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WINTER 2015

www.bdo.co.nzAudit | Tax | Advisory

BUSINESS EDGEINCENTIVISING FOR SUCCESS

GOING PUBLIC

BEYOND THE

BUZZ

A SENSE OF PURPOSEKylee Potae, Head of Maori Business BDO Gisborne

Business Edge - Winter 2015 1

WINTER 2015Business Edge will provide insights on key issues impacting your business.

CONTENTIncentivising for success 2

Going public 4

Social media - beyond the buzz 6

A sense of purpose 8

Welcome, to the latest edition of Business Edge. We are excited to celebrate our one year anniversary of this publication and

hope you find the content both relevant and thought provoking!

In this edition we discuss employee share schemes. Increasingly, businesses are wanting to compensate and incentivise key employees with share options. We explore the most common types and some of the things you need to be aware of to ensure they work well for both the individual and the company. Our second article is on Initial Public Offerings (IPOs). Should your company consider an IPO? We also discuss what issues you need to consider to make it a success. In our third article we look at social media and why it is relevant for ALL businesses today. Who should own your social media strategy and how do you measure success? Our final article is on governance and we provide a planning framework which we have found effective for a number of our clients.

We love to get your comments, so if you would like to let us know your thoughts on these articles, ideas or suggestions for future articles, please feel free to email them to [email protected]

Best regards,

Adam Davy Head of Advisory BDO New Zealand

BUSINESSEDGE

Business Edge - Winter 20152

INCENTIVISING FOR SUCCESS

One set of levers that employers are pulling with increasing sophistication in their efforts to attract and hang onto top people is employee incentive schemes. Varying combinations of bonuses, shares and other incentives are being created to align managers with shareholders around company goals, performance and return objectives.

However, there are pitfalls to be avoided in the quest to get it right, so we offer a few tips below in this highly competitive arena:

Plan your incentive scheme

You spend considerable time and effort in planning your business strategy, and incentive scheme planning should be no different. After all, we’re talking about how incentives can drive your human and company performance. And ‘human’ is a crucial word: aligning behaviours with company objectives and value.

Among the questions that need to be answered when structuring the scheme is whether the design balance is right in regards to short and longer-term goals.

As there are a number of different types of schemes - each with different structures, advantages and disadvantages - it is important to choose a structure that suits your needs.

Do it early

The opportunity to align the performance and behaviours of your leaders to company objectives and shareholders is strongest early on.

If you do this later, as your company grows, you might limit the incentive and return opportunity for your key people. It could also cost you more to change an existing scheme, and the tax consequences could be complex.

The week before you undertake an IPO is not the ideal time to ask yourself how you might reward senior staff who have been there a long time and will help the company to grow. Although investors and analysts want to see management aligned well past an IPO date, you don’t want to erode profitability through a hastily-conceived incentive scheme.

Make sure it is ‘by the book’

The Financial Markets Conduct Act 2013 (FMCA) reformed how companies offer shares to the public.

It provides specific exemptions to employee share schemes from the usual disclosure and reporting requirements. However, the exemptions are not absolute, as you are still required to provide certain warning statements and other information.

It is therefore important to ensure your scheme is in compliance with the FMCA.

Box clever for a successful, incentivised future

Whatever you are aiming to achieve, consider the consequences of the incentive structure, as they can be major. Implementing a scheme without fully comprehending the wider tax, valuation, accounting and regulatory issues can result in an ugly scenario for your business.

For more information, contact your local BDO Adviser.

New Zealand: a land of robust economic growth, low unemployment levels and no capital gains tax on shares. This mix ensures that attracting, retaining and incentivising top talent around company performance and shareholder returns has become a red-hot topic for any ambitious organisation.


