Exciting Future for Business, Says SME Monitor

media information: 20 March 2006

Exciting Future for Business, Says SME Monitor

New Zealand businesses remain confident despite warnings of economic gloom, according to results of the inaugural ICEHOUSE ICE Monitor for SMEs.

The benchmarking research studied alumni from growth programmes run by the ICEHOUSE over the last 3 years and concluded that internal challenges and constraints are the biggest obstacles to business growth.

The majority of the owner managers of these SMEs (96%) acknowledged these obstacles but felt they were in the optimum position to address them.

Most businesses felt tax and compliance issues had little impact on business growth but staff issues including recruitment and retention continued to be significant challenges and barriers to growth.

David Irving, The ICEHOUSE Chairman, said the alumni from the ICEHOUSE growth programmes were typical entrepreneurs who had great faith in their personal ability to overcome the odds. It had been a very good time for owner manager -led businesses in NZ over the last 3-5 years – with the average increase in earnings (EBIT - earnings before interest & tax) being 26% for alumni. "That is outstanding growth by anyone’s measure," he said.

The survey looked at the Owner Manager’s Programme (OMP), Agribusiness, Moving On (Succession & Exit) and the 321 Go Global Emerging Exporter programmes held over the past three years.

“Figures for OMP alumni show an average annual increase in turnover of 17% with EBIT almost twice that. We also found that many exporters who attended the Global programmes were reducing staff numbers, achieving low profits and even losses while averaging an annual export growth of 11.4%. The area of building international businesses will continue to be a key focus for the ICEHOUSE and the University of Auckland Business School ” said Irving.

He noted that the alumni of all programmes averaged large increases in net assets (45% for all alumni) which, while probably influenced by a climb in property values, also indicates that some of the benefits of growth are returning to the entrepreneur who is reinvesting the profits in the business. "Over time this asset growth will need to be watched as it may lead to a relatively poorer wealth performance if asset growth outstrips earnings," he said.

Irving said all of those surveyed credited the ICEHOUSE programme with increasing management and leadership capability of their businesses. In addition respondents stated as an unexpected bonus they had learnt much about their own health and well being.

“Clearly the ICEHOUSE programme has reinforced the value of the owner manager having some time out in mid career to learn new strategies which allow him or her to be on the job rather than in the job“.

ENDS

NOTES FOR EDITORS

Survey: 24% response from a target group of 238 SMEs

Sample: alumni from ICEHOUSE growth programmes 2001-2005

Business Growth Constraints and Challenges

14% compliance
27% competition
34% technology and systems
35% funding, including lack of resources, and cash flow
60% staff recruitment, retention, skill, motivation and trust
75% communication
75% external challenges and constraints
88% self: skills, knowledge, ability, confidence, motivation
96% internal challenges and constraints including time use, delegation, skills, knowledge

Personal, well-being, and reflective issues

74% Reported good or improving overall life balance in the last two years
79% Credited the ICEHOUSE programme with increasing their awareness of physical, mental, emotional and other aspects of health and as a motivator for self improvement
53% Identified as family businesses

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