Helping Businesses Start Up
By Chrys Horn, Brenda Tahi & Joanna Doherty
For a few months our research team has been learning about helping Māori to set up businesses in remote rural areas. We have learned about this in Te Urewera by working with a number of businesses or potential businesses. Our mentors have spent time reflecting on what they are doing, why they are doing it, and how much they should do in the best interests of their clients. Interviews with these mentors have captured some of this learning as has a round of interviews with clients.
Our work has included interviews with people involved with providing business advice for Māori , both in our southern case study area (Banks Peninsula) and in other parts of the country. From this action research process, we are learning about the process of mentoring/helping small businesses set up, and also about ways in which people manage the complex process of setting up a tourism business in a remote area. This page outlines what we have found out about the mentoring process so far. Another page (link) outlines strategies to overcome problems faced when setting up a business.
A note on terminology
We are using the terms ‘mentor’, ‘mentoring’ and ‘client’ largely for convenience, but mentoring may not be the best description of the work going on in this project; what we have been doing has been more intensive and “hands on” than might usually be implied by the term.
Clarifying what the business is or does
The first thing our mentors have been helping clients with is in building a clear, detailed description of the product they want to provide to the tourist. For some people, this has been the first time they have had to articulate what they think might be “a goer” as a business. Some clients found this a valuable process because it helped them think clearly and carefully about what might work and what was less likely to work.
One aspect of this that mentors working in rural areas have to deal with is working out what the client would like to do as opposed to what they think will be good for others in the area. For many Māori in both our case study areas, the point of setting up a business is to provide opportunities and employment for family members or other members of the tribe and this can affect the way they think about a business.
One of our mentors noted a potential “chicken and egg” situation with this process. Potential business people need a clear idea of their product to begin developing their business but they also need to tailor what they do to fit the needs and interests of potential customers.
Helping clients learn about business
People working in business development (interviewed as part of this study) have observed that New Zealanders starting out in business do not usually know much about the process of running a successful business.
Some of the clients we work with who have spent some time developing their business say it is good to learn just what running a business requires – including all the marketing, customer service, legal and financial aspects of the business. Others, who are still developing their ideas, feel the most important thing is understanding the special things about their location and what they can offer in terms of their skills in hunting, horse trekking or guiding.
While it is early days yet for most of our clients, it appears that it is possible to put people off starting a business by telling them what is required to run a business. While this is not encouraging for our mentors it can be viewed as people making decisions based of better knowledge than they may first have had. In terms of capacity-building, though, such a decision can be viewed positively – it may be that when people have had time to get used to the idea of what is involved, and perhaps make small steps in picking up additional skills, they may come back to their business idea sometime in the future. A common feature of development work is that it can take several attempts to get started, but with each attempt people know a little bit more and become more likely to make it work the next time.
A frequent problem that operators have is a lack of clarity about what sort of business structure they need to have. Many of the people in our northern case study have operated in a small way as sole traders, whereas there are advantages for most in setting themselves up as limited liability companies.
Little and often
Most of the clients in this project found it more beneficial to have a mentor contact them for shorter periods, more often. For some, having the mentors contact them provides motivation to keep moving and working on the less interesting but important elements of the business. This contact also provides the opportunity for clients to get small bits of information and help, which may help them over the many minor obstacles that come up whenever anyone is trying to do something new. This means that an important element of helping is for the mentors to establish regular contact through phone calls and visits.
Building strong relationships
There was significant benefit in the mentors spending time interviewing clients and getting to know them before the mentoring started. The mentor that did this with some of her clients felt it made it easier to work with them than it was working with those people she did not get to know first.
The mentors observed similar benefits in living locally, in the same rural area as their clients. Living nearby can make them more accessible to their clients and the fact that mentor and client may know each other through other channels than just the mentoring one can help the relationship. When the mentor is not always in the role of mentor, there is an increased likelihood that the client will ask questions, or take the lead in making contact with the mentor. When the relationship is only based on the mentoring process, it appears that clients can be shy about contacting the mentor because they feel that the mentor is busy or too important to be contacted. Thus it is important for the mentor to keep in touch in these situations. Clients can be just as shy about asking questions when they are not sure about some aspect of the mentoring, hence time building the relationship is important if the mentoring is to be effective.
Also, mentors who live locally are familiar with some of the difficulties of setting up and running a business in these particular settings, having done it themselves. They may be more able to suggest ways to manage problems or can make allowances for the problems that arise in the ways that they mentor.
Crafting the right approach
Each client has a different set of knowledge and imperatives that they have to work around. Each has different calls on their time. Few of them have the luxury of being able to focus exclusively on their business. This means that, as one of our mentors put it: “the mentoring has to be carefully crafted.”
Tasks are best broken down into small chunks so that clients can see what they have done and gain a sense of achievement. One of our clients wanted some idea of how much time they should spend working on their business each day if they wanted to get it up and running at a particular time. Overall, our clients seem to benefit from a good structure to the overall process of learning about and getting through the tasks associated with starting up a business.
Our mentors have spent time questioning how much they should assist clients. Assistance varies between individuals or whanau involved and depends on the resources each has at their disposal. Ideally clients should write their own business plans. However, it can seem a daunting task and there have been instances where the mentor has chosen to help and has spent time working through the thinking with the people concerned.
Keeping mentors in touch with each other
Many of our clients are working with more than one mentor. We have found distinct benefit in the mentors discussing together what they are doing with each client so that everyone knows what everyone else is doing. This is important where there are overlaps – for example in the marketing and overall business development process. In the process of working with one mentor, a client may ask a question that is more pertinent to another mentor or that may have been covered by another mentor. This then provides feedback as to where clients are in the process. Likewise, when mentors strike problems, they are better able to tackle the issue when they know what the others are doing. By staying in touch with each other it becomes easier for mentors to draw together the learning that clients are doing, so they can provide more seamless and coherent assistance.
July 2006
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