Address to Hutt Valley Women in Business

Address to Hutt Valley Women in Business

Thank you for the invitation to attend your meeting tonight. I was particularly pleased to accept your invitation with both hats on as Minister for Small Business and Minister of Women's Affairs.

I have said on a number of occasions that there were two portfolios I specifically asked the Prime Minister for and they were Commerce and Small Business. I had had the privilege of working on the Commerce portfolio before, but not the Small Business one. I had often felt that there were untapped synergies between the two. However, the Prime Minister also appointed me to the Women's Affairs portfolio and I immediately saw the potential in that combination as well.

As I said to the New Zealand Chambers of Commerce last year, women in the paid workforce remain seemingly unable to lift themselves across a gender pay gap that persists at around 80 to 85 per cent of the male wage, while women university graduates earn on average $6000 - $8000 a year less than their male counterparts within six months of graduating.

It is hardly surprising then that self-employment starts to look attractive to women. Especially given the potential for increased flexibility in working hours, which often is a motivating factor in setting up one's own business.

I am particularly pleased that some of the benefits of being employed are being extended to include those in self-employment, for example the extension of Paid Parental Leave to self-employed parents.

Before I come back to Women in Enterprise, I want to talk a little about my role as Minister for Small Business.

I need first of all to declare a non-conflict of interest. I don't run a small business. I never have and I probably never will. But if I do, I have already learned many lessons that unfortunately a lot of small business owners will never learn.

The essence of the entrepreneurial spirit is risk-taking. However, what I have learned is that successful entrepreneurs manage their risk-taking by being very clear about where they are going and how they are going to get there.

The government cannot do this for people, which is why our focus is on providing support in the form of information, advice and training. This support includes self-employment (Be Your Own Boss) programmes, help on how to develop a business plan and introductions in export markets. We couldn't, and you wouldn't want the government to, run your business for you.

As Minister for Small Business I see myself as an advocate for small business – as your voice at the Cabinet table. It is my role to identify policy settings that are acting as barriers to taking on staff, expanding operations, investing in new infrastructure, increasing productivity, moving into exports and so on. I then have to come up with practical solutions that are deliverable and finally I need to persuade the relevant portfolio Minister to pursue the necessary changes, which is where the advocacy comes in.

The Small Business Advisory Group is a critical part of the process of identifying problems and solutions and, because they get to talk directly to officials, some of their real influence is unseen. I chair a Small Business Ministerial Group made up of Ministers whose work impacts on small business and this group ensures that the impacts of small business are considered when policy is being developed in a range of areas.

Small and medium-sized enterprises (SMEs) continue to be a key driver of growth in the economy, making up over 95 per cent of all businesses in New Zealand, and contributing around 40 per cent of total output. From 2000 to 2004 SMEs accounted for 60 per cent of all new jobs created. The National Bank’s Small Business Monitor showed that small businesses outperformed the rest of the economy from 2002 to 2004 in terms of economic activity. So, SMEs are important to the economy, and for them to be productive they must be the best that they can be.
That is why I have reversed the order of the official advice I have received about my focus as Minister for Small Business, as follows:

• Improving business and management capability
• Making transactions between SMEs and government agencies easier
• Enhancing communication between SMEs and government
• Providing more enterprise education for school students and young entrepreneurs, and
• Maintaining a quality regulatory environment that eliminates unnecessary compliance costs and minimises necessary compliance costs.

As I said to the Canterbury branch of the Institute of Directors the week before last, this is not to say that my eye is off the ball as far as compliance costs go, because small companies are exposed to exponentially greater costs per employee than large companies, which is not rocket science, but it needs to be remembered.

My main reason for putting business capability at the top of the list is that having compliance costs as the number one focus encourages the view that an owner just needs to wait until someone else fixes the problem, when there is much that they can and should do for themselves.

Last year, I attended a presentation by Arthur Grimes of the University if Waikato and Richard Fabling from the Ministry of Economic Development entitled "What sets successful firms apart from the pack?"

The information was drawn from the Statistics New Zealand Business Practices Survey 2001, which provided a lot of information from which they could identify business practices that were linked to success.

They identified investing in people – through performance pay, innovation-related employee training and regularly measuring employee satisfaction – and investing in innovation – through up-to-date equipment, marketing new products and continuous in-house R&D – as the key drivers of success.

Investing in people, products and markets – again it's not rocket science, but how many people know how to implement the theory in a way that is realistic given the nature of their business? We know small business owners are very busy people. Often because of the size of their business they end up doing everything and they haven't got the time to do the strategic stuff that will grow their business.

