Coping with regulation is all about attitude

Research by Massey University’s Centre for Small and Medium Enterprise Research has found that some SMEs actually use regulation to their advantage.

According to the centre’s director, Professor David Deakins, who will present some of the research at the International Council for Small Business World Conference in June, the ability of small and medium-sized businesses to cope with regulation comes down to their owners having the right attitude.

“SMEs of the same size, within the same industry sector, can have very different capabilities when it comes to managing regulation,” he says.

“One factor that is important is the owner’s attitude - if they are proactive about seeking advice, use sources of information like the Inland Revenue, and are prepared to invest in the right systems, then SMEs tend to deal with regulation quite well.”

Professor Deakins’ advice to SMEs is to join their professional bodies and develop strong business networks.

“The research results were very clear that having key networks for obtaining advice is important,” Professor Deakins says. “This could be Chambers of Commerce, local business associations, members’ associations, mentors, or in the case of the primary industries sector, cooperatives. SMEs do tend to struggle when they don’t have these avenues of support.”

Investing in up-to-date management systems is also important. Online software packages, which can be easily updated as regulations change, can remove the burden of routine paperwork and improve capability, which is a different concept from compliance, Professor Deakins says.

“SMEs need to be prepared to invest in such systems. It makes things like the change in GST easy to deal with, and can assist with sustainability in situations like the Christchurch earthquakes. Any SMEs that used paper-based systems, or even their computer hard drives to store information, would have lost everything in the earthquakes, while those with online systems could continue to trade.”

The New Zealand Centre for Small and Medium Enterprise Research is based at Massey University’s Wellington campus. It was established in 2000 to help maximise the contribution to the economy of New Zealand’s more than 470,000 SMEs, which account for 31 per cent of all employment.

The centre successfully bid to host the 2012 International Council for Small Business World Conference, along with the Small Enterprise Association of Australia and New Zealand, Wellington City Council, and Grow Wellington. This is the first time the conference will be held in New Zealand, and more than 400 small business educators, researchers, policy makers and practitioners from around the world are expected to attend. It will take place in Wellington from June 10-13, 2012.

Professor Deakins will present part of the research into how SMEs cope with regulation at the conference, focusing on rural SMEs in the primary industries sector. For more information visit: http://www.icsb2012.org.nz/

The report SME Capability to Manage Regulation was originally prepared by Massey University researchers for Inland Revenue and the Ministry of Economic Development. A full copy of the report can be downloaded here.