Education, not capital, key to small biz growth

A lack of education rather than capital is the biggest growth hurdle for New Zealand's small business economy, according to Tenby Powell, founder of the New Zealand SME Network.

One way to address the issue was putting university graduates in direct contact with business owners, he said.

"What is lacking a financial understanding and that is perceived as a need for equity and capital."

Via the SME Network, which comprises 3000 or so owner/managers and their advisers, Powell has contacted vice chancellors and key senior staff at New Zealand tertiary institutions outlining an initiative to link business owners with academics and their students.

The idea is to have large-scale integrated programmes to boost SME growth and help reduce the national skills shortage. 

"There are a number of studies that have clearly shown advanced economies, of which New Zealand is one, will only grow if they apply innovative process and more sophisticated business systems.

"The question is how to we give small business owners access to these resources. The obvious answer is bright graduates," he said.

The initiative aims to match graduates completing research projects as part of their course requirements with business owners wanting access to research resources that will improve their performance. 

"That's an opportunity that most businesses don't have unless an individual graduate comes knocking with a project to do. That does happen, but it's in a very piecemeal way. 

"What we are saying is that if we can get all the universities to work collectively and get some kind of government initiative behind it, in 10 years we could make a significant change to our SME economy,"
Powell said.

Waikato University deputy vice chancellor Alister Jones said though the university's graduates were already finding placements with SMEs, the new initiative presented an exciting opportunity to do things on a larger, more strategic and co-ordinated way.

"This is something that's been a long time coming. It's a way for business coming together around problems that universities can be involved in solving.

"But it's a place for us to test our ideas out and be exposed to commercial realities," he said.

The key to success of the initiative will be finding examples of where a relationship between graduates and business owners has worked well, and being prepared to build from it, rather than trying for too much, too quickly, he said.

"We need to ask: What have we already learnt and what do we already know? Then build good practice models around it."

Powell said response from tertiary institutions contacted so far had been "overwhelmingly positive" but the first hurdle was building trust on both sides. 

"What we need next is a team of people to look after this, to find a simple and effective way of bridging that trust gap and start making things happen," he said.

Jones said there was learning to be done on both sides.

"Universities need to better understand the needs of SMEs and SMEs need a better understanding of what universities can provide and how our graduates can work with them," he said.

Duncan Mackintosh, CEO of WaikatoLink, the commercial arm of Waikato University, believed any issues between the academic and business sectors was not so much one of trust as a need for better communication and understanding.

"It's more a case the academic and business worlds have traditionally worked to different time frames. I don't think it's so much a trust issue as a need to more closely align the way we all work. Students could be the way to do that," he said.

The company, which specialises in turning early stage research and innovations into viable products and services, employs up to 10 graduates regularly in full-time and part-time roles across marketing and technical disciplines.

Mackintosh said there were many benefits to working with students.

"They may lack experience but they're energetic and enthusiastic, which should never be underestimated, but they're also exposed to a lot of the latest knowledge and they aren't constrained by the traditional or 'normal' way of doing things."

And Jones said the advantage for graduates was that working with business as part of their study programme meant they were more "work-ready".

"It engages them in business and enterprise so they learn the excitement of that environment as well as how tough it can be."