With small businesses representing 97% of all Kiwi firms and 25% of the country’s GDP, New Zealand is a nation of entrepreneurs and small start-ups with big dreams.
However, rough economic conditions in the past few years have forced small business owners to tighten their belts, while also leaving many overworked and without the upskilling needed to keep growing.
In response to this, Xero is calling on the new Government to take more steps to support small businesses to help them succeed as they face further economic challenges.
Xero believes it’s crucial for the new Government to truly understand the challenges that small businesses face and the crucial role it can play in driving solutions.
Xero New Zealand Country Manager Bridget Snelling says, above all else, the key issue small businesses are facing is poor productivity.
“To put it simply, many small business owners are overstretched and under-developed,” he says.
“Kiwis are often working long hours with much less than our overseas counterparts to show for it. Solutions to our productivity problem are not earth-shattering, and much of it comes down to a pressing need for greater focus on digitalisation.”
Xero previously commissioned research through NZIER that found a 20% increase in the number of businesses adopting cloud-based business tools could add up to $7.8 billion to Aotearoa’s annual GDP through improved productivity.
The accounting software company has commissioned a report through the Astrolabe Group providing evidence-backed steps the Government can take to support small businesses in these challenging economic times.
What can the Govt do to help small businesses?
The report outlined four key areas the Government can focus on not only boosting the small business economy, but also New Zealand’s economy as a whole.
Firstly, it’s recommended the Government invest more in digital and productivity-enhancing technology and consider introducing a multi-faceted program modeled off the Go Digital scheme in Singapore. The program would remove the barriers of uncertainty and cost, while also promoting action.
“There is a clear lack of investment in digital and productivity enhancing technology, which means Aotearoa New Zealand is worlds behind our international counterparts when it comes to productivity,” Snelling says.
“Our government needs to be doing everything it can to digitalize our small business economy and turn this country into a world-leading digital nation. This should be backed by investing in and supporting digital literacy initiatives.”
Second, Xero says the Government should improve access to finance for small businesses, as limited options in New Zealand make it difficult for small business owners to receive a loan, which in turn makes it harder to grow and innovate.
Thirdly, the Government must address training and workforce development needs, such as upskilling for small business owners and expanding its Digital Boost program.
“It’s clear digitalization and efficiencies are curtailed due to lack of skills and training,” Snelling says. “Without solid government support in this space, growth will continue to be slow.”
Finally, Xero is encouraging the Government to reduce the compliance processes and requirements imposed on small businesses by government agencies.
“Businesses with less than 20 employees need to maintain extensive corporate processes, such as safety,and compliance activities like payroll, just like their larger competitors,” Snelling says.
“However, these small businesses don’t necessarily have the revenue to support a dedicated back-office capability. For new participants, the initial compliance and corporate administration hurdles can be significant.”
A digital future for Aotearoa New Zealand
As new leaders begin their tenure in Government, Xero hopes its advice will be adopted and that political leadership does right by small businesses affected by Covid restrictions, inflation and the cost of living over the past few years.
Ultimately, Xero hopes the new Government will do right by Kiwi entrepreneurs and small business owners, take the right steps to boost the country’s productivity and GDP, and strengthen New Zealand’s position in the world as a place of innovation.
“Small businesses play a fundamental role in supporting local communities, fostering innovation and driving productivity,” Snelling says.
“Our new government needs to recognize that the opportunities for improving productivity in New Zealand are incredible, especially if they prioritize small businesses.”
This content was sponsored by Xero. For more information on what digital tools might suit your business best, visit the Xero app store.