running a small business

Research: The realities of running a small business

Working for yourself, being your own boss, building a brand – that’s the dream imagined by small business owners everywhere. And while it undoubtedly has its benefits, the reality of running the show also has more than its fair share of challenges.

A recent study commissioned by Prospa has shone a spotlight on the daily battles faced by New Zealand’s small business owners – and the extent of the work they put into making the business a success.

While there’s certainly room for improvement when it comes to business management and work/life balance, it’s proven that small business owners certainly aren’t afraid to put in the hard yards to make their business a success.

Working 9 till 5… and beyond

The research, which was carried out for Prospa by YouGov Galaxy, found that nearly half (49%) of small business owners around the country are working between six to seven days a week on their business, with one in five (20%) working the full seven days.

But long hours aren’t the only challenge small business owners are facing, the research found that over three quarters (76%) of respondents are struggling with one or more areas of business management – namely finance and accounting (39%), IT/technology knowledge (31%) and digital marketing (30%).

Other common struggles were debt collection and managing overdue invoices (20%), sales techniques (20%) and people management (17%).

As a result, up to 43% of small business owners have found themselves putting in extra hours to learn new skills. While 38% of respondents say they’re missing out on opportunities to grow their business and one in five (20%) reported cash flow issues that brought them to the brink of going out of business.

Interestingly, millennials (90%) are more likely than baby boomers (69%) to say there are areas of business management that they struggle with, particularly finance and accounting (52% compared to 33%), and people management (35% compared to 8%).

The personal impact of running a small business

The study also reveals the emotional impact of such pressures, with 88% of small business owners reporting that they experience negative emotions, such as frustration (44%), stress (40%) and feeling overwhelmed or burnt out (38%).

What’s more, a massive 81% of respondents said they’ve had to make sacrifices in order to focus on their business, including cutting back on personal time (58%), hobbies (57%) and exercise (48%). Sadly, time spent with family wasn’t far behind (38%), as well as time spent with a significant other (33%).

Unsurprisingly, 30% even cut back on sleep to get back to the grindstone.

Small business wish list: Skills and investments

Still, small business owners know what’s needed to improve things, with key skills in digital marketing (31%), financial literacy (30%) and sales techniques (30%) listed as having the biggest impact on their ability to manage and grow their business.

And when it comes to investments, 25% of small business owners felt that a marketing campaign would have the biggest impact on helping them grow their business, while 17% said hiring staff and 13% said better, more professional equipment.

Finding the resources to fund equipment is something that Kurt Jacks and his wife Althea, owner/operators of The Rib House in the Auckland suburb of Pakuranga, know all about.

“We found that when you start a small business, it sucks a lot of money, more than we anticipated,” says Kurt. “We needed to do upgrades and renovations to the kitchen, and we also eventually want to upgrade the size of our restaurant, but we needed a bit of help.”

Read more about The Rib House’s small business story.

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