By Dr Tadhg Ryan-Charleton*
Despite downbeat economic predictions and an imminent global recession, the New Zealand recovery offers opportunities for entrepreneurial success that exceed anything we've seen for decades.
The government's decisive action to save lives and a reported steady drop in new Covid-19 cases means discussions are beginning to shift towards how New Zealand can exit lockdown and what our society may look like afterwards.
Economic recovery is at the heart of this conversation. Closing down the country was necessary to ensure that businesses can operate into the future, but Covid-19 has battered our economy and eradicated many New Zealanders' source of income.
Entrepreneurs will be a critical driver of our economic recovery. We will rely on new businesses for innovative ways to meet societal needs, to replace imports that no longer exist, to create new jobs for New Zealanders, and to help get our Treasury moving again.
For entrepreneurs (new and existing) who answer the call, the incentives and supports to pursue new ventures will be greater than they've been at any time in recent memory.
Incentives will increase because for all of us Covid-19 has challenged the illusion of consistency in our daily lives and financial security into the future.
Perceived consistency and security is a key barrier for people starting their own businesses because to pursue a new venture one must often forgo a 'stable' career and a 'secure' retirement.
The rapid change in our circumstances has made it easier to see illusions for what they truly are. Lockdown has illustrated that stability and security are illusions, and that these perceived barriers to starting your own business may not really exist. Nowhere has this been more starkly illustrated than in hard-hit sectors like tourism, transport, and hospitality.
'Someday' is a plague that takes entrepreneurial aspirations to the grave. Covid-19 has given us a first-hand lesson in economic impermanence, which offers a unique set of incentives to swap 'someday' for today or tomorrow.
The lockdown has taught us new ways to do business and helped us to harness the real power of our technologies. Many industries (education included) have identified that certain operations are equally or more effective when they are organized virtually. Minor injuries and sicknesses can be diagnosed virtually, without bringing multiple infectious patients into a shared waiting room. Education and training can be delivered online at times and places to suit the needs of individual learners. Purchasing essential goods and services, which traditionally required advance planning, research, and travel, can now be organized entirely by virtual means.
Evidence also suggests that many businesses are more efficient without physical contact. Managers are thinking twice about which meetings are actually necessary. Face-to-face interruptions have been almost completely eradicated. Those who are no longer required to be in a particular location from 8.30 to 5 have been offered new rewards for managing their own time, accomplishing more in a shorter period, and avoiding unproductive distractions.
My conversations with entrepreneurs and business owners suggest that many businesses are questioning whether all their pre-lockdown physical presences (offices, storefronts, private warehouses etc) are actually needed.
For entrepreneurs who do opt for a physical presence post-lockdown, the cost of and competition for these resources will be less.
Supports available for entrepreneurs will also increase. Within the government's rescue package recently projected at $20 billion, assistance for small businesses will be critical. This must include widely accessible loans and grants with accommodations for those who cannot provide conventional evidence of financial security.
Indeed, Covid-19 has essentially created a 'reset' in the competition for credit because few existing businesses have been able to maintain the track record of financial health that lenders would traditionally expect.
The rapid rise in unemployment means that new business founders have the opportunity to hire more talent than at any time in recent memory. Outstanding leaders, project managers, and star employees who for decades have contributed to their company's competitive advantage will be returning to the job market hungry for their next challenge.
As is common in recessionary times, many will return to education and training to increase the value they create for their next organization.
Despite these incentives and supports, our government must make difficult decisions to enable an entrepreneurship boom. One key challenge which may temper this optimistic outlook for entrepreneurs is that of striking a balance between propping up existing businesses and allowing new businesses to flourish in an openly competitive market.
New Zealand must get the balance right between supporting existing businesses and allowing the natural cycle of innovation to occur. This involves some destruction of the status quo and the emergence of new, better businesses.
At a certain point in our exit from lockdown, we as taxpayers will need to stop bankrolling existing businesses and ask them to stand on their own feet in post-lockdown New Zealand. Many businesses will meet this challenge and become stronger, more vibrant organizations as a result. Others won't.
Rather than continuing to provide subsidies to businesses which cling to a talented workforce that they can no longer utilize, we must recognize that termination of some businesses no longer meeting societal needs is a natural part of a thriving economy.
This turnover will be essential to release capital and resources for the next generation of new ventures.
Let's look forward to embracing entrepreneurship in post-lockdown New Zealand, to challenging existing norms, and to harnessing new business as a critical mechanism that will get our economic recovery moving.
* Dr. Tadhg Ryan-Charleton is a Lecturer in Entrepreneurship and Strategic Management at the University of Otago and a Fulbright Scholar.
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