Invest to grow

Difficult economic times can leave a lasting legacy for business owners above and beyond the more immediate effects of the slowdown. Early research by the Westpac business banking team shows a fear of risk taking and a lack of confidence and capability within the New Zealand business community are holding back growth.

Mark Steed, head of corporate banking and property finance, says the mindset of the business community needs to change if firms are to grow and prosper.

"Business owners need to move from a cautious mindset to a confident one. That needs to be reflected in their actions as well. I think businesses need to recognise that if they want to grow they need to be willing to take some risk."

Steed says Westpac is actively approaching New Zealand businesses, helping them build the confidence needed to grow the economy and improve the living standards and prosperity of all New Zealanders.

"A few, mainly larger businesses, and a few key industries, such as the dairy industry, are confident and are actively investing in growth. They also have the necessary skills to do this.

"But the great majority of businesses in New Zealand are small, or are in industries that face challenges to their existing operating models. These operators lack the confidence to invest in growth. Most of these firms are passively waiting for the economy to assist them, rather than actively setting the growth agenda for their own business."

Steed says many of these businesses also don't fully recognise the challenges companies face when they grow to a different scale.

"They will need to seek input and advice on new governance skills to help them if they are to reach a new level of business performance.

"This lack of skills and a resistance to change is also holding many firms back from exporting. Yet increasing exports is fundamental to sustainable economic growth for New Zealand. Our domestic markets are just too small to drive big growth."

Westpac can help fuel the growth in a number of ways, including providing development and investment finance for commercial property and for going concerns. Westpac can also provide owner-occupied finance for firms that already own, or are looking to buy new premises.

"Repayments can be structured to match the business cashflow," says Steed. "We encourage firms to stay in one location, due to the goodwill and familiarity this builds with the current and potential client base."

Once property needs are sorted, Westpac can also help growth through equipment finance loans of up to 100% of the asset.

"When you invest in the right equipment for your business the asset pays for itself," says Steed. "Essentially, it pays the loan for you by helping to generate greater cashflow.

Westpac structures the term of the equipment finance loan to reflect the expected life of the asset. So you only pay the bank for as long as you expect to get money from the asset you acquired.

Westpac believes that the small business community holds many of the keys to growth in New Zealand. These are companies with one to five employees and an annual turnover of less than $1 million. Steed believes that inspiring suchcompanies to move from cautious to confident is critical if New Zealand as a whole is to prosper.

"The first step is for all their advisors and mentors, including banks, to help them see the potential in their business, and show them that growth isn't scary, and is quite achievable."

For more details of how Westpac can help your business, or a client's business, visit your local Westpac branch or phone 0800 177 277. Website: www.westpac.co.nz.

Story by: Trendsideas