How much can the Govt really help small business?

Photo: ODT Files
Photo: ODT Files
I’m off to the hairdresser today for a much-needed tidy up — that makes me sound a bit like a car doesn’t it?

Hairdressers are wise people — they hear a lot. Trapped in a chair for a couple of hours people like me chat widely about what’s going on in our worlds. Our chats cover pretty much anything, from what’s for dinner tonight to which of my teenagers I am angsting about the most, and we always talk about the business climate.

We worried our way through the Global Financial Crisis — now it’s Covid-19. The shock has hit, we face the grim and very long tail of recovery.

The number of New Zealanders employed in small business is about a third of the workforce, ranging from 400,000 to 600,000 people (depending on what your definition of a small business is). Most of those small businesses (97%) employ 20 people or fewer — those businesses are your farmers, hairdressers, mechanics, cafes, dentists, vets, plumbers, sparkies, builders, physiotherapists and GPs.

Only 50% of small businesses make their 10th anniversary, not surprising when the majority don’t have enough cash to survive two months without income — it’s a tough, competitive world out there and then there is Covid-19.

The Government is trying to roll out some useful schemes, it’s a challenge though. A $5000 grant for business advice is no use to someone who has lost 90% of their revenue overnight, no advice can fix that one. What else can we do? Scott Mason raised the issue (Otago Daily Times, May 25) of whether we should be supporting ‘‘zombie companies’’ or put our energies into those which are salvageable. It is a valid question, but how do we sort the wheat from the chaff and as a business owner at what point do you continue the good fight or walk away?

What I do know from my experience battling the GFC (when we had a retail business) is that governments and banks are your ‘‘supporters’’ for a relatively short period of time. In the midst of a crisis the support is there, but three years down the track when we are still in that long recovery tail, that support is likely to have disappeared.

The business owner faces the decision of closing the door now and walking away versus battling on and perhaps being forced to sell later down the track. In that time the business owner will also have lost three years of income if they had walked away — opportunity cost. The hard lesson I learned during the GFC was that we didn’t walk away (sell) soon enough.

Please don’t underestimate how hard these decisions are to make. Many small business owners have bled hard work, sweat and tears into their endeavours for many years. As a business owner it is hard to get out of bed and go to work knowing you are earning nothing, it is soul-destroying going to work knowing you are going backwards.

I spoke with a friend last week, who shared with me what he was losing month on month. He bravely told me how many months he could last — he has set his deadline for when he has to walk away.

You would think the conversation was bleak, yet our conversation revolved around the pivots he was making, the optimism he had for the new business model he was trying and the sheer drive that is the small business owner — after all, if he doesn’t do it, no-one else will. For me, those conversations are gold, they highlight what amazingly resilient people we have in this country. He’s a great guy, I hope he gets through.

How much can the Government help in all this?

I don’t know, but I hope it doesn’t waste all its money on strategic reports for industries which are read by 15 people.

In this environment, doing something and not getting it entirely right is better than doing nothing at all.

Regardless of my political persuasion, I am very pleased that the new leader of the National Party is taking on the small business portfolio, this sends a strong message to all parties that the jobs of up to 600,000 small business employees are of utmost importance in our economic recovery.

And to my hairdresser, 15 years of chats — we’ve seen it all, we will survive, and my hair will continue to become greyer. Some battles cannot be won!

■Anna Campbell is managing director of AbacusBio Ltd, a Dunedin based agri-technology company.

Comments

Government needs to realize its limitations, and get the hell out of the way.

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