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The Trouble With Lifestyle Entrepreneurs
New Zealand's business owners have struck a work-life balance that many of their American counterparts would envy. So why is this becoming a national crisis? And what's the lesson for us?
Published July 2005
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BUY A REPRINTAnyone who wants to schedule a meeting with the founders of Burke Publishing had better be flexible. The textbook publishing company is run by Rory and Sandra Burke, a husband-and-wife team who operate the business from a 35-foot sailboat, the Pacific Voyager, in the coastal waters off New Zealand. Their floating headquarters has on occasion anchored miles beyond cell phone or e-mail range. It's a fabulous lifestyle, but one that severely limits their company's growth potential.
To really ramp up sales, Rory says, they'd need to dry-dock the boat, move to a land-based office, and start hiring employees. And to the Burkes, that sounds like a lousy tradeoff. "We're lifestyle entrepreneurs," Rory says. "We try to strike the balance between income, possessions, the time we work, and where we work." If that means Burke Publishing remains the same size, that's okay with them.
It's not okay with New Zealand's prime minister, however. At a time when American entrepreneurs aspire to improve their work-life balance, New Zealand -- as a matter of public policy -- is trying to coax its lifestyle entrepreneurs into spending a little less time enjoying life and a little more making money. In the process the country is struggling with a novel question: How do you get laid-back business owners like the Burkes psyched up about growth?
Entrepreneurial But Not Ambitious?
New Zealand -- the source of lamb, kiwis, and the Lord of the Rings movies -- is, by some measures, already phenomenally entrepreneurial. Businesses enjoy a number of advantages, including a highly educated English-speaking work force and a time zone that straddles the North American and Asian workdays. The economy has been growing steadily, with GDP rising 3.5% last year. And more businesses are popping up all the time.
According to a recent study, 14.7% of New Zealand's adult population is involved in launching a business, a level that exceeds even that of the U.S., where the measure is 11.3%.
Despite its many businesses, however, New Zealand has been falling far behind other developed countries in terms of its standard of living. The problem is that many of these lifestyle entrepreneurs work just enough to buy a second home and a boat and to send their kids to school; for the lucky ones that achieve those things, the incentive to keep enhancing their personal fortune seems to vanish. Experts say that an annual income that is the equivalent of just $70,000 in the U.S. is considered the pinnacle of economic achievement in New Zealand. As a result, few businesses have American-style expansion plans. By one count, the entire country, with a population of four million, has just 240 businesses that employ more than 500 workers.
Since 1999, Prime Minister Helen Clark has been trying to push entrepreneurs in her country to expand. Her efforts are nearly as much a part of the national discussion in New Zealand as the efforts to fix Social Security and cut health care costs are in the U.S.
Usually when governments want to spur entrepreneurship, they tinker with the tax code, reduce red tape, and increase research spending at universities. Many European Union countries are going through these exercises now. Trouble is, New Zealand is already business-friendly by those measures; it needs something else to kick-start business expansion.
Dealing with the problem is all the more difficult because it seems to have both a practical dimension and a philosophical one. On the practical side, most experts believe that the key to raising New Zealand's standard of living is to get companies to export more aggressively. New Zealand's small domestic market -- its economy is roughly the size of Orlando's -- offers only so much opportunity.
To that end, the University of Auckland Business School's entrepreneurship center has started a group that brings together a few dozen entrepreneurs every month to hear guest speakers, discuss case studies, and network. Andrew Hamilton, who runs the center, says the goal is to help aspiring exporters focus their efforts and better understand the risks, from currency fluctuations to cultural hurdles, of expanding abroad.
The initiative has met with some success. Heather McEwen, chief executive of an agricultural software company called Xenacom, credits the program with helping her develop valuable contacts and bolster her market analysis skills. McEwen's company opened its first U.S. office last December in Ames, Iowa -- more than 8,000 miles away from its main headquarters in Auckland. "We may be slightly more ambitious than your average company in New Zealand," McEwen concedes.
