Local Government Magazine
Opinion

In defence of small businesses

By Vaughan Winiata, managing director, V Information and ‘Small Business Evangelist’.

On April 15 Tauranga council made national media when it demonstrated strong leadership for its small business community amid the L4 lockdown. This was significant for a number of reasons of which I will explain, but first a bit of preamble. Our small business (SME) sector employs approximately 600,000 people, or about 30 percent of the country’s workforce.

SMEs also contribute about 30 percent to our GDP, so broadly speaking this sector accounts for almost a third of the horsepower in our economic engine room.

These numbers were before the pandemic came along and, thanks to a dish of bat served medium rare, we found ourselves suddenly forced into weeks of expensive lockdown and what the SME numbers will look like post-lockdown is anybody’s guess. No business, big or small remains viable for too long when all revenue is stripped out but all costs are left in.

The business term for a situation like this is aptly called “a bloodbath” in reference to a bottom line that is “all red ink”.

On April 28 we began the staged transition out of lockdown and started our journey on the long and winding road to economic recovery. Unfortunately, there have been many casualties and, since March 26, day one of Lockdown, many small businesses are sadly gone.

Those small businesses still afloat will be asking of themselves the not so simple question “where to from here?”, which brings me back to what this column is about, the leadership of Tauranga’s local government.

Throughout the 34 days of L4 lockdown, only one local government Leader came out in support of small business, that was Tauranga mayor Tenby Powell.

On April 15 Tenby Powell featured in all national media calling for an immediate opening of small businesses to save thousands of jobs. This was significant, as never before had the leader of a council made such a vocal and impassioned plea to Central Government on behalf of SMEs.

Tenby Powell is a longstanding advocate for SME, as it’s in his DNA. Prior to being Mayor of Tauranga, he led the Small Business Council commissioned by Minister for Small Business, Stuart Nash. It is therefore not a complete surprise that he would demonstrate empathy for how our small business landscape has quite literally been flipped “base over apex”.

What was a surprise, however, was the deafening silence from other local government leaders who opted not to endorse Tauranga and “go in to bat” for their small business communities, and this did not go unnoticed within the SME sector around the country.

At this moment as you read this column, many small businesses face financial ruin, lost livelihoods and mortgagee sales of family homes.

That is just the tip of the iceberg. Add broken marriages, split families, domestic violence, drug abuse, mental health and the worst of all, suicide.

The SME sector without immediate support, direction and leadership is societally, a ticking time bomb and the leadership Tauranga has shown for its small business community must be commended, as courageous and calm leadership is the best encouragement we can give our SMEs who are staring into an abyss.

Historically, governments both local and central have not had a great affinity for the SME sector, and this is not something new and, in many ways, even understandable. One major reason for this lack of empathy is this sector has always been diabolically fragmented – a fragmentation created by a multitude of organisations, associations and agencies involved that are not SME specialists.

Closer inspection reveals The Ministry for Business, Innovation and Enterprise (MBIE), NZTE, BusinessNZ, local Chambers of Commerce and Business Associations, just to name a few and all operating as territorial silos. None of the aforementioned have a heart and soul that is focused solely on small business operation. And this is a big problem.

The fact that our country has no specialist body for a sector that accounts for one third of our economy is quite unbelievable.

On any given day the big business leaders of organisations like Air NZ, Fonterra or Spark can command a strong voice, gain access to Government doors, or feature on the front page of pour newspapers while the SME sector is languishing near the back page somewhere between the Horoscopes and Crossword Puzzle.

Until this changes, nothing changes. That is why it is important we don’t miss the opportunity to acknowledge and support leadership and direction the Tauranga local government is providing for its SMEs.

It cannot be understated how actions like this are gold for small businesses fighting for their survival. I lay down a challenge to all other local governments to make a mockery of my views in this column and demonstrate meaningful examples of support for our small businesses, and nothing would please me more than to be proven wrong on this occasion.

Local Government and Small Business #weareallinthistogether.

 

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