Celebrating - and supporting - the survival of small businesses

By Phil O’Reilly

First published on The Post.

With interest rate reductions announced recently and more promised in the next few months there has been a lot of talk about the light at the end of the tunnel.

The fact is that the latest interest reductions won’t yet be helping businesses very much. It will take a while to really light a fire under the economy and get people out spending and businesses investing once more.

That is particularly acute in some sectors such as construction, which tends to be last into downturn and last out. All of the talk of “survive until 2025” remains very much an issue for small businesses in most sectors.

In the face of very difficult conditions, our small business community in New Zealand - tens of thousands of entrepreneurs and the Kiwis who work for them - has once again proved its resilience. We all owe a debt of gratitude to the people who take on a small business and make it work. They are collectively our largest employers and they provide many of the things that we rely on day to day.

For any small business owner thinking about what has been going on in the last few years - take a bow - you survived.

I will argue that survival was not an accident. Every small business owner should be thinking about what they did to make sure they got through this tough time and what it will take to survive the next few months as well.

Cash is king for any small business and getting paid can sometimes be tough during difficult economic times. The survivors will be those who managed to work out how to get cash and keep it. How they not only got paid but paid their suppliers too. On time and in full.

It’s been a tough time for small businesses, and the glimmers of hope arising from recent interest rate cuts are still on the horizon, writes Phil O’Reilly.

Any good small business will have had a strategy. Right now, they will be thinking about what they were doing during the tough times to change their strategy, to pivot and to do new things.

How did they keep their customers happy and how did they maintain average spend? How did they ensure they continued to fill their pipeline? Did they think about new forms of advertising or marketing? Did they think about product or service innovation?

Great small businesses will have defended their staff during these tough times. They will have tried to build skills and capability around being agile, resilient and serving customers brilliantly. And they will have made layoffs if they were absolutely necessary, but only then.

Now, having learnt the lessons, it is a good opportunity to make these part of the everyday for those businesses in the future - even as good times come - because that is how they will continue to prosper.

I live in Wellington and the stories we all hear about Wellington being a city in trouble are in many ways very accurate. But even here, many small businesses are thriving. Some restaurants are consistently full. Some tradies have queues of work coming out their ears. Others are continuing to grow and invest.

Any good small business person will be looking at them too. What are they doing right? How are they managing to thrive in tough times and effectively take share from their competitors? What is it about their offer that is so attractive even when people have less money to spend?

A lot of that is about quality of service, about innovation, about hitting a target market well. Good small business people will be thinking about all of those things.

So, when we think about the next few tough months for small business and what they are doing for themselves, we need to consider what we can all be doing for them? Firstly, we can be investing in them if we get the chance. A bit of a tradie’s time working on the house or the car, maybe a dinner out.

Construction tends to be one of the last sectors to go into a downturn, and one of the last to come out, writes Phil O’Reilly.

We can also make sure we pay them on time and in full so that they can pass that on to those they deal with.

Government also has a critically important role, not just as a customer of a small business, but also as a regulator.

I have always thought that, in thinking about regulation, the government should have a small business frame of mind. If a regulation works for a panel beater in Te Awamutu it is likely to work for much more sophisticated and larger businesses in Auckland. If government thinks about regulatory reform with the lens of ease of use for small business, then they will probably get it right for every other business as well.

There is not enough of this thinking going on in government. Government often deals with the most competent and capable businesses and delivers regulatory outcomes which work for them. This sometimes has the impact of making things harder for small, less sophisticated businesses, particularly those in rural and regional New Zealand.

If we really want to get New Zealand thriving, we need to think about the importance of small business. They will have learnt a lot during the current downturn and the best of them will have thrived and prospered, despite the tough times.

We can all make sure that small business succeeds by investing in them if they are good enough and encouraging government and local government to have a small business frame of mind when thinking about regulation that affects them.

That is a good start to building a better New Zealand.