Torture the numbers and they will confess

01:13, Nov 02 2012

This week the New Zealand SME Business Network received a letter from Act MP John Banks in his capacity as Minister for Small Business, that he addressed to all 2200 members.

It buoyed us all significantly.

Well, all may be an exaggeration but the messages I have received suggest many members of this LinkedIn Group for small businesses are pleased to have had direct engagement by the Minister.

It is, as I am told by numerous members, acknowledgment by government that SMEs are important to our economy. But it's also fair to say despite this, the government has struggled to develop practical initiatives to stimulate SME growth.

And although in desperate need of economic stimulation, New Zealand is not alone in its anguish over how best to help small business owners grow.

So what did the Minister for Small Business have to say?

In his letter, Banks dexterously read the pulse of many small business owners, reinforcing his Commitment to creating a better environment in which SMEs can operate. In his capacity as Minister for Regulatory Reform he said he would continue to look for ways to remove unnecessary regulation that holds business back.

Banks does understand this intuitively. He's one of only a handful of 'professional' politicians who have maintained active business interests while in office.

His comments were music to the ears of small business owners as these two issues, the business environment and too much red tape, rank as their prime concerns.

But how can this be? New Zealand has just made pole position again, for the fifth year in a row, as the easiest place in the world to start a business, according to the latest World Bank report.

The report, which ranks 185 countries in terms of their economic performance against an equally weighted index of 10 indicators, also ranked New Zealand first for protecting investors, second for registering property and third place for ease of doing business.

What those figures don't show and yet is the most telling (qualitative) statistic of all, is that many of our small businesses are struggling.

I talk to numerous owners and managers each week and they tell me this in gruesome detail.

Statistics without context and qualification are often subject to the skewing of 'interested parties'. The reality of small business New Zealand is that while it may indeed be easy to start a business, it is often very difficult to keep it going.

In New Zealand 97 per cent of all businesses are classified as SMEs (employing less than 20 staff), employing 3 out of 10 people in our workforce and producing 40 per cent of our GDP.

Significantly for small business owners, Banks acknowledged the importance of removing barriers to employment, reducing the cost of compliance, and encouraging entrepreneurial New Zealanders to take that first step to becoming self-employed.

And the Government's Business Growth Agenda (BGA) seems to support the Minister's aspirational comments.

The BGA will focus on six key areas over the next three years to help business grow, and to build a more productive and competitive economy. The six areas include access to markets, innovation, skill and safe workplaces, capital markets, infrastructure, and resources.

The government's challenge, as it is for others running countries seeking to lift SME performance, is the gap between policy development and its practical translation. It is here that the opportunity for economic improvement is often lost.

Still, I for one, am heartened by the BGA plan; equally so the improved level of engagement with SMEs and the seeming desire to build capacity in this important sector.

There is little doubt that at some stage the steely eyes of a statistician will be cast over any initiatives prior to their adoption as policy. It's the set of figures that will be used to support the arguments that concerns me. Torture the numbers and they'll confess to anything!

I remain optimistic the minister representing this sector will continue to engage with small business owners.

His final paragraph said he welcomed ideas from SME owners on how the Government can create an environment that allows them to flourish, recruit new staff and enter new markets.

Let him know your views.

Tenby Powell is an entrepreneur, builder of organisations, and the driving force behind the New Zealand SME Business Network. Join the SME network on LinkedIn and follow him on Twitter at tenby.powell