A great small business story

September 10th, 2014 at 3:00 pm by David Farrar

Stuff reports:

When the Christchurch earthquake left hairdresser Michele Robertson and her friends short of a workplace, she decided to open her own.

Few 23-year-olds saw opportunity in the destruction of their city. But Robertson, who has worked in salons since she was 16, had always wanted to own her own.

“I was naive enough to think it could work,” she says.

“And it did.”

But Robertson was not without her naysayers.

“The first meeting I had with the bank manager – the earthquake had just happened, he might have been having a bad day – but the way he spoke to me was so degrading,” she says. “I went home and nearly gave up.”

Even reality television show host Tabatha Coffey, of Tabatha’s Salon Takeover, said Robertson was “crazy” when she met her at a hairdressing event at the Sky Tower.

But Robertson figured, “If I failed, I had the rest of my life to fix it. If I succeeded, I’d set myself up for a really good career.”

She opened Balayage, in Addington, five months after the earthquake in July 2011, thanks to $15,000 loan from her parents via the bank.

Mentors such as former boss Sonya Mbonyinshuti and uncle Jon Weir, who owns a construction company in Christchurch, encouraged Robertson to learn from their failures, as well as their successes.

Their main advice?

“Not seeing money that comes into your bank account as yours. It’s not,” Robertson says.

Following this, she paid herself about $200 a week for the first seven months and put most of salon’s revenue into a tax and GST account. She worked six days out of seven, and lived at home.

After one year, Robertson owned Balayage freehold and had a $2000 surplus, which she gave to local charity Te Mapua Child and Youth Trust.

That’s a great story. We need more people like Michelle willing to give it a go. Her experience of very low incomes for the initial year is not unique. I know of an advertising agency where the owners were paying themselves less than the receptionist, in a bid to keep it going.

This is one of the reasons why we should be very wary of employment law changes that will impose extra costs on small businesses. Many of them start off on the verge of failure, and it would not take much to push them over the edge.


Small business views

September 5th, 2014 at 1:30 pm by David Farrar

MYOB had Colmar Brunton do a poll of 1,000 small business owners.  Some findings:

Preferred Policies

  1. Reduced prices for unlimited data broadband 69% support
  2. Simplification of Provisional Tax rules 67% support
  3. Tighter controls on foreign investment 54% support

Least Favoured

  1. Capital Gains Tax 60% against
  2. Raising age of super 43% against
  3. Remove 90 day trial period 39% against

Trust to manage the economy

  1. National 63%
  2. Labour 8%



Labour bad for small business

May 26th, 2014 at 9:00 am by David Farrar

Stuff reports:

Small listed companies have performed significantly worse under Labour governments over the past 40 years because of major policy changes, a report says.

The report, produced by Massey University economics and finance senior lecturer Dr Chris Malone and associate professor Hamish Anderson, looked at the results of about 500 NZX listed companies since 1972.

“The smaller firms have done abysmally poor during Labour terms of office,” Malone said.

So why?

“We have attempted to ask the question why that has happened and it does appear to be related to policy reform.”

Companies were classified as large or small by splitting the sample at the median capitalisation.

Small firms had average monthly returns of about 0.7 per cent under Labour and between 1.4 per cent and 1.8 per cent under National.

Monthly returns for large listed firms were only slightly better when National was in power, he said.

So a National Government doesn’t help big business, but small business.

BusinessNZ chief executive Phil O’Reilly said the research made a valuable point.

“It’s policy uncertainty and radical policy change that will tend to destroy business confidence,” O’Reilly said.

Businesses wanted policy that was well-signalled, evidence based and supportive towards business growth.

Businesses tended to hold off investing and employing until the impact of policy changes were known, he said.

Even what may appear to be a minor change such as the KiwiSaver contribution rate can have a significant impact on a small business. Your payroll software needs to change. Your employee records need to change, and you ofte then spend weeks or months correcting errors with the IRD.

Regardless of the merits of a Capital Gains Tax, it would hit small businesses badly. It’s easy for a large business to value all its assets and work out capital gains. A small business will not have internal accountants but instead have to spend tens of thousands of dollars hiring external accountants to do this.

Large businesses have HR divisions to cope with changes in employment laws. Small businesses generally will not, and again be hit hardest with any changes.



The union view on jobs

March 16th, 2013 at 8:58 am by David Farrar

Kerri Jackson at Stuff reports:

Small businesses that cannot afford to pay their staff a living wage should probably not be in business at all, a union leader says.

First Union general secretary Robert Reid said while the movement supporting a living wage of at least $18.40 an hour was generally targeted at large corporations and city councils, some undercapitalised small to medium-sized enterprises (SMEs) needed to think about their business practices as well.

“Why should a worker suffer for being employed by a business that maybe shouldn’t exist?

What an appalling statement. It shows the hatred for business that some union leaders have. Small business owners often spend months or years struggling to set up a business when they can’t even pay themselves a salary. And they create jobs for others, but Robert Reid thinks they are making their workers suffer if they pay them less than $18.40 an hour.

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