The Institute of Directors (IoD) is backing the move to build capability of small business and reduce their compliance burden.
On Monday 2 December, the government announced its support for the recommendations from the Small Business Council and agreed to implement initiatives including building the capability and skills of small business owners.
IoD chief executive Kirsten Patterson says one of the things the New Zealand Small Business Strategy highlights is that people with the right capability and skills are key to small business success — that includes good governance skills.
“Some people think governance is only for bigger organisations, when the reality is good governance is relevant to all organisations irrespective of size,” Mrs Patterson says.
“Given 97% of New Zealand businesses are small businesses employing almost a third of the workforce, there’s no question we need to equip them with the governance skills they need to succeed,” says Mrs Patterson.
The IoD, working with the Ministry of Business, Innovation and Employment and the Companies Office, helped produce a new suite of online governance resources promoting better business practices. It includes modules that look at why good governance is important and how it can help businesses to run smoothly, achieve goals and maintain a good reputation.
The recently released IoD/ASB 2019 Director Sentiment Survey echoes findings from the Small Business Council’s report which says compliance processes can significantly increase the work load and costs for small business owners.
The IoD survey found 76% of directors of small businesses said time spent on compliance activities continues to increase, up from 72% in 2018.
In addition, with the changing regulatory and legal landscape, the survey found 47% of directors said they are more cautious in business decision-making due to personal liability, up from 39% in 2018. The proportion is higher for directors of small businesses with 60% agreeing they are more cautious, up from 41% in 2018.
Directors also identified regulatory red tape (17%) as one of the top risks facing their organisation along with labour quality and capability. The proportion is also higher among directors of small businesses with 25% saying red tape is a major risk for them.
“A reasonable level of regulation has its place, however small business owners also need time to focus on things that will help their business to thrive,” says Mrs Patterson.
“There needs to be a right balance between time spent on compliance and on matters that can help them get ahead of the game such as strategy, sustainability and innovation — that’s where good governance can help,” Mrs Patterson adds.