10 KEY QUESTIONS:Our job is to create the right blend that maximises the outcomes for staff and shareholders while minimising associated issues. Our starting point is therefore to ask these questions:

1. What are you trying to achieve?2. How much do you want to share?3. Do you want senior management as shareholders, or as incentivised

managers? 4. Are some senior management family members?5. Can your senior management afford to pay for the shares?6. Is there some form of liquidity event on the 3-5 year horizon – an IPO

or trade sale? 7. What form of incentives structure would drive the right behaviours? 8. Is the business going to generate dividends or churn out cash (or no

cash) for the next five years?9. Do you want to remain a shareholder, gain a business partner, or sell

the business to senior leaders?10. What happens if…?

What schemes are out there?

Share options schemes Employees are granted an option to exercise the right to convert options into shares at a particular future time and at a particular exercise price. Options typically confer no voting or dividend rights until the option is exercised.

Long-term incentive schemes Employees are granted an option to exercise the right to convert options into shares at a particular future time and at a particular exercise price. Options typically confer no voting or dividend rights until the option is exercised.

Share loan schemes The employee obtains a loan from the company to purchase shares in the company. The loan has certain repayment requirements and the employee may have other restrictions on how the loan and their shares are dealt with under the terms of the share scheme

Phantom share schemes Employees have the right to the increase in value of the shares after a certain period of time without buying shares. If an employee is given 100 phantom shares at $1,500 per share, and the company increases earnings by its 40% target when a second valuation takes place, the shares would be worth $2,100 per share - resulting in the employee’s phantom shares increasing from $150,000 to $210,000: a gain of $60,000.

Employee Benefit Trusts (EBT)

EBTs are established to benefit employees with equity-based incentive plans that include bonus plans, share options plans, and phantom share options. Companies sell shares into the EBT, which then facilitates share acquisition for employees through individual agreements and creates a market for private company shares. Over time, senior management become beneficiaries of the EBT on individual arrangements. If they increase the value of the company according to agreed markers, they receive a share in the increase in value.

* These examples provide a general overview of some of the types of schemes available. However, there are many variations and derivatives of these, particularly as they are tailored to the particular needs of the company. Each scheme has various advantages and disadvantages which need to be evaluated according to the particular needs and size of your organisation before choosing the most appropriate scheme for you.


In BDO’s experience, successful IPOs are characterised by a range of common factors. To help other businesses considering an IPO, we recently brought together a range of senior people with experience in the area, including experts from BDO’s Corporate Finance team, for an IPO seminar. In this article, we’ll discuss the key themes from the seminar including the potential benefits of IPOs, the key success factors, and the issues to consider along the way.

Why go public?

The most obvious benefit of an IPO is that it provides access to capital to grow your business. That’s a particular concern for the 90% of New Zealand mid-market businesses ($10-$50 million turnover) that are privately owned. For the CEOs of these businesses, balancing their growth aspirations with the demands of servicing existing clients is a major issue – particularly when they’re so busy working in the business that there’s little time to work on it. Opening up capital for growth is key for this important sector, and an IPO can be an effective way to do it.

But the benefits of an IPO can be much wider than accessing capital. Our experience, and that of many speakers at the seminar, was that going public can also result in a better, stronger business. According to NZX CEO Tim Bennett, most business who list report that it’s been good for their business. Here are some of the reasons why:

▶ Better governance and business processes - When you’re a private company, it’s a little easier to let those things slide. But when you’re in the glare of the public spotlight, you need to have rigorous governance and business management processes in place – which is good for the business.

▶ Profile – as a public company you have a much higher public and media profile. While that can be uncomfortable, it can also be a big competitive advantage.

▶ Credibility – as a public company customers, investors and suppliers see you in a different light – especially in overseas markets where listing is seen as the ultimate business aspiration.

▶ Transparency – your share price gives you an immediate and constant measurement of your business performance. As a result, it drives you to constantly think about your customers and their needs – and ultimately make better business decisions.

▶ Clear succession – listing on the share market provides a clearer, easier exit strategy for the founder, and helps the business focus on ensuring a smooth transition.

It’s not always a good time to undertake an IPO. Currently, though, a low-interest rate environment and the growth of KiwiSaver funds mean there is a window of opportunity. The emergence of the NXT market, with less complexity, simplified listing rules and a new approach to disclosures, has also created an easier pathway for smaller businesses.

Key success factors

Planning – and more planningIPOs take time – usually a lot more than you expect. A detailed timeline, with key milestones and checkpoints, is essential to help you stay on track and avoid chewing up even more time and resources. Start the planning process by revisiting exactly why you’re undertaking an IPO in the first place and how much money you need to raise, as that clarity will help you with the important decisions you’ll need to make along the way.

GOING PUBLICGoing public can have many benefits. It can be a pathway not only to growth, but also to a stronger, more sustainable business. But it’s also not something to enter into lightly. While the rewards can be huge, getting to an IPO can be a lengthy process requiring significant resources.


never set down in a coherent way or exists largely in the head of the owner. But to convince investors, the investment statement needs to articulate your strategy in an accessible and compelling way. Having that clarity is a significant benefit to your business going forward, whether you proceed with an IPO or not.

The new Financial Markets Conduct Act should make it easier to tell your story. The focus of the new act is on providing ‘clear, concise and effective’ information for investors, rather than a plethora of technical details. In preparing your investment statement, focus on what typical investors really need to know about your business, such as identifying risks that are particularly significant and how likely they are to occur.

Establishing a rigorous verification process is also critical. Every fact or number in the Investment Statement needs to be verified and documented, so a methodical process for cross-referencing data will save a lot of time and avoid potential issues later on.

Staying on message

Consistency is key. It’s vital that everyone involved in the IPO, especially in the sale process, is reading from the same script. Conflicting messages will not only confuse the market, but may lead to issues further down the line.

How BDO can help

BDO has extensive experience in helping clients prepare for and execute successful IPOs, including assisting with IPO planning, preparing a prospectus and independent accountant’s report, liaising with the Companies Office and NZX assisting Directors to understand their obligations, assessing your readiness for an IPO, and more. To find out more, contact your local BDO Adviser.

If you want to find out more about NZX visit www.nzx.co.nz or the new NXT market for small high growth businesses visit www.nxt.co.nz.

Assembling the right team

A successful IPO requires input from a lot of different people skills and expertise – so it’s important to get the right people around the table. Apart from the owner and company management, specific roles you’ll need to think about include:

▶ Lead Managers – as their role is to sell your business to the market, it’s essential to ensure they have a good understanding of your industry.

▶ Independent Directors – they play an important role in balancing the natural enthusiasm of the owner and management with an objective assessment of the business and in particular, it’s growth potential.

▶ Investigative Accountants – getting your numbers and assumptions right is key. The Investigative Accountant’s role is to review and provide assurance on the historics and future forecasts.

▶ Legal Advisers – there is a significant amount of documentation that needs to be produced including offer documents, banking agreements, employment contracts and more, all of which require legal review.

▶ Tax Advisers – IPOs can create complex tax issues, from the tax treatment of employee share plans to dividend payments to shareholders in other tax regimes. Getting a tax adviser involved at an early stage will avoid nasty surprises down the track.

▶ Advertising / PR professionals – don’t underestimate the importance of profile and media presence in the success of your IPO. To sell the company to investors, you need a compelling story.

▶ FMA / NZX – staying in touch with the FMA and NZX throughout the process will make it easier to ensure you meet their requirements. They are also an invaluable source of knowledge, information and resources.

The investment statement

The investment statement is at the heart of the IPO process – and it’s also one of the major benefits for your business. Often, your business strategy is

Other issues to considerBusiness as usual during the IPO process

IPOs inevitably consume a significant amount of management focus. You may want to consider ‘backfilling’ some key positions to ensure you’re able to continue to meet your customers’ expectations during the process.

The importance of good record-keeping

Going public by definition exposes your business to a whole new level of scrutiny. That’s why it’s important to take good records during the IPO process and in particular, to document all key decisions. Business is uncertain – but if things don’t turn out as expected after the IPO, being able to demonstrate a considered, well thought through decision-making process will go a long way to avoiding potential issues.

Have a Plan B In business, things can change quickly – often for reasons outside your control. It’s important to have regular checkpoints in your IPO process so you can assess whether it’s still the best option for your business – and to have a Plan B if it isn’t.

“Balancing your business growth aspirations with the demands of servicing your existing clients is a major issue for all CEOs”


Social media is strengthening its place as a major part of the day-to-day lives of people across the globe. In little more than a decade, social media has been adopted at an unprecedented speed and on a truly staggering scale. Worldwide it’s estimated there are:

▶ 1.8 billion social network users

▶ 4.5 billion ‘likes’ a day on Facebook

▶ 500 million tweets sent a day on Twitter

▶ 5 million images uploaded a day on Instagram

In terms of devices where social media is accessed, mobile growth is clearly leading the way. This is evidenced in New Zealand which has a strong existing base of smartphone and tablet users (2.2 million and 1.0 million, respectively). According to the most recent report from the Interactive Advertising Bureau of New Zealand (IAB NZ), mobile advertising spend in Q4 of 2014 grew by a whopping 119% year-on-year. Though they don’t break this down further into sub categories, there’s a strong sense that a big part of the increase correlates with the growth in accessing social media from mobile, possibly making it one of the hottest digital trends in the country. Another recent report from the IAB in Singapore found that 48% of New Zealand’s population with active accounts on top social networks, access them via mobile.

Your customers, your competitors, your business partners, your kids, your neighbours and your friends – they’re all on social media. So you need to be there too – don’t you?

For most businesses, the answer is undoubtedly yes. But many make the mistake of jumping into the social media frenzy without really asking why they’re there, and what they hope to achieve.

Investing in social media is no different to any other business investment. You need to think about how it will contribute to your business strategy, and how you will measure that contribution. You also need to understand the costs and risks involved.

To be effective, you need to provide a continual stream of engaging, relevant content and invest resource in creating an ongoing conversation with customers and other stakeholders.

As many businesses have found out to their peril, social media is a two-way conversation that cannot be ‘managed’ in the traditional sense. Negative feedback from disgruntled customers used to be confined to a small circle of friends and family. With social media it can reach an audience of millions - in seconds.

Take for example, the “United Breaks Guitars” case, where a Canadian musician’s guitar was allegedly severely damaged by United Airlines baggage handlers. When United informed him that his miniscule claim was ineligible for compensation, he immediately created a song on YouTube where he sang that he “alerted three employees who showed complete indifference towards me”. The YouTube clip amassed 150,000 views within one day, prompting United to contact Carroll saying it hoped to right the wrong. Within four days of the video being posted, United Airlines stock price fell 10%.

So it’s important to have a clear strategy for social media – and a clear link back to your overall business strategy and reputational risk management framework.

Who owns your social media strategy?

Social media is often led by the marketing department, as it’s seen as simply another channel for connecting to your market. But as the list of potential applications above shows, it can have a significant impact right across the business – so the whole business should have an input into your social media strategy. For example, consider establishing a social media steering committee with representatives from throughout the business. That way you can avoid:

▶ Taking too narrow a view and missing out on the opportunities social media presents to transform your business, and:

Social media can contribute to a wide range of business goals. The most appropriate social media approach for you depends on your business strategies and what you’re trying to achieve.


▶ Taking a piecemeal, uncoordinated approach to social media that is not aligned with your overall business strategy.

The steering committee should also establish guidelines for the use of social media in your business – e.g. what channels you will ‘play’ in, who can take part and in what capacity, what resources are required to achieve your social media goals, your social media ‘tone’ and ‘voice’, and so on.

Measuring success

In the same way, you should take an organisational wide view of how you will measure the impact and success (or otherwise) of your social media initiatives. There are plenty of tools you can use to measure various aspects such as likes, click-throughs, sentiment, followers etc. These are attractive because social media is hard to measure and they provide some hard data. But the key is to focus on your intended business outcomes rather than just on activity.

Social media measurement is not easy and it’s an emerging and hotly debated topic. Likes, click-throughs etc. have their place, but they should be used as part of a multi-disciplinary dashboard approach. It should include both hard and soft measures, and should focus on the contribution of social media to overall business goals. Social media should always be aligned with your business strategy – not an end in itself.

How can BDO help?

BDO has extensive experience in working with organisations to help them develop effective ways to measure their marketing including social media spend.

This article was authored by our Brand Marketing effectiveness specialist, Tim Gacsal, Associate at BDO Auckland.

LINKING SOCIAL MEDIA TO YOUR BUSINESS STRATEGY. SOCIAL & BUSINESS GOALSSome different ways social media can support key business objectives:

▶ Increasing reach and awareness – this is the starting point for most businesses and the most obvious reason to get involved in social media. Customers increasingly use social media networks as a source of information and opinion about products, services and brands. A social media presence can connect your business and your brand to a huge audience across different market segments and geographies.

▶ Thought leadership – social media platforms such as Twitter and LinkedIn are increasingly where people go to stay up to date with latest thinking on key issues in their field. This has particular relevance for professional services firms, who have traditionally used ‘content marketing’ (e.g. the creation of white papers, opinion pieces and journal articles) to sell their firm’s expertise.

▶ Building profile – for professional services firms, the profile and reputation of their partners and senior people is a key driver of new business. Increasingly, clients seeking professional services are reviewing the LinkedIn profiles of key staff as well as their social media posts when they are considering engaging a firm.

▶ Build relationships with key influencers – Many important influencers have a large number of followers on social media (LinkedIn has even established a global influencers programme which includes luminaries like Sir Richard Branson and Bill Gates). Thoughtful contributions to their posts and conversations can help to enhance your own profile.

▶ Increase marketing effectiveness - Social media can be an effective way of leveraging existing marketing and corporate responsibility activities. Paid search, banner ads and posts can link to campaign pages on your website, while Facebook and Twitter are effective forums for stories about your sponsorship or community activities.

▶ Improve customer service – Customers increasingly expect that businesses will be on social media. They also expect to be able to interact with you there, 24/7.

▶ Increase website traffic – Social media is an important factor in search engine algorithms. Building your social media presence can help improve your site’s ranking for organic search.

▶ Reputation and issues management – One of the major advantages of social media is the ability to listen in to what people are saying about your brand and your business.

▶ Market and customer research – Social media networks offer huge opportunities to gain deep insights on what both your customers and competitors are doing and saying.

▶ Improve recruitment – Networks like LinkedIn offer access to, and with, a huge pool of potential employees.

▶ Internal collaboration – Social tools like intranets, executive blogs and other knowledge sharing tools can encourage your staff to collaborate more effectively – especially over multiple locations.

1.8 BILLION SOCIAL NETWORK USERS

4.5 BILLION ‘LIKES’ A DAY ON FACEBOOK

500 MILLION TWEETS A DAY ON TWITTER

5 MILLION IMAGES A DAY ON INSTAGRAM

LINDA COLES SEMINARInterested in finding out more about how you can use Social Media to your advantage? We have an exclusive Social Media breakfast seminar hosted by Linda Coles, one of LinkedIn’s top 500 influencers, in August. For more info go here: www.bdo.co.nz/social-media


When people are united behind a clear vision and strategy, amazing things can happen. The Black Caps’ incredible run in the Cricket World Cup is one example. The global success of Xero, driven by its vision of ‘beautiful accounting software’, is another. But often, there’s a gap between the vision and strategy set by the directors or trustees, and what the organisation actually does.

When the vision isn’t reflected in what happens ‘on the ground’, it’s enormously frustrating for directors and trustees. They don’t understand why people in the organisation just don’t seem to ‘get’ the vision they laboured so long and hard to create.

It’s frustrating for people in the organisation too. They’re working hard, doing what they think is right for the organisation – but somehow it doesn’t seem to meet the expectations of the board. So what’s behind that gap between the vision and strategy - and the way they are interpreted and executed?

Communication breakdown

In our experience, one of the fundamental issues is around the clarity of the vision, and the way it’s expressed.

To achieve out the board’s vision, staff first need to understand what it means for the organisation, and how success will be measured. More importantly, they need to know exactly what it means for them - and how they will be measured.

It sounds simple, but it’s not - and that’s the cause of much of the frustration.

Often, Directors, Governors and Trustees have broad conceptual goals, based on a desire to leave the organisation in a better position after they leave. For example, they may want to be ‘the leader in their market’ or

‘the pre-eminent provider of widgets to New Zealanders.’ While those are admirable goals, they’re also relatively ‘loose’ and open to interpretation. The more stakeholders you have, the more interpretations there are likely to be. In collectively owned Maori businesses there are by definition a wider range of ownership interests than most other businesses. It’s not surprising, therefore, that the outcomes are often different from what board members had in mind.

In our experience of working with Maori Trusts, the owners and Governors also have much longer horizons than most commercial businesses. They are concerned not just with the next 3-5 years but with the next 30 – 50 years or longer. Because their asset base – predominantly their land – will never be sold, they take a long-term intergenerational view. That means that they may be less concerned with maximising opportunities today, and more concerned with ensuring sustainability for future generations.

However, the farm managers they employ may have short-term financial targets to meet in terms of getting the best prices for their sheep, beef or crops – so they are very much concerned with maximising current opportunities. The result is often that while those financial targets are achieved, that may come at the cost of some of the key principles that are important to owners and Governors, such as long-term sustainability.

We often see business plans being driven by budgets rather than strategy. And when that happens, unintended consequences can result.

Business Planning should always start with a clear understanding of the purpose of the organisation, how that purpose will be achieved, and how it will be measured. A budget is then developed based on the resources needed to carry out the agreed strategy – not the other way around.

Business planning is not a simple process. In our experience having a structured planning framework is key to success. There are many models,

A SENSE OF PURPOSE

Kylee Potae, Head of Maori Business at BDO Gisborne


but below is one that we’ve found effective in helping many Maori Trusts get greater clarity on their vision – but the process can be applied to any business.

A Business Planning FrameworkWe view the business planning process as having four distinct steps:

Step 1: The strategic plan

In this step Directors and Governors agree on the vision and mission of the organisation, and a high-level view of its goals and objectives. For clarity, this should cover no more than 4-6 key areas (otherwise it becomes difficult for stakeholders to understand), and should describe the things that are fundamentally important to the owners and board. Typically the focus areas will be something like:

▶ Production

▶ Financial

▶ People

▶ Social & cultural

▶ Environmental

Having a focus on each of these areas gives managers and staff a wholistic view of the business, rather than focusing for example on narrow financial goals. It helps them understand not only what you want to achieve, but also what that would actually look like in the real world, to mitigate the risk of different interpretations. It also enables conversations about how you prioritise and trade off between sometimes conflicting objectives.

In each focus area, directors should the define critical success factors and key performance indicators, so there is a clear understanding of the outcomes they are seeking in each area. That’s crucial, because unless you know with crystal clarity what it is you want, you are unlikely to get it. Getting to agreement can make your head hurt – but in our experience it is often the difference between success and failure.

The extract below illustrates the type and level of information in a typical strategic plan. While it’s a farming example, the same principles apply across all sectors.

Key focus area Objective Critical success factors Key performance indicators

Production Maximising livestock productivity

• Ability to finish 70% own grown lambs

• Ability to finish all own grown cattle

• Ability to market 80% finished lambs

• Ability to market 80% finished cattle

• Development of individual productivity performance programme

Environment Utilising resources in a sustainable and scientifically based manner

• Forage and nutrition plans

• Improving our environmental footprint

• Completed nutrient budget and long term plan

• Land Environment Plan to be completed

“Bridging the governance gap from a Maori business and farming perspective”

At its heart, good governance is about making sure organisations ‘do the right thing, in the right way.’ Of course, ‘the right thing’ for one organisation may not be ‘the right thing’ for another. It depends on the organisation’s vision, and their strategy to achieve it. Setting that vision, of course, is another crucial role of governance.


Key focus area Objective Critical success factors Key performance indicators Completion

Production Ability to finish 70% own grown lambs

• Development of more high quality forages

• 300 ha to be planted this year May 2016

• Selection of ram genetics in line with finishing policies

• Board approval of any genetic changes August each year

Step 2: The business plan

In this step, management are responsible for taking the strategic plan and turning it into a detailed operational business plan. For each critical success factor (CSF), they set out how they will achieve it, by when, and how success will be measured. The extract below shows how one of the CSFs from the above example might be broken down in the business plan:

This process is key to bridging the communication gap that often exists between different levels of the organisation:

▶ It ensures that the board and management are aligned, with an agreed view of what needs to be achieved and how. (Giving managers the responsibility for creating the business plan also helps ensure they are committed to achieving it).

▶ Management can also use this with staff to ensure they understand how their day to day role contributes to the overall goals of the business.

Step 3: The Budget

Only when the strategic and business plans have been agreed does the budget process begin. The goal is to ensure there is enough money and resources to achieve all the parts of the plan. If there isn’t, management must negotiate with the Board to obtain more funding, reprioritise, or delay some aspects of the plan until more funds are available. The key point is that the budget is an outcome of the business strategy, rather than driving it.

Step 4: Reporting

A common issue with strategic and business plans is that they are created once, amidst much fanfare, and subsequently left to languish in a drawer while the business carries on as normal. The key to keeping the plan alive is a regular, simple reporting process.

Managers should report directly to the Board on the key metrics identified in the business plan. This reporting should be a feature of every board meeting (we have found that a simple red-orange –green traffic light report on progress towards the 4-6 Key Focus Areas works well, as it’s easy to create and interpret).

The process of regularly reporting and discussing issues keeps the strategic plan alive in people’s minds, and enables changes to be made in response to changes in the business and the external environment. It also helps keep everyone in the organisation focused on what’s really important, rather than getting lost in the minutiae of business as usual.

As many boards in many industries will attest, delivering on their vision isn’t easy. It takes discipline, accountability, and focus. But by following a structured approach Maori businesses can greatly increase their chances of bridging the gap between vision and reality – and achieving the true potential of the Maori economy.

For more information, contact Kylee Potae, Head of Maori Business at BDO Gisborne: [email protected]

STEP 1: The strategic plan

In this step Directors and Governors agree on the vision and mission of the organisation, and a high-level view of its goals and objectives.

STEP 2: The business planIn this step, management are responsible for taking the strategic plan and turning it into a detailed operational business plan.

STEP 3: The budget

Only when the strategic and business plans have been agreed does the budget process begin. The goal is to ensure there is enough money and resources to achieve all the parts of the plan.

STEP 4: Reporting

A common issue with strategic and business plans is that they are created once, amidst much fanfare, and subsequently left to languish in a drawer while the business carries on as normal. The key to keeping the plan alive is a regular, simple reporting process.

1 Source: BERL: The Asset Base, Income, Expenditure and GDP of the 2010 Maori Economy2 Source: Ministry for Primary Industries: Growing the productive base of Maori Freehold Land, February 2013


This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact your local BDO member firm to discuss these matters in the context of your particular circumstances. BDO New Zealand Limited, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

BDO New Zealand Limited, a New Zealand limited liability company, is a member of BDO International Limited, a UK company limited by guarantee, and forms part of the international BDO network of independent member firms. BDO New Zealand is a national association of independent member firms which operate as separate legal entities. For more info visit www.bdo.co.nz.

BDO is the brand name for the BDO network and for each of the BDO Member Firms.

© 2015 BDO (New Zealand) Limited

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