Gill South: Book offers help for small companies with big ambitions

New Zealand's tertiary institutions have plenty of courses for executives wanting to climb the career ladder, but there are few equivalents for business owners looking to get bigger.

The closest thing is the Owner Manager Programme run by business growth centre The Icehouse and its partners at the University of Auckland Business School. The course runs for three consecutive days a month, for five months, and feedback is that it improves business owners' earnings by 30 per cent.

A new book - Changing Gears: How to take your Kiwi business from the kitchen table to the board room - is trying to help a wider audience of small- to medium-sized enterprise (SME) owner-managers. Co-written by former Heinz Watties Australasia CEO and Icehouse co-founder David Irving, with three Business School academics involved in the Owner Manager Programme, it sets out to address the main areas stopping good small companies from growing.

Describing the typical SME owner-manager, the book doesn't pull any punches: "Your management capability is limited. Even if you are an excellent manager yourself, you struggle to expand this capacity throughout the business. Developing a business plan, operational excellence, human resource practices, marketing strategies and creating a senior leadership team, represent major challenges for you."

The nation's business owners often fall into three "management traps", says Irving. They are working in the business not on the business, reacting to events and firefighting; they don't change gears, but do things the way they always have done; and they don't develop their people and recognise talent.

"They are often not strong managers. They do things on instinct, based on their upbringing," says Irving. "They know what they have got to do - but it's quite a challenge for them to change some habits.

"Delegation is so hard for them," he says. "But without delegation, the firm cannot grow."

What owners must always hold on to are the purpose and values of the business and the key appointments and dismissals, says Irving. If they have a team they can rely on, then they can decide the strategies, organisational matters and remuneration strategies. If they don't, then the owner-manager must make those decisions.

Good leaders will be in touch with their people, particularly those on the front lines.

"The people in the company want to know and see their leader. It is a cost and pleasure of leadership," says Irving.

Adds co-author, Associate Professor Darl Kolb: "One simple example that stands out in my mind is an owner-manager who, instead of going into his shop at 8am Monday morning, goes for a coffee and plans his week, reflectively. Two things result. First, he has a sense of priority when he arrives at work, and secondly, his team have had to initiate the week, solve problems and motivate themselves without him there. When he arrives at 9am, he steps into the flow instead of needing to create the flow."

Irving, who partners with six companies including Hubbard's Foods, Cable Bay Vineyard and AuCom Electronics, says the most important thing he has worked on to help them grow is senior staffing. "With each one of these companies, the thing that we have improved is the development of their top team," he says.

As Changing Gears puts it, "the senior team is important in a corporate, but often is the business in an SME."

Small firms should find a good recruitment firm they can trust and give them a long-term brief to keep them supplied with good people, says Irving. "Their small size actually means that each appointment is more important than the bigger employers'," he notes.

Adds Kolb: "Google is the most sought after employer on the planet and it interviews the deepest applicant pool on Earth up to six times per candidate. They obviously take talent searching seriously, and not because of scarcity, but because it is so important. Owner-managers should see talent searching as a key role, not a hassle to hand over to recruitment agencies."

In the book, Irving disputes the notion that New Zealand owner-managers are happy just to bring their businesses to the point where they have the "beemer, bach and boat", then put their feet up.

"Our small domestic size and distance from international markets are the significant physical reasons why we do not grow bigger firms," he says.

It would be wrong to blame any lack of enthusiasm on the part of our owner-managers for companies not achieving greater size, says the former CEO. "Place their peers here from other more populous areas in the world and you can imagine their reaction to a small local market and distance to the population centres of the world."

Another key area of education for owner-managers is to pay attention to their health, something many business owners ignore until it is too late. Gears devotes a whole chapter to this topic.

Drawing from the research of Dr Sven Hansen, from the Resilience Institute, it recommends a good diet, a regular exercise regime, strength-building and plenty of sleep.

As Changing Gears observes: "Without you there is no business."

The question of succession is something preoccupying many babyboomers, but Irving questions the need to be so fixed on looking for a trade sale.

"I've been a big proponent of longevity," says Irving. So many people in New Zealand have a "must sell" mentality, he says. The Cable Bay partner visited many wine businesses in France recently, all family operations and all "steeped in knowledge".

He works with owner-managers to help them transition from the role of CEO to the role of founder. The move can be very liberating; they then have a licence to "do whatever", he says. The 67-year-old founder of AuCom, of which Irving is chair, comes in and does the wages. His son now runs the company.

BETTER BUSINESS

Changing Gears (Auckland University Press, $29.99) is co-written by David Irving, Auckland Business School Associate Professor Darl Kolb, and lecturers Deborah Shepherd and Christine Woods.