Industry associations vital for small business - Tenby Powell

14:08 16/08/2012 ©Fairfax News

For the past three years I have had the privilege of travelling New Zealand with a small team of senior executives to interview the finalists in the Z Energy 'Leader of Tomorrow' competition.

This award, co-sponsored by InfraTrain, New Zealand's Industry Training Organisation for Infrastructure industries, is given to one young construction engineer each year and forms part of the New Zealand Contractors' Federation (NZCF) annual conference.
In essence, it's about identifying and recognizing the next generation of senior construction leaders who will build New Zealand.

Other awards include the Trainee of the Year, also sponsored by Z Energy & InfraTrain, and the Hirepool Construction awards.

This year's Leader of Tomorrow award went to Dan Lucas of Fulton Hogan for his leadership of the new Christchurch motorway and, as an important aside, his leadership during the February 2011 earthquake. Fulton Hogan is not a small business; it's one of this country's largest and most dynamic contracting companies.

Similarly the Trainee of the Year and category winners of Hirepool Construction Awards all went to large companies. Jamie Campbell from McConnell Dowell was the Trainee of the Year and Fletcher Construction won the big award for the Victoria Park tunnel; a project worth in excess of $350m.

And therein lies the opportunity for small business owners. Being part of a forward looking and proactive professional industry organisation means we get to rub shoulders with the big boys. Usually this means access to resources, which importantly includes exposure to education and new thinking.

A recent example of new thinking came from the New Zealand Institute of Chartered Accountants (NZICA) which released a radical paper on how to better tax small businesses - one that potentially takes business away from accountants. Why would a professional organisation do that to its members? Because the changes are in the public interest, says Institute CEO, Terry McLaughlin. "I have a statutory obligation to act in the public interest and that differentiates us from other bodies," he said.

The proposal focuses on simplifying the tax system for small and micro business owners to such a degree that McLaughlin believes his Institute's recommendations will reduce the costs of tax compliance for these smaller businesses by 33 per cent.

Any small business owner will welcome with open arms a reduction in red tape, particularly if it's accompanied by a cut in administrative costs.

As for education, it is a continual focus for most Industry Associations. The Contractors Federation has 583 member companies of which 500 (86 percent) are small businesses. Most of the SME owners I talked to at the Blenheim conference saw the benefits of their membership, with exposure to new thinking and access to education ranking highly as their reasons for continued membership.

And their reasoning is echoed around the developed world. In fact it's supported empirically.

In a recent report, the New Zealand Institute quoted the World Economic Forum which has identified innovation and business sophistication as the most important drivers of the incomes of advanced economies. "The only way countries can sustain higher incomes and associated standards of living is if their businesses are able to compete by offering new and advantaged products and services."

New Zealand is an advanced economy. We are ranked 21st out of 34 countries with Switzerland, Sweden and Japan being at the top; Greece, The Slovak Republic and Turkey are at the bottom. We fall immediately behind Australia. It's nowhere near as exciting as Olympic medal rankings but it's winning at these disciplines that will make the economic difference in times to come.

And at the core of winning at these two disciplines is education.

Many countries are focusing on lifting innovation and business sophistication as an economic strategy. If New Zealand does not do better as an innovator, one that successfully commercialises ideas, we will not keep up economically with other advanced nations.

The question is - how do we lift innovation and sophistication in our own businesses? This, in turn, may assist with the perennial problem of attracting and retaining the next generation of senior business leaders to New Zealand.

Tenby Powell is an entrepreneur, builder of organisations, and the driving force behind the New Zealand SME Business Network. Follow him on twitter at @tenbypowell.