Speech to Northland Business Expo

Introduction

Thank you very much for inviting me to speak here today.

I am always pleased to attend business expos – I can sense the excitement in the air and the potential for great things from small beginnings.

It always amazes me how many vibrant and innovative small businesses we have in this country.

Today I want to give you an idea of:

• the big picture - where your business fits with others in the country
• what I believe will be the key issues for businesses in the future
• what the Government is doing to help make life easier for you and your business.

Latest demographics

As Minister of Statistics, I want to take you through some of the latest demographic data we have on small businesses.  

The government defines small and medium enterprises (SMEs) as those businesses with less than 20 employees.

In the year to February 2010, 96.6% of enterprises in New Zealand were SMEs.  Northland had the highest proportion of SMEs of any region in New Zealand, at 97.6%.    There are 19,444 SMEs in the Northland region.

As for the very small businesses, we find that 87% of enterprises employ 5 or fewer people in New Zealand.  This is 90% in Northland.

We also know that SMEs account for 30.6% of all employees in New Zealand, and 39.6% of employees in Northland.

So small businesses are a vital part of our economy, and even more important in Northland.

Here’s another way to look at the number of enterprises according to their size.  The vast majority are owner-operated businesses.

We also have statistics on which industries have the greatest number of small businesses and employees in the Northland region.

The largest number of SMEs in Northland are in “Agriculture, Forestry and Fishing” (29%), followed by “Rental, Hiring and Real Estate Services” (17%) and “Construction” (11%).   Compare this with New Zealand as a whole, where “Rental, Hiring and Real Estate Services” is the dominant industry at 20% and Agriculture, Forestry and Fishing” is second at 15%.

The greatest number of employees in Northland work in small businesses related to “Health Care and Social Assistance” (15%), “Retail Trade” (12%) and “Manufacturing” (11%). 

This graph shows the percentage of enterprises in each age group, and there is an interesting comparison between Northland and New Zealand. 

If we add the first two bars, over half of SMEs in New Zealand are less than six years old, whereas in Northland it is 40%. 

Then if we go further along the age range, you can see the percentage of older businesses is greater in Northland than the whole country, with few over 21 years old.

The Statistics New Zealand website has many more statistics like this for your particular area or industry.   This is something I have been pushing for, as many businesses provide a lot of information to government through various surveys.   Now you can get something back, for free.

The Business Toolbox is a great example.  It provides information for small businesses on their local markets and industries.  You can get a map of your residential market or a profile for your industry, and use it to research your market potential.

Check out www.stats.govt.nzand make use of this free information to help your business.

Statistics can be a very valuable resource for businesses and as one prominent businessman put it, ‘well informed people make powerful decisions’.

Key issues for businesses looking forward

I cannot emphasise enough the impact technology is having on the way we do business now and into the future.

But are we using it to our full potential?

A MYOB survey last November of over 1,000 New Zealand businesses found that only 34% of Kiwi businesses own a website and 20% sell their products and services online.

Of course, not all businesses are suited to online trading.  But the opportunities created by advances in technology are growing exponentially.  All businesses need to be aware of them and take advantage.

Today I want to cover three areas of technology which I believe will have a major impact on small businesses and their productivity:

Ultra-fast broadband

Whangarei will be one of the first cities in New Zealand to benefit from the Government's commitment to ultra-fast broadband.

Over the next 5–10 years, we will see fibre enabling speeds of at least 100 megabits per second accessible by up to 75 per cent of New Zealanders.  This is more than 10 times faster than current rates.

This will completely change the way we do business.  There will be opportunities we can’t even begin to imagine:

• businesses will interact with customers in new ways
• location will no longer be important – can truly operate “in the cloud”

Here’s an example of a company already using high-speed optical fibre.  A Hamilton business called Marathon Photos can take thousands of photos of runners at an event in Sydney, and have them available for purchase online the next morning.

Another example – Auckland company Fern New Zealand provides point of sale technology to a group of wine shops in Noumea - they can remotely control their customers’ computers from Auckland.

Businesses need to be prepared and take advantage of the opportunities created by ultra-fast broadband.

Growth of mobile applications

Incredible growth:

• The iPad sold 2 million units in its first two months on the market, or 3 iPads a second.
• During that same period, applications for the device have been released at a rate of roughly 140 per day.

People are using mobile devices in imaginative ways.  For example, in Melbourne I can download a free iPad app which tells me exactly when and where I can catch the next tram, in real time.

