Why are the odds stacked against the small-business owner?

In November 2023, National Road Carriers Association3 MinutesBy James SmithDecember 5, 2023

If New Zealand is ever to get its mojo back, we must change the attitude towards small-business owners and implement policies that nurture and encourage them.

Every big business started as someone’s idea, a thought that there might be a gap in the market, a way to challenge the status quo or a desire to be master of their destiny.

Some of the biggest companies started out in a spare room or garage. Jeff Bezos and MacKenzie Scott started Amazon in a rented garage in Bellevue, Washington, and grew it to a business that spans the globe, generating US$514 billion in revenue last year.

In New Zealand in 1978, Bruce Plested started a company called Mainfreight with $7200 and a 1969 Bedford. It is now a global logistics company, generating revenue of $5.68 billion last year.

Every year, thousands of individuals make the brave move to step outside the protected environment of employment to have a go. Having a go is hazardous. According to Stats NZ, only 37% of businesses survive two years.

Talk to any small business owner, and the stories are similar. Regardless of whether you have a coffee cart or a trucking business, it feels as if every official, regulation and rule is there to restrict your ability to succeed.

The impact on the small-business owner seems out of proportion and can lead to the perception it is just too hard.

To understand why this is and why belonging to an industry association is so important, you must understand the power imbalance between small-business owners and almost everyone they deal with.

The small-business owner is easily intimidated by an official with a clipboard or a customer who holds their fate in their hands. It is also easy for the business owner to overlook a detail or misinterpret a regulatory requirement. They are vulnerable to subtle changes in the economic environment as they lack the protection of critical mass that larger businesses have.

One of the main reasons for this is the small-business owner, in most cases, has both sleeves rolled up and is heavily involved in the day-to-day operation of their business. They are often heavily in debt and are learning the ropes in a highly competitive environment. In other words, a business is like every other form of life – at its most vulnerable in its first year.

Sadly, there is no requirement for a small-business owner to plug into a support network. Which, combined with an unhealthy dose of ignorance, leads us back to the appalling failure rate.

If there were a requirement to belong to the relevant industry, trade, or professional body along with bureaucratic support for those brave enough to have a go, we might just generate more success stories and get our mojo back.