The total control, productivity trade-off.


Published by Fairfax (Stuff.co.nz) on 18th October 2013.

The total control, productivity trade-off.

Owners’ desire to keep their business small and to retain complete control is preventing their business from reaching its full potential, survey results show.

The latest Grant Thorton International Business survey on productivity found 77 per cent of New Zealand’s small business owners believed this desire hindered productivity.

The professional services firm’s business transformation partner, Simon Hunter, said this explained why owners chose to increase productivity by hiring more staff, rather than re-thinking their strategy.

Statistics showed 20 to 25 per cent of SMEs increased staff between 2003 to 2012, said a Ministry of Business, Innovation and Employment (MBIE) spokesman.

Hunter said: “That’s not sustainable in the long term for individual business or the country as a whole.”

The MBIE spokesman said research from accounting software firm MYOB showed 37 per cent of SMEs had “growth aspirations”.

“The rest are owned by ‘lifestyle seekers’, 50 per cent, or ‘passionate professionals’, 13 per cent.” Hunter said that the preference to stay small and in control often results in businesses being increasingly insular in their day-to-day activities.

Brand engagement business Chilli, chief executive Jonny Mole said owners focused on growth needed to bring in external advisors to support and assist them.

But, he said: “Many owners have been burned by bad advice, so are gun shy and less willing to bring on the key people who are able to do this.”

As well as this they were reluctant to embrace change, said RightWay chief executive Greg Sheehan.

“This means they’re not prepared to take the risks suggested by external advisors.”

This coupled with their desire to retain total control meant their only adviser was their accountant, he said.

“Although they’re great at helping with tax issues; they don’t have the expertise to help with setting strategy or building a great brand.

“Business owners typically love what they do, but they don’t know how to grow a business. So they need good people around them to help them do this.”

Both Mole and Sheehan said there needed to be more support structures and systems in place to help owners do this.