There is so much demand for iPad applications right now – making websites friendly for fingers.  hairyLemon is a Christchurch website design company – they’re going gangbusters at the moment, designing new ipad applications for the US market.  They plan to increase their staff numbers by more than 30 percent this year.  

We need to get smarter with the way we provide services and information to businesses.  Think about web services rather than websites.

Geospatial technology

Over the time I have been involved with information and communications technologies, there have been other revolutions - the personal computer, the internet.  And I do believe geospatial information is at the heart of the next revolution.

Geospatial information is all about location. Every time you use GoogleMaps, call emergency services, fly or take a ferry, or buy a house, you are using geospatial information.  It’s becoming more and more a part of our everyday lives.

Geospatial information and technology already contributes $1.2 billion to our economy.  There are significant opportunities for this to grow even more.  But we need government and business to make more use of the data already out there.

How is the Government supporting SMEs?

I appreciate that in the past two years have been tough for business.

However, there are signs the New Zealand economy is recovering, and there are growing opportunities for New Zealand businesses

The three main ways the Government can help businesses of all sizes become more productive and maximise their contribution to economic growth are:

1. Improving the regulatory environment– cut unnecessary red tape wherever possible.
2. Improving the economic environment– recent budgets have restructured the tax system, cutting company and personal tax rates, and encouraging savings and investment.
3. Improve communication between government and business– using the latest technology to make it easier for businesses to deal with government agencies.

The Government has made considerable efforts in all three arenas.

International research shows that countries that keep rules and regulations to a minimum, offer tax and other incentives, and provide training and support services to start-up entrepreneurs increase the likelihood of new businesses starting up and surviving. 

New Zealand’s regulatory environment

It’s a fact that New Zealand has consistently been one of the easiest places in the world to do business.  According to the World Bank’s latest Doing Business report, New Zealand is ranked number three in the world for the least impact of regulations on business.

The World Bank’s report also ranks each country on ten areas of business.  On eight indicators, New Zealand is ranked ahead of Australia.

One of my priorities as Minister for Small Business is to identify areas we can cut unnecessary red tape for small businesses.

The Small Business Advisory Group is made up of ten savvy business owners from around the country

each member has many years of practical, hands-on experience in different businesses and industries

it’s an excellent vehicle for providing me and the Government with feedback on policies which affect small businesses

recently they have provided valuable input into changes to the Holidays Act, Minimum Wage Review, Resource Management Act, and many other pieces of legislation affecting businesses

90-day probationary employment law is one example:

• has allowed small businesses to take a risk and employ new staff
• no longer fear of expensive legal action if things don’t work out
• the law has since been expanded to include all businesses

Improving communication between government and business

Business.govt.nz  - How many of you have used this website?

Business.govt is the first stop shop for businesses.   It was relaunched last year and is constantly being updated.

The site has a wealth of free information, resources and links to services for small businesses.  There are business planning templates, tools and training modules to help you grow your business. 

The site is gradually being expanded to include more transactional services with government agencies.

There is also a competition running on the site, offering prizes for the best business plan.  Use the business plan template to set out your most creative business ideas.   The competition closes on Friday, 3 June.

Make business.govt your homepage and sign up for their monthly newsletter.

Other government initiatives to support small businesses

Since 2009 the Government has made a number of changes to the way we support businesses, making sure that every dollar is spent wisely.

1. The global financial crisis hit when we took office, and we immediately put into place a Small Business Relief Package to get businesses through this difficult period.
2. Last year we changed the way training and development services are delivered to small businesses. 
3. business owners are able to choose the assistance which is best for them at the local level
4. your Regional Business Partners for Northland are Enterprise Northland and the Northland Chamber of Commerce
5. Last year we also overhauled the way research and development is encouraged.

-   small businesses without an R&D record can now apply for technology transfer vouchers to fund up to 50% of their spending on R&D.

I was very pleased to hear that New Zealand Trade and Enterprise and the Ministry of Science and Innovation has made available up to $1 million for qualified businesses in Northland to take up training and development programmes.

So if you need help with research and development or want to develop a plan to grow your business talk to Enterprise Northland and the Northland Chamber of Commerce.

Conclusion

These are just some of the ways government is changing the way we deal with businesses.

We want to create an environment where:

• taxes and regulations encourage investment and growth, and
• your business has choice in the way you are supported, to suit you as your business grows
• We want to see small businesses become more productive, because we all benefit.
• But government can’t do it all ourselves.  The opportunities are all out there for everyone to take advantage of.