What is taking place in the marketplace and NZ economy?

Small business owners in New Zealand are currently facing several pressing challenges and the marketplace indicates to us (and also by talking to other clients in various industries) there are certain factors affecting economic growth and financial stability.

So what sort of challenges are small business owners facing under the current economic climate in New Zealand now that we've started the year 2025?

1. Economic Uncertainty and Rising Costs: The Reserve Bank of New Zealand has highlighted a grim economic outlook, with rising unemployment and delayed business investments due to financial hardships.

   
   

   Additionally, economic instability from inflation and increasing costs is a major concern for 75% of businesses in New Zealand. Not to mention that interest rates are still not low enough to ensure enough liquidity in the market place to incentivize more spending by individuals and business owners.

   
   

2. Cash Flow Management: Cash flow remains a significant issue, with the average small business experiencing negative cash flow for a third of the year. Approximately 95% of Kiwi small businesses faced at least one month of negative cash flow in 2024. Also, in 2024 New Zealand had a record number of liquidations particularly in the construction and hospitality sector due to cash flow issues faced by small business owners.

   
   

3. Access to Finance: Securing funding is becoming increasingly difficult, with 57% of small business owners reporting challenges in accessing finance from traditional lenders. More than half have missed growth opportunities due to funding constraints.

   
   

4. Regulatory Compliance: Navigating various regulations and laws is time-consuming and costly. Businesses must ensure compliance with tax, employment, and industry-specific regulations, often requiring professional assistance.

   
   

5. Mental Health Challenges: There has been a significant increase in mental health-related absences among employees, with a 20% rise reported over the past year. This trend affects both staff and business owners, adding to the operational pressures.

   
   

6. Late Payments: Late payments are a major challenge, with one in two businesses reporting this issue. This exacerbates cash flow problems and hinders financial planning.

   
   

Addressing these challenges requires a multifaceted approach, including policy interventions, financial support mechanisms, and mental health resources to support the resilience and growth of small businesses in New Zealand.

We are in the constant know-how and can provide you the support and clarity you require to make the hard decisions going into 2025. This includes assisting you and reviewing your existing business model and determine if it needs to be changed, innovated or