The Case for a business licence

Experiences over the course of 2020 have convinced us that there is a real case for requiring people entering the business world to have to acquire some training and a licence of competence in advance.

We are well aware that just having a licence does not ensure competence. You don’t  have to drive far on our roads to be aware of that. But a very basic understating of how business works would surely be good, not only for individual owners and operators, but for the community generally.

The hurdles the business community encountered this year have highlighted the number of business owners who would certainly have failed should there be a “ Business 101 “ requirement for owners.

In our dealings  with a mix of both tenants, owner-occupiers and other business owners , we have encountered too many who don’t have the skills to even read a P & L and Balance Sheet, let alone be able to challenge them. Many do not have a credible plan for their business – let alone a plan for a rainy day (or in this case a global pandemic).

When the situation of the type that we have encountered this year strikes, and we would contend that “rainy days” are inevitable in the future, many businesses were totally unprepared, both in terms of contingency plans , and more importantly in terms of reserves to weather the storm. For many, they have seen their business  as some form of ATM, and failed to build resilience in to their planning.  They failed to put reserves away for the inevitable “rainy day”. We would argue that in addition to that, the government has been complicit, in that one of the side effects of the Penny & Hooper tax decision was a discouragement to business owners retaining profits in their company structure. Unfortunately the “government” is merely a proxy for taxpayers, so the encouragement to disperse profits (to the benefit of the IRD) has seen the taxpayers have to come to the rescue of so many businesses, who have inadequate reserves.

Some years ago, during our career in the food industry, it was introduced as a mandatory requirement that food handlers should undergo a course , and gain a certificate in basic food hygiene. As so required, we underwent our couple of days training at the local polytech. The tutors were not the most inspiring, and served to prove the old adage “If you can’t do, teach”. But after the three days revising basically commonsense rules on food handling, we sat our test, to earn our certificate. I am certain that even a somewhat retarded chimpanzee would have found the test difficult to fail. Most attendees scored 100%. But, sure enough, there were fails. And they were from one of the largest fast “food” chains. Which confirmed that even basic commonsense can often be failed. And further confirmed the need for a practising licence to weed out those who just were not competent, and therefore a danger to others.

The lack of basic business understanding on the part of many un-prepared owners has been shown up. We have always contended that you can be  the best panelbeater (substitute whatever trade or profession you like here) in the world , but it doesn’t mean you can run a panelbeating business. The skills and understanding that go into running a business are different from those needed to work in a business. In the property sector we see it all the time, where business owners don’t even understand the basics of a commercial lease. And if they don’t understand the basics of a lease (which secures their place of work), we wonder what else they don’t understand about the basics of business.

Having business owners undergo some basic business training, and obtain a licence, however rudimentary, would surely be to the benefit not only of those individuals and their business, but protection for the rest of the community.