KEY POINTS:
"It's not that small businesses don't know what they're doing, they're just not quite sure what order to do it in."
So says Sarah Trotman, one of the country's leading voices for small businesses and the creator of the Small Business Expo running at the ASB Showgrounds in
Auckland from May 30 to June 1. This year the event will move on to Wellington in July and Christchurch in August.
Operators of small businesses are notoriously difficult to drag away from work but 7,500 went along to last year's event in Auckland and 82 per cent intend to return this year.
"We are so committed to getting business owners out and working on their businesses. Often they are technically very competent but they have a lack of business skills," says Trotman.
"I think New Zealand small business owners are waking up to opportunities like the expo. Today it's OK to admit you don't know everything there is to know. Ten years ago you might pretend you knew it all.
"People should emerge with a renewed commitment to working on their business."
The event is also ideal for people thinking of starting up a business, because all the advice is there, says Trotman. The expo has signed 200 business-to-business exhibitors in Auckland, and 100 each in Wellington and Christchurch.
One of the most important issues for business owners of any size is to have a plan for selling the company when the time is right.
"There is a lack of support for business owners in this field," says Trotman.
So this year, a team of bankers, lawyers, accountants, franchise experts and business brokers will be available in the Business Brokering Zone. Their aim is to get small businesses thinking about what they have to do to prepare when the time comes to sell.
"The good news is, if you are looking to sell your business at the moment, it is an excellent market, with plenty of private equity funding out there looking for a home," says zone participant, Greg Woodd, a partner at Simpson Western, the North Shore-based law firm which deals with many small and medium size enterprises (SMEs).
But, he warns, people buy businesses too quickly without doing their due diligence properly. Some people were buying companies without having talked first to the firm's customers and suppliers and getting confirmation of continued business. "The whole thing is extremely personal, like buying a house is extremely personal," he says. "It's amazing how quickly you can buy a business and then you're stuck with it for a long time."
Woodd counsels clients who come to him, burnt out after running every part of the business.
"People get tired out and they can't see any way other way of going forward. Often these people are in their 40s or 50s and we sit down, go through the process of showing people what happens if they put some management in place. ...If they get management in they get their life back and people are re-energised," he says.
If the business is sold, it can be a good idea for the former business owner maintaining a consultancy role can be a good idea. "Human intellectual property is not to be underestimated," he says.
Ed Stranan, will be the zone's business broker. A director with Christopher Brown & Associates, he cautions there has to be something to sell when the owners have left the company.
The business broker, who deals with manufacturing and engineering businesses, says he spends 80 per cent of his time finding businesses and 20 per cent of the time selling. Most of the companies he finds, he sells to his database of buyers.
Stranan, who looks at three businesses a week, says he would take on one new business every two months on his books.
"In amongst all the clay there is the odd flicker of gold," he says. The businesses must be transparent. Price expectations are unrealistic, it's like people are about the property market. "I have yet to talk to a vendor who doesn't think his company has potential." And either they can't give him the management information or the business is foundering.
"The greatest value are the ones that have some product or service which is quite unique, with continuing revenue because it is something intrinsic," says Stranan.
Meanwhile, the upbeat message from the Ministry of Economic Development (MED) with a large presence at the expo this year, is that New Zealand is one of the easiest and cheapest places in the world to set up a company.
MED will be promoting four offices, including the Companies Office and the Intellectual Property Office of New Zealand (IPONZ).
"People are unaware of the type and extent of free information available from us. People are not aware that when they start a business, they need to know who the competitors' directors are and their shareholders are. This can be of enormous use," says Charlotte Morgan, senior e-business adviser at the MED.
Later this year, the Companies Office is launching an enhanced service where new businesses can apply for a company IRD number and register for Roger Bell, chief executive of Vero Insurance which will be running the Vero National Business Support Zone, says one of his messages is to find a way of setting standards - Vero is hoping soon to be judged as world class by the Baldridge Criteria for Performance Excellence.
Being judged superior to your competition is great for business, says Bell. "Then you can charge on quality versus the others who are charging on price," he says.
"Typically a lot of New Zealand businesses say they want to be world class. When you say, 'how will you know? what framework do you have?' they always hesitate. It's a statement of good intent. If we are world class our customers will tell us, they say. But what if their customers don't know what world class is?"
Exporting will be another area explored at this year's expo.
Companies need look at things from a global perspective from day one, says Ken Stevens, export champion for 2007 and chairman of Glidepath, global manufacturer of airport baggage handling systems.
He will be one of the keynote speakers at the National Bank seminar series along with Minister of Trade, Phil Goff.
Stevens is no stranger to how small businesses work. "I have been everything from sweeper to designer to installer to key maker," says the owner of the 35-year-old company.
Exporting from early on may well mean they should try to raise more capital than they had originally planned for, but capital is not hard to raise in today's market, he says.
Tenacity is the only way to win new markets, says Stevens. It took six years of solid lobbying to win its first business in Malaysia and now the company is the number-one supplier of baggage handling systems there.
"You need to do your homework thoroughly," he says.
His main criticism of small New Zealand companies is that they don't export early enough and that they are reluctant to share their ideas.
"I get inspiration from other companies, from seeing what other people are doing."
Stevens appointed his first chief executive to his company in 1997 and says he has tried hard not to "stick his nose in too much".
Small business facts
* Firms with five or fewer employees have the highest profits per employee.
* SMEs account for 9 per cent of all enterprises in New Zealand.
* The total number of SMEs increased 10 per cent in the 12 months from February 2004.
* There will be 200 exhibitors at the Small Business Expo in Auckland, 100 in Christchurch and Wellington, total attendees expected to total 12,000. Source: Small Business Expo
* Useful websites:
www.smallbusinessexpo.co.nz
www.med.govt.nz