I am going to risk being a bit controversial and suggest that this applies more to male, as opposed to female, small business owners. Why would I say something like that when I know there is a "political correctness eradicator" breathing down my neck waiting for me to say something like this?

Well, it's because many of the reasons that lead women into business are quite different from the reasons that motivate many men. I am not saying this is always the case, but the differences are pronounced. My opinion fortunately has the advantage of being evidence-based. Allow me to explain.

The Women in Enterprise Project arose out of the development of the Action Plan for New Zealand Women, where it was identified that women in enterprise are a growing feature of the SME landscape.

Women are becoming self-employed at twice the rate of men, and are becoming employers at a faster rate than men. This trend is shared with many similar countries across the world. On average, however, women’s businesses start small, remain small, and generate lower incomes than men’s businesses.

As a consequence, the Ministry of Women’s Affairs, in conjunction with the Ministry of Economic Development, initiated the Women in Enterprise Project. The objective of the project is to gain a better understanding of women’s experiences in business and to explore opportunities for the government to support women to achieve greater business success.

Research undertaken as part of the Women in Enterprise project included a review of international and New Zealand literature, as well as interviews and focus groups with 50 women business owners and women involved in business assistance services, for example New Zealand Trade and Enterprise, the Pacific Business Trust and the Maori Women’s Development Incorporation.

Overall, research suggests that women business owners face similar issues as men business owners, such as developing business expertise, accessing finance and managing compliance costs.

However, as I indicated, differences in men’s and women’s enterprises reflect underlying differences in their motivations and goals, as well as a range of other factors that are likely to have a more profound effect on the success of women’s businesses.

These include:

• Lower levels of business experience – the industries that women work in and the positions they hold often mean that they are less likely to be exposed to the type of management experience necessary to run a business.
• A lack of accumulated wealth and borrowing potential – broken employment patterns, lower levels of income and a lower threshold for risk are some of the factors that contribute to the fact that women tend to have access to lower levels of capital than men. This can reinforce the tendency for women to set up businesses in female-dominated industries, which often require less start-up capital.
• Caring responsibilities – men and women have similar motivations for going into business, for example personal ambition, to be one’s own boss, and to raise economic returns. However, for many women the business is part of a broader desire to balance work and family responsibilities. This is not surprising when you consider that it is still true that women are usually the ones to assume the primary caregiver role. The theory doesn't always match the experience though, with many women juggling even more responsibilities, which sometimes limits the potential of their business.

Although women face some additional barriers as a result of these factors, the success of many women’s businesses highlights that not only are women able to overcome these obstacles but that they also bring other strengths to the business environment.

The significant numbers of women entering self-employment, which show an increase of approximately 31 per cent between 1991 and 2001, is evidence that many women see self-employment as a viable and rewarding work option.

Again I am generalising, but the different strengths that women bring to business include aspects of their management style. The literature cautions that "efficient management" is often seen to require masculine qualities, which many women do not identify with.

Other research, however, suggests that women's emphasis on co-operation rather than competition, collectivity as opposed to individuality, and web-like networks over vertical hierarchies actually fits very well within what are currently admired forms of management and leadership. The participative and transformative management style of many women managers, as well as the importance placed on inter-personal skills, confirms that women can do very well in a business environment.

When you know that investing in people is one of the fundamentals for business success then you have to know that women are going to be good at it.

Networks are another area where women can bring strengths, particularly given their participatory nature and emphasis on creating co-operative relationships.

International research suggests, however, that women experience difficulty in accessing networks particularly those dominated by men. This has seen the number of women’s networks increase over the last decade, for example HER Business network and women’s business groups attached to Chambers of Commerce.

Another recent initiative focused on improving women’s access to networks is Entrepreneurial Women Reflect Online. Two of New Zealand’s technology networks, Innovators Online Network and Women in Technology, are collaborating to host an online discussion forum for women entrepreneurs. The discussion forum will feature special guest contributors, and sub-topics will include work-life balance, road-blocks to success, finding other support networks and dealing with family and relationships.

I could go on with statistics that identify some of the disparities that exist between men and women that suggest the glass ceiling has found its way into this sector too. However, I am not going to do that as I want to end on a positive note.

I am pleased that the Women in Enterprise Project is producing the data, which I will be able to utilise as Minister for Small Business and Minister of Women's Affairs to advocate for the policies that will lighten the load. As I often say just because girls can do anything, doesn't mean they have to do everything.

It is interesting that when I asked the PM to take a punt on a synergy that I could see in Commerce and Small Business that she answered my request with a combination that has an even greater potential into the future. I am very excited by what can be achieved and I look forward to working with organisations like yours to explore the full potential that is there.