NZ has healthy start-up culture but needs more support, MYOB says
New Zealand has a healthy start-up culture, but more can be done to support the development of home-grown entrepreneurs, says business software provider MYOB.
"We think more needs to be done to establish New Zealand as a hub for start-up growth and development, including developing our education system, changing the public's investment mindset and cultivating talented people who can help businesses to scale up," said MYOB general manager Carolyn Luey in an MYOB special report called the State of Aotearoa's Start-Ups.
Among other things, New Zealand requires better access to capital and investors who are willing to take risks, she said. "A smaller economy also means we have a smaller pool of people and organisations to supply funding. But start-ups with big and bold ideas need investors who are prepared to back them, despite the risk."
Luey also underscored that major successful start-ups like Spotify, IKEA, Volvo, H&M and Skype realised that their domestic market was not big enough and "their approach is a vital ingredient that has been missing from the start-up mix in New Zealand."
The latest MYOB Business Monitor survey between February and March of more than 1,000 small and medium business owners and managers included 96 start-ups. Of that, MYOB found almost half (42 percent) believe that the shortage in skilled personnel is their main barrier to innovation. However, only 16 percent of start-ups said that they conducted employee training in 2016. This highlights that start-ups require candidates who are already equipped with the necessary skillset instead of spending time and resources training/coaching their existing staff, she said.
Luey also noted that 74 percent of Kiwi start-ups are in favour of a graduated business tax structure, that progressively increases the proportion of tax they pay as their revenue increases. A further 62 percent support an alternative to provisional tax, which grows to 79 percent for businesses aged two to five years.
In countries where start-ups flourish, such as Sweden and Switzerland, corporate tax ranges from 12-to-24 per cent, so while New Zealand is ranked as one of the easiest countries to do business, more can be done to support our smaller businesses, who are currently taxed at 28 percent, she said. One in 10 start-ups said that meeting their tax obligations puts extreme pressure on their business operations, and almost one fifth said the same about finding access to finance and funding.
The report is based on comments from industry leaders, incubators and investors, as well as data from international surveys. Luey noted that according to the World Bank's Ease of Doing Business Report 2016, New Zealand is the second best nation in terms of managing ongoing compliance requirements and the Global Information Technology Report 2016 names New Zealand as the number one country to start a business in.