Solo business owners without partnerships 'hold NZ's economy back'
Going it alone can be the hardest way to run a small business, and some will even go as far as saying that solo business owners are ‘holding back New Zealand's economy'.
That's according to business services provider OneHQ's cofounder Craig Cotton, who believes there should be fewer solo businesses and more business partnerships. Why? Because it's the key to a thriving small business economy, he believes.
"Almost half of the small business start-ups in New Zealand fail because they try to do it alone. A large chunk of those that survive are holding on by their fingernails because us Kiwis have this thing about 'being your own boss'; to be 'independent' – but it's counterproductive,” Cotton says.
"On your own, you're just buying a job, and you'll find that you're also your own worst boss. My advice is to find other like-minded people, team up with them and build a business together. It is better to have a smaller piece of something big than a big piece of something small."
He says this can result in more family time, more financial independence, and self-accomplishment in the long run.
He found out the hard way when he left his corporate life, but for him working alone takes longer, is harder, and costs more in terms of money and sacrifice.
"I sold my house. I lived out of my truck, slept on spare beds and at times couches. I lost a relationship and only came back to Auckland every other weekend to see my children – it was bloody hard, and I suffered to the point of being depressed.
He approached his next venture through partnerships.
"Doing it together with other people is better. Bigger is also better because success needs scale. As Kiwis, we have this thing that failure is not an option. We dread failure, and we'd rather be miserable than fail. But it is better to fail fast and learn fast and fix fast than to hang on to a hopeless venture,” he says.
Cotton explains that there are three Cs to business success: Capability, capital, and customers.
Don't do it alone, Cotton says. “Partnering with others gives you scale automatically. That human capital makes all the difference. Ask for help. Get advisors. Collaborate. Find partners. Don't think of it has giving away what you have, but as growth."
Cotton says that most SMBs in New Zealand are financed through mortgages on the family home, which only adds to the dread of business failure.
"A good business concept, one that is pressure tested, researched and shared with others – preferably while you are still in your job – will find it easier to get proper business finance, even backers and investors.
“But giving up your income and launching out on your own on the back of a mortgage on your home is not smart – collaborate, test, scale and fail before you abandon your income."
Cotton says sales and customers will come if you have a business idea that meets their needs.
“Park your romantic beliefs about life in business and connect quickly with your customers. Ensure what they want is going to make you happy and that it delivers on your 'why'."
"Ignite your partners, your team and your suppliers with that passion – build those connections – and customers will be tripping over themselves to get in the door. People buy culture, they buy passion, and they buy your 'why'.
Cotton says that while many business owners started because they thought they had a unique idea, the truth is that there are many good ideas, but most fail because it is the execution of a plan that matters, and that requires capability, capital and customers.