Technology is helping New Zealand’s small businesses focus on the important stuff and freeing up their valuable time, while dealing with the challenges and opportunities of a pandemic.

As a nation of five million, we love to hold up our shiny success stories of Kiwi businesses that have made it big on the world stage. Whether it’s a sustainable shoe brand that uses materials sourced from trees and wool, like Allbirds, or a company that shoots rockets into space from the Mahia Peninsula like Rocket Lab, you can bet a Kiwi somewhere is boasting about them.

And yet, the unsung heroes are the small businesses that are the driving force behind New Zealand’s economy. They account for up to 97% of all businesses, contribute 26% to our GDP, and create over 100,000 jobs annually.  

“If you just look at two of those aspects, which is contribution to GDP and employment, they are the lifeblood of every economy and absolutely critical to our success. But yet, they have been one of the most vulnerable segments during the pandemic,” says Chavi Jafa, Visa’s vice president and head of business solutions for Asia Pacific. 

With fewer resources at their disposal in a crisis, and founders who often juggle many roles, the challenges posed by Covid-19 have been incredibly tough on small businesses.

A global survey by Visa found that in response to the pandemic, more than two-thirds of SMEs (67%) had tried a new digital approach – from launching an e-commerce site or changing point-of-sale technology – to keep their business on track.

 “A lot of small businesses were already on their digital journey, but they were moving organically,” Jafa says. “During the pandemic, the acceleration around that has been significant. You had offline businesses that were going partly or completely online. 

 “So, what does that mean for a small business? When they think about innovating, it means that they need to adopt new technologies and make processes efficient online. In a lot of markets, many processes were still offline.”

She says it’s not just about bringing the online shopfront of businesses up to speed digitally, either. Behind-the-scenes, critical tasks like accounting, invoicing, payroll and more that are done manually can be laborious and time-consuming for small business owners who often wear many hats.

Jafa knows a thing or two about these pain points. Prior to working at Visa, she used to co-own and run a busy restaurant. In her time there, she says she learnt first-hand how revolutionary technology can be for owner operators when it comes to expense management, managing credit and cash flow and streamlining time-consuming back-end processes.

“That experience has led me to think about solutions for small businesses in my role now, because each of those aspects we can improve on with digitisation,” she says. 

Getting the skinny

One small business that has navigated this period of change through 2020 impressively is Skinnies, a sunscreen brand founded by husband and wife duo Olly and Martha Van Arts. Inspired by New Zealand’s strong UV rays and people’s general dislike of thick and greasy white sunscreen, the pair set out to make a better alternative for themselves and their kids.

They created a world first in their clear waterless sunscreen, which forms a thin invisible layer on top of the skin and absorbs the UV rays. Alongside selling their products in New Zealand, they also sell to the United Kingdom, Europe, USA and Singapore.

However, the pandemic meant that international sales slowed or halted altogether as a result of supply chain challenges and lockdown restrictions.

Before Covid-19, Skinnies was using Xero to do its accounting in New Zealand while running manual spreadsheets for sales, customer data and basic inventory counts in its international markets. The latter had to change, fast, to save time and have better cost control through this challenging period. 

“What was interesting to us was that we thought we had a digital footprint prior to Covid-19, but quickly realised this was not operating at a smart level in terms of the front-to-back end of the business,” she says. “A massive change for us was dealing with the shift in increased transactions from online growth. It wasn’t about 10 larger retail transactions per month anymore – it changed to 100 a day, but smaller transactions.”

 Skinnies rolled out Xero in their international markets to save time, improve accuracy and keep results and sales data in real time and started using Capsule, a customer relationship management software that shows the status of contact cycles with customers. 

 After taking steps to become a more digitised business behind-the-scenes, Martha Van Arts says daily online sales globally have increased by around 40 percent. Skinnies’ experience shows how valuable it can be for small businesses to use technology to free up time from the administration side.  

 “It’s really shown us the global marketplace has no boundaries, online opens this right up,” Olly Van Arts says. “As a small business with a niche product, we’re expanding into markets digitally that we just couldn’t afford or have the resources to do on the ground. Online allows us to reach more consumers, target a segment, share our story, build e-commerce and have multiple sales channels all operating from our Auckland base.”

