KEY POINTS:
Back in 2000 when the idea of The ICEHOUSE was hatched as a business growth centre to help more New Zealand companies succeed at home and internationally, I had no idea of the goldmine we had discovered.
I refer to the understated heroes who are the owner-managers of
New Zealand small- and medium-sized enterprises (SMEs). The ICEHOUSE has now facilitated 600 of them through five-month management journey programmes with many more attending shorter seminars.
The results have been fantastic - average earnings increases of 30 per cent a year as a result of the programme, and better still, owner-managers report a much improved work / life balance.
We are a nation of SMEs.
* They account for 40 per cent of New Zealand's gross national product.
* 96 per cent of all businesses have fewer than 20 employees.
* 60 per cent of all jobs created in the last five years came from SMEs.
* Clearly successful SMEs are crucial for New Zealand's economic future.
Despite that, we overlook this vital group. In recent times David Skilling of the New Zealand Institute and Lloyd Morrison of Infratil have spoken out on the country's woes and promoted rallying cries like "top 10 per capita in the world". Treasury has recognised the role of the firm in economic improvement but unfortunately they examine the firm from the outside rather than from the inside where the productivity gets done.
All of these messages fail to reach the very people who can do something about it - New Zealand owner-managers. These people are permanent features of our economy. They not only manage as their corporate colleagues do but they own the business - they have skin in the game. They can't leave in a hurry.
What The ICEHOUSE has learned over the past eight years is that these owner-managers can buy, make, serve and sell but they are often not good managers. They are usually not tertiary educated, they have learned by doing. Typically if they delegate they do so without trust - it's their money, they make poor people decisions, are themselves time-poor, they struggle to face up to succession and most importantly they are lonely in their role. While their streetwise upbringing makes them resilient, it does nothing for their judgment at key times like hiring a key staff member, business planning, major acquisitions, succession and so on. We have learned that owner-managers benefit from wise advice, and this does not come solely from an accountant or lawyer who typically view the owner-manager business only from a financial or legal perspective.
So what are the management skills our "gold nugget" SME owner-managers need to really shine?
KEY AREAS
In our experience, the five key areas that New Zealand SMEs owner-managers most need to focus on are:
1. Delegation, so that the owner-manager can be proactive about tomorrow rather than reactive to today's problems.
2. Building a lead team of their most valuable staff, so the business is not overly dependent on the owner-manager and staff members can see opportunities to grow within the
business.
3. Finding some wise advice, to be available to the owner-manager from someone who has "been there, done that". Treat the arrangement as a partnership.
4. Spending more time out of your office - with staff, on the factory floor, and with customers and other key stakeholders. Use the occasion to learn from them and to transfer your messages to them.
5. Managing business risk by using your streetwise mentality to smell out trouble and opportunity.
Outstanding business productivity requires a wide range of management capabilities, such as resource allocation, organisation, remuneration, output, yield, innovation and returns, and the best way to acquire these is by working alongside experienced and successful business leaders.
We trust this occasional series of articles will enlighten owner-managers to realise their potential. They are understated heroes and New Zealand's economic future depends on them.
* David Irving is chairman of The ICEHOUSE.
The ICEHOUSE is a business growth centre focused on making a difference for New Zealand. (www.theicehouse.co.nz)
