SMEs unprepared for crises
New Zealand urgently needs a national programme to help small and medium-sized businesses prepare for crises like the Christchurch earthquakes, say researchers from Massey University.
New Zealand urgently needs a national programme to help small and medium-sized businesses prepare for crises like the Christchurch earthquakes, say researchers from Massey University. The recommendation comes at the conclusion of the latest BusinesSMEasure report from the University’s Centre for Small and Medium Enterprise Research. The study is the first to examine the effects of the Christchurch earthquakes on SMEs across New Zealand, as well as their readiness for dealing with a crisis or a natural disaster.
The study found a high degree of vulnerability and a lack of formal crisis planning amongst small businesses across New Zealand. Only a small proportion of the businesses surveyed had a formal business continuity plan and less than ten per cent had a written crisis management plan. Of these, less than half had tested their plan in practice.
The proportion of SMEs undertaking continuity planning did increase after the first Christchurch earthquake in September 2010, and the experience of dealing with the impact of the subsequentearthquakes has actually made surviving Christchurch SMEs more resilient.
“It was interesting to see how much better prepared and less vulnerable Canterbury SMEs were compared to those in other parts of the country. The experience of dealing with a natural disaster clearly raised the level of companies’ crisis management planning and awareness,” says centre director Professor David Deakins.
“While Canterbury SMEs were better prepared as a result, it was not through formal continuity planning. They were more resilient because of changes they had made to their businesses – this might be better computer and online systems, the ability to trade outside their premises, or additional staff training so their people know what action to take in a crisis.”
Their experiences could be useful to others, says Professor Deakins. That’s why the BusinesSMEasure report concludes with a recommendation that a national programme of measures to improve SME resilience “should be given a high priority”.
“Any such programme would have a number of components, including training in business continuity planning, using online computer systems for financial and office management, methods for maintaining customers and building networks, and coverage of psychological elements, such as dealing with trauma,” says Professor Deakins.
BusinesSMEasure is an annual, longitudinal study aimed at providing New Zealand’s SMEs, their support infrastructure, and policymakers with useful research. The 2011 survey, which had over 1000 respondents, focused on crisis management and the impact of the Christchurch earthquakes. Its findings will be discussed at the Disaster Management Symposium at the ICSB World Conference, to be held in Wellington in June.
The New Zealand Centre for Small and Medium Enterprise Research is based at Massey University’s Wellington campus. It was established in 2000 to help maximise the contribution to the economy of New Zealand’s more than 470,000 SMEs, which account for 31 per cent of all employment.
Key BusinesSMEasure findings include:
• 43 per cent of SMEs surveyed had experienced a crisis in the past five years.
• Only one-third of firms responded to the most recent serious crisis in a resilient manner.
• Vulnerability increases if the crisis is caused by a natural disaster, rather than an internal crisis.
• Less than 10 percent of SMEs have a formal written crisis management plan.
• A formal written crisis management plan does not necessarily make a company more resilient; experience in dealing with the consequences of a crisis is more important.
• Canterbury SMEs that are still in business after the earthquakes have an increased capability to adapt to changes in the business environment.
• Belief, by owner-managers, in business continuity levels were relatively high, but Canterbury SMEs were less likely to believe their current level of insurance would safeguard their business if their business was unable to operate for three months.
Please note: While the survey highlights differences in how the sequence of Canterbury earthquakes have impacted on New Zealand SMEs, the results refer only to surviving businesses. A copy of the BusinesSMEasure 2011 can be downloaded at:
http://www.massey.ac.nz/massey/fms/sme/businessmeasure/Report_MED_FINAL.pdf