Looking after the little guys 

While digital platforms for back-end processes like accounting were once reserved for big businesses with the money to afford such resources, technology has come a long way in helping the smaller players. New Zealand fintech companies such as Xero and Hnry are rising to the challenges created by Covid-19 and helping the small businesses that form the backbone of our economy with their digitisation. 

Hnry is a digital accounting service for sole traders, contractors and freelancers that takes care of all their tax calculations, payments and filings for them, whilst also providing accounting software for invoicing, expense management and finance tracking.

Co-founder James Fuller says they have people from a variety of industries using the platform, from beekeepers and marine engineers to people running e-commerce stores. He says the idea for it came when he and co-founder Claire Fuller were self-employed and saw first-hand how much financial admin was required.

“For years, the accounting industry has largely under-served the self-employed, due to them being ‘high volume, low value’,” Fuller says. “We therefore end up in a situation where individuals don’t have any option but to use overly complex digital tools, coupled with expensive traditional accounting services that don’t really want to help support them.”

He says the disadvantage these people face is with all the learning that’s required to remain compliant, there’s little time or energy to focus on their actual work. 

 “The vast majority of independent earners aren’t trying to grow a huge enterprise, they just want to earn a living. All of that compliance and hassle takes them away from their clients, their family, and their ability to earn,” Fuller says. 

 The growth of Hnry users has been steady since it was founded in 2018, but between April and June, New Zealand’s lockdown period, Fuller says the number of people joining was 260 percent higher than the same time last year.

“With so many people forced into redundancy, and so many others having their income in jeopardy, it’s no surprise that people looked to use every opportunity to keep the income coming in.”

During this time, Hnry also proved to be very useful for helping self-employed people access the wage subsidy. This is because unlike traditional bookwork, Hnry’s digital platform could instantly produce a report showing an impact to someone’s revenue over time – the proof that was required to be granted the wage subsidy.

Fuller says he’s been inspired by the fast adoption of online platforms by contractors and sole traders over this challenging time. 

“We’ve heard some amazing examples of personal trainers delivering their group classes over Zoom, psychiatrists seeing their clients online rather than in-person, and graphic designers using online platforms to sell digital copies of their work across the globe. This country has amazing resilience, and it was fantastic to see the creative and interesting ways that Kiwis ensured they could keep that income coming in.”

From the front to the back

 Visa has several ways to help small businesses digitise their back-end processes, including a tool called Visa Business Reporting. Here, businesses can track card payments in an easy-to-understand format and see where they’re spending their money while adding receipts and notes to a place where it’s all digitally stored in one place.

Jafa says the data small businesses can get from centralising their back-end all in one place online is incredibly insightful, versus having it spread out across different mediums. 

“That helps business owners to make better decisions in everything from inventory management to how they manage their cash flow.”

Another tool that enables control for small business owners is Visa’s card control capability that allows business owners to set spending limits on commercial cards and receive notifications when purchases are made.

 “One of the things we’ve realised with a small business owner is that they’re typically growing businesses and they wear multiple hats, so they want full control over their expenses – and rightly so,” Jafa says.

A key benefit of using a business credit card is improving cashflow, as businesses can extend their days payable outstanding and optimise working capital, taking advantage of up to 55 days interest-free.

There’s still more digital learning to be done for many small businesses, but the changes we’ve seen happen this year from the pandemic have helped usher in a new era of digital innovation, alongside new opportunities and challenges. 

One innovation that Visa is working on is an app that gives employees the convenience of using on-demand virtual cards to make purchases online and in-store via their digital wallet. Employers can set time and spend limits on the virtual cards, helping them to better manage and track expenses, and reduce the reliance on physical cards.

For those starting their journey of front-to-back digitisation, the tools Visa offers like business credit cards and fintech platforms like Xero and Hnry are helping small businesses like Skinnies refocus their time and energy on the important stuff: their customers.  

“I always say every minute that a business owner spends on a back-end process is a minute taken away from going out and bringing in a new customer,” Jafa says. 

“A lot of the focus of these tools and services is to help our small businesses and in turn, our communities. After all, they’re the cornerstone of every economy.”

Are you a New Zealand fintech that is ready to take that next step? Do you have a solution that enables small businesses to thrive? Visa is calling for startups to apply for its Asia Pacific Accelerator Programme. To find out more, click here.