According to the Ministry of Business, Innovation and employment there are 499,944 small businesses in New Zealand who employ 0-19 employees. This makes up a significant part of the economy in this country, employing over 1 million people. That is over a quarter of working aged New Zealanders.
I have mentioned the statistics that surround SME’s over the past few years, but with the impact of Covid-19 has had on the economy, it is one that is worth repeating. Before 2020, New Zealand had one of the worst productivity levels in the OECD. This is not a recent issue, this has been declining since the 1980’s. During the past 40 years we have consistently been in the lower half of the productivity statistics. To make this picture more troublesome, on average, we work 17% longer to achieve those dire results.
To Mr & Mrs SME owners, these figures can be all consuming. It is easy for those in the trenches to turn to our politicians both local and central governments seeking support. More often than not, small businesses don’t even know that there has been support available, not since Covid-19 but for years. The good news is that there are already many ways small businesses can seek support through the Regional Business Partner Programme.
But let’s unpack the numbers. If we look at it closely, there is an opportunity for SMEs. Better still it is worth on average $170,000 per annum or $14,109 per month for each business. Now that is something to think about. By continuing to do what we do, work inefficiently and not maximise our resources, small businesses miss out on significant cash flow opportunities. The longer it is put off, the more ground they lose to the competitor that understands this.
By focusing on improving the business gradually, making small improvements each day - Mr & Mrs SME owner can conservatively improve performance by at least 20%. This might seem impossible with a day that is already packed full of activity, jobs to do, clients to follow up with. Yes we are all busy, but are we busy at just being busy?
The first step is to focus on the stuff you can control. Focus on communication and engagement of your staff. Start asking them what are the things that bug them, what continuously frustrates them - what pisses them off?! As a team, begin with one issue and resolve it for good. It might be additional tools so they don’t keep looking for something, or the current ones are well past their use by date. Often the solutions are simple and cost effective and certainly worth the return on investment.
Look at how you structure meetings - do you default to an hour because that is how your calendar is organised. Challenge the team to be more disciplined around meetings, turn up on time (respect for people), have a clear agenda / outcomes. Set the meeting for 45 minutes, don’t just fill the time because you have it booked out. For a meeting of four people, that is already one hour of productivity gained!! If it is a weekly meeting, just that one improvement will net you more than a week of capacity!
Talk to one supplier a month about how they might be able to help you perform 2-3% better, can they start delivering less stock more often? Businesses I work with have often found suppliers more than willing to help - if you increase business, so do they!
Pick a process that the team has just done for so long, no one can remember why Sally does that or Bob should do something else. Are the forms you use still reflect the way the job is done. Does the team waste time finding information and filling in data forms that are obsolete. Stop firefighting issues, pick one a week and solve the main cause(s). I am constantly amazed at how much leadership time is spent on firefighting issues.
These are all common issues I see in businesses across NZ. We can get complacent, keep doing what we have always done - yet we desire different, better results. Because we don’t continuously review, update, improve the way we work (our processes) the only way SMEs can grow is by working harder, longer hours. After considering all of these issues, it is easy to understand why the productivity stats are what they are. We all know of someone who has to work all day saturday just to keep up with demand. The solution of additional staff is great for the short term, but it erodes profitability of the business and is not a sustainable solution.
Focus on improving your own business processes. That is where the opportunity for you is hiding. These opportunities are just sitting there waiting to be realised.
Go to your team, ask questions, tell them you want to improve the business, let them show you where. Your staff are the experts of every process in the business. Given the chance, they will quickly tell you the ones that don’t work. Each improvement is an investment, it might require a one-off effort in time but it will continuously pay you back each time the process is completed.
For many people reading this, it all sounds like common sense - well because it is. Having a culture of continuous improvement in your business is all about allowing your team to make the needed changes. It also takes discipline. Keeping the momentum going once you start is where most businesses fail. Keep it simple, make small changes each day.
You can control and take action. There is something that you can do today that will enable you to realise that $170,000 opportunity.