Support for starting small business in New Zealand is provided by two agencies, BIZ, and Work & Income NZ (WINZ). While BIZ is a division of New Zealand Trade and Enterprise, WINZ is the organisation concerned with helping New Zealanders achieve independence through work, either as an employee or as a self-employed person.
If you are completely new to self-employment, your exercise of starting small business in New Zealand could begin with downloading the publication, Unemployment and Independent Youth Benefit, from the Work and Income NZ Brochure.
The booklet mentions that WINZ might help you start a small business in New Zealand, and if you are interested in this idea, you could ask your case officer about this alternative.
You need a good business idea, good support from others and lots of commitment. Ask yourself:
- Do you have something that people would pay for?
- Are you the kind of person who could get help from people (or do you antagonise them)?
- Can you work hard and stick at it, till you have learnt all the ‘ropes’ and made it a success?
Assistance for Starting Small Business in New Zealand
Government assistance to small business takes two main forms:
- Training in business skills. This could include mentoring during the initial stages of the business, and
- Referral services, referring the entrepreneur to relevant sources of information or assistance.
Work and Income NZ has published informational brochures and other material for persons (mainly employees with no previous business experience) starting small business in New Zealand. Local centres of Work and Income NZ also provides a training program, Be Your Own Boss, for those planning their own venture.
New Zealand Trade and Enterprise provides business skills training and information services to small and medium enterprises. Visit BIZ Web site to see how BIZ helps you find organisations, programs and resources to develop your business.
New Zealand government also places high emphasis on helping Maori and Pacific people to acquire business culture and start on their own. For example, the Te Puni Kokiri program supports Maori people in starting small business in New Zealand.
The article, Small Business Support in New Zealand, discusses the issue in more detail.
Planning Your Business
Starting small business in New Zealand is basically not different from starting anywhere else. You have to assess the market for your product or service, in this case the market in New Zealand or a particular region of it. If you are planning to export, the market to be researched would be wider.
Next, you have to prepare a detailed plan based on realistic estimates of sales and costs. The plan would also explain how you would organise your business activities (production and delivery) and achieve the planned level of sales. Go to New Zealand Trade and Enterprise Web site to download the publication, Planning for Success – a do it yourself kit for developing your own business plan.
It is your business plan that would tell prospective lenders and other agencies that you do have a viable proposal for starting small business in New Zealand. And it is your knowledge of the market that should come through clearly in the plan. Lenders and investors would be more than willing to help you, if they feel that yours is a realistic plan with excellent profit potential.
Before starting small business in New Zealand, you should be aware of the forms in which you could organize businesses in New Zealand. The major forms are Sole Trader, Partnership and Company. There are also forms like Trust and Society.
Personal assets of sole traders, and partners in a partnership, could be liable for business debts. In partnerships, one partner can incur debts which other partners might be forced to meet from their personal assets in case of insolvency. Partnerhip agreements could, however, limit the liability of specific partners.
Other forms of business organisation, particularly companies, limit the liability of their members for business debts. The members would have to pay only upto the original amount that they had agreed to contribute to the business.
In addition to personal liability, the form of business organisation could have implications for taxation, and business name protection. You should consult a business advisor about the implications of organising business in different forms.
All tax payers need to obtain an IRD Number from the Internal Revenue Department. Sole proprietors and partners should obtain ‘individual’ IRD numbers while companies and other entities need non-individual IRD numbers. Visit Internal Revenue Department (IRD) Web site for full details and to download forms.
You have to pay a tax on your business income and deduct income tax from the salaries you pay to your employees. Even the fringe benefits you pay to employees would attract tax that must be deducted and remitted to IRD. You also have to pay a tax on the sales value of goods and services you sell, if your turnover in a twelve-month period exceeds prescribed limit ($40,000 at the time of writing this).
There are exemption limits and conditions and also formalities like registrations and submission of periodical returns. Failure to comply with tax regulations could result in penalties. It would be a good idea to consult an accountant or other tax consultant at your small business start.
Health and Safety in Employment Act imposes an obligation on employers, employees and persons employing contractors to take ‘all practicable steps’ to ensure the safety of themselves and others at the workplace. The implications are that persons in charge of workplaces must:
- be aware of risks to safety at their workplaces, and
- adopt all reasonable precautions to minimise the risks.
You could get an idea of what is ‘reasonable’ by referring to such sources as the Health & Safety Act, user manuals provided by manufacturers, industry publications and OSH (Occupational Safety and Health) guides. You could also visit WorkInfo Web site. Employers are required to contribute to an insurance fund that is used to pay workers suffering workplace injuries or occupational diseases.
You must also be aware of labour laws in general if you plan to employ workers. Visit Department of Labour Web site for basic information on this topic, such as regulations regarding hours of work, leave entitlements and disciplinary proceedings. Employing workers would also involve keeping proper records for wages paid and incidentals.
A separate article, New Zealand government regulations for business, discusses the matter in more detail. Considerable trouble could be avoided if you comply with all applicable regulations while starting small business in New Zealand.
Finance for Starting Small Business in New Zealand
Many sources of finance are available for starting small business in New Zealand. Your own savings, and the money you may be able to raise from friends and relatives, would be the primary source for initial finance.
If the above sources could not finance your scale of operations, you would have to look outside. It is at this stage that developing a business plan becomes important. Outsiders need to get a clear idea of what you are planning, and how you would repay any borrowings, before they would consider your request.
Government financial support is discussed in a separate article, mentioned under Small Business Assistance above. If you are eligible for assistance under any of these programs, you could avail these for starting your small business in New Zealand.
Other external sources for starting small business in New Zealand are venture capitalists/business angels and banks. You could also consider coopting a business partner, particularly if that person could bring business skills or contacts that you lack.
Venture capitalists and business angels are investors who are looking for profitable avenues of business investment. They seek to invest in businesses with high growth potential so that they could sell their shares at a premium later. Visit Venture Capital Web site for more details.
If yours is not a business with all that high growth potential, it might be difficult to find interested equity investors. Even otherwise, it is easier to find commercial finance providers rather than equity investors. You could go to Debt Providers Web page to look at a list of possible lenders.
These debt providers could provide different kinds of loans to you. For acquiring long term assets like premises or machinery, you would need a long term loan repayable over several years. For working capital, a bank overdraft is best. You might be able to get immediate cash from invoice discounters against credit invoices to customers.
A separate article Small Business Finance in New Zealand, discusses financing issues in more detail.