New Zealand’s SMEs are doing pretty well, but loosening the regulatory strings could help them do even better, the Ministry of Economic Development has told the incoming small business minister.
Chief executive David Smol said previously economic and regulatory policies including broad-based prices, availability of skilled labour and reasonable access to finance benefited both small and big businesses.
However, he wrote in his briefing, SMEs have slightly different needs to their larger counterparts. They respond quicker to environmental changes, are our best sources of innovation and new products and their owners lack the financial resources to plan ahead and focus in growing their businesses.
The key policy concerns now for small businesses include improving the regulatory environment, supporting their recovery from events such as the Christchurch earthquake and improve their capability to support economic growth.
SMEs, defined by the ministry as those with less than 20 employees, make up 97 percent of New Zealand’s businesses; they are responsible for 31 percent of employment and create 40 percent of added-value production.
The smallest businesses, those with a maximum of five people, are responsible for 90 percent of these businesses. These small companies also generate the greatest number of jobs.
Smol said the regulatory environment for SMEs was one of the best in the world but there was room for improvement. The government is working on identifying regulation that could be streamlined and needs to remove or simplify restrictive regulations and create incentives for firms to comply with those that do not add unnecessary compliance costs.