There’s a lot of talk these days about the need for more large-scale, global companies based in New Zealand. Certainly, there are a number of examples to inspire young entrepreneurs. Firms like the Gallagher Group have long been held up as an example of how kiwi ingenuity, combined with good business skills, can create a global organisation. More recently, there’s been a handful of “young” organisations such as Xero and Icebreaker that have shown that even new companies can take the world by storm.
But while it’s easy to look at a company once they are large and global, it’s important to remember that they didn’t start this way. Large companies were once small. And many entrepreneurs don’t just start one business in their life – they start many, each time learning from the success and failures of their previous ventures. And, let’s be honest, for every publicised success, there are lots of failures.
We need a constant flow of young, ambitious organisations. So how do we encourage more young people to start their own business? How do we help them to be more successful? And how do we help them to get started and to grow? From my perspective, there are three things that will help:
On the first point, there is progress. While we still have a way to go, it’s nice to see a change in society whereby entrepreneurs are talked about and the media portrays them in a positive way. You could even say that entrepreneurship is starting to be considered sexy.
On the second point, this is where Young Enterprise fits. By giving young people the hands-on experience of running their own business while they are still in school, we are exposing young people to the possibility of entrepreneurship. Students walk away from our programmes with the knowledge of how to write a business plan, the importance of sales and marketing, and the experience of dealing with actual suppliers and customers. More importantly, they get the taste for business.
On the third point, this is where equity crowdfunding becomes really exciting. Realistically, small businesses are not in a position to do a full IPO. But if they want to grow quickly, they will often need access to external funds.
In the olden days, the joke amongst startups was that the first source of funding was the ‘three Fs’ –family, friends and fools. But what if friends and family aren’t an option? Do we discourage a handful of potentially successful entrepreneurs just because their parents don’t have enough disposable income?
The new legislation removes this barrier and gives startups an alternative option to raise funds. Does this mean that these startups are guaranteed to succeed? Of course not. They still need a great idea, a solid plan and more importantly the ability to execute on that plan. But if they do have all of this, and can convince the crowd to invest, they may just reach their goals a little sooner, grow that little bigger, and help to generate a more prosperous country for us all.
And through all of this, we might just find that New Zealand has more successful small businesses alongside more successful global companies.