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.
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