The Economic Advisor

Small Business in New Zealand – A Vital Component of the Economy

The release of the report ‘SME’s in New Zealand: Structure and Dynamics 2009′ has reconfirmed the strong contribution that small and medium sized businesses make to the economy, particularly noting that their dynamic and flexible approach has contributed to the economy’s successful return from economic hardship, providing the backbone to the New Zealand economy.

Small business in New Zealand has always attracted a large pool of investors who wish to create their own future by being their own boss. Whether this is growing from the desire to create a flexible work-life balance or to initiate the beginnings of building an empire, purchasing a small business is often the first step in realising their dreams.

Small business is not only attractive to the aspiring business owner and investor, but the New Zealand Government encourages such development. This is due to the fact that small businesses offer the economy many advantages.

What sets small business apart from their larger counterparts is that due to their size and employment structure, they often encourage innovation and flexibility, while maintaining close relationships with their customers and the community in which they operate within. Additionally, through these characteristics, small businesses keep larger firms competitive.

Further traits of a small business include their ability to provide employees with comprehensive learning experiences, develop risk takers, generate new employment and provide greater employee job satisfaction, contributing to the retention and stability displayed in national employment figures.

The SME 2009 report emphasised that one of the key benefits of small business is that they are dynamic and flexible. Small businesses are well renowned for their ability to develop new ideas, material, processes and services that larger firms may be unable or reluctant to supply. In small businesses, experiments can be conducted, innovations initiated and new operations started or expanded without the need for lengthy board meetings and universal company acceptance. Being first to market in today’s modern society can mean the difference between success and failure.

With this innovation, small businesses not only drive results for themselves, but contribute to keeping larger firms competitive. With the introduction of new products and services, small businesses encourage competition, if not in price, at least in design and efficiency. With growing niche markets being developed by the segmented demands of the modern generation Y and Nextgen consumers, small businesses are finding increasing opportunities to develop and satisfy increasingly diverse demands.

With the growing reliance of small business in New Zealand to provide the backbone of the economy, growing segmentation of consumer demands, and providing many a budding entrepreneur the stepping stone into the competitive world of business, small to medium sized enterprises will continue to grow as an investment opportunity to both those who wish to be self employed and those who plan to take over the world.

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