By Vaughan Winiata, VFormation.
As 2020 draws to a close, many will be pleased to lock the gate and throw away the key on what has been a forgetful year.
The Small Business sector is just one of the many communities that felt the full force of the Covid-19 economic impacts, some were fortunate to be ‘essential’ businesses and thrived, others were jettisoned into the Small Business Graveyard, never to be seen again.
As bleak as the opening sentences read, the truth is, at the best of times and even without the disruption of a pandemic, many small businesses struggle to be viable. For Small Businesses, it is a reality that failure is more likely than success, and often that’s no reflection of an entrepreneurs’ personal resources or capability.
An overlooked fact is that, by a long shot, local governments have far more influence over the Small Business sector than central government. The success of Small Businesses is directly influenced by their local business environment and where local governments play a huge role. Our local communities rely on Small Businesses who in turn are crucial to the prosperity of our local communities, Small Businesses can be described as the glue that gels local economies together.
The term ‘local environment’ was referred to by Malcolm Gladwell in his book ‘Outliers, The Story of Success’ where he wrote: “The tallest oak in the forest is the tallest not because it grew from the hardiest acorn, it is the tallest because no other trees blocked its sunlight, the soil around it was deep and rich, no rabbit chewed through its bark, and no lumberjack cut it down before it matured.”
Malcolm Gladwell’s view stands firm in the Small Business sector, even the hardest working and most resourceful small businesses will struggle to grow when the local environment stifles their efforts. Enabling a favourable local environment will be a real challenge for Local Governments looking for effective ways to transition from the pandemic induced emergency measures to sustainable recovery initiatives and policies.
Small Business was also one of the hottest political footballs in the recent elections, levels of rhetorical lovey dovey for this sector covered all the predictable areas such as subsidies, grants, red tape, and the hot-to-trot topic of mental health. Thankfully, the election is now behind us and it’s back to the coalface of our local business environments.
With local environments and a wee bit of Christmas Spirit in mind, I have comprised a Small Business wishlist for our local governments, who in their own way can be a real life Santa.
Listed below are three key areas I believe are ‘diamonds on the floor’ because they are realistic, actionable and will go a long way to creating a more favourable local environment for Small Businesses.
Christmas Wish 1: Government Procurement
Despite what officialdom may say, Small Businesses should be given special dispensation when it comes to Procurement. Procurement policy and process must evolve beyond patronisation and be more transparent, simpler, and accessible.
The current situation is a murky administrational spagbol that favours bigger businesses with the resources to navigate the maze-like halls of bureaucracy. If there is just one thing that can make a positive difference to the Small Business sector – it is Procurement. This is an area where local government leaders, some of whom earn more than our Prime Minister, can show their mettle for the genuine societal benefit of our Small Business community and wider economy.
Christmas Wish 2: Business Advisory
One of the biggest decisions many Small Business owners will be facing is taking on more debt to keep their business going or to simply cut their losses and shut up shop. This is a time when sound professional advice is critical, yet most small businesses under duress are notorious for ignoring advice and simply being ‘possums in the headlights’.
This is an area where local governments can help through better support of the Regional Business Partners (RBP) growth advisor program. The RBP program is a taxpayer funded advisory service to support Small Businesses.
Right now, for example, our Government has allocated $75 million to the RBP program to improve the digital enablement of the Small Business sector. Unfortunately, most small businesses never get to know about these supportive initiatives. Local Governments need to better utilise their own ratepayer funded Business Associations (46 in Auckland alone) to drive awareness of this valuable initiative to a wider SME audience.
Christmas Wish 3: Buy Local
Buy Kiwi Made campaigns have been around in various guises for decades with questionable degrees of effectiveness. An unintended upside to the pandemic is that it has given the topic a steroidal like boost, a boost it badly needed.
This is a golden opportunity for Local Governments to capture the renewed focus and encourage consumers to ‘Buy Local’. Quite frankly, all local governments should be promoting Buy Local on the basis that it is a pillar of their regional development strategies. The success of these campaigns maybe be unclear, but the general principle is very sound. I have no doubt that there is a clear definitive link between a Buying Local culture and a local Small Business environment that is more resilient and sustainable
So where to from here?
To begin with we must acknowledge that it is not the role of local government to make small businesses viable, that is the business owners responsibility. It is not a criticism but simply the truth that most government employees know very little about running a small business so it is appreciated that they do us all a favour and stay out of the way.
The most meaningful actions a local government can do is to utilise the ‘triggers and levers’ they already have at their disposal to support their local small business communities. Reinvention of the wheel is not necessary, the wheels have always been there.
The Small Business community has never been great at articulating exactly what it is it wants from governments, both central and local. That is why unqualified or unrecognised small business commentators and advocates take the opportunity to fill the vacuum, the outcome usually poorly disguised self-promotion.
The good news is, the new normal has brought an end to such shenanigans and a lot more dialogue, directly from the Small Business coalface is making its way past the bureaucracy and through to the decision makers in government. At this stage, more evident in central than local government.
I will close out with a line from the book ‘Nothing You Don’t Already Know’ by Alexander Den Heijer: “When a flower doesn’t bloom, you fix the environment in which it grows, not the flower.”
The three wish list factors noted here can go a long way to improving local small business environments by supporting business owners to leverage their own resources and capability to maximise performance and ride out the economic storm.
While I am one of the many who looks forward to locking the gate and throwing away the key on 2020, I am also optimistic that 2021 will produce evidence of the Small Business sector leading our economic recovery.
In the meantime, I appreciate your readership and wish you all a safe and happy Christmas and also look forward to catching up again in 2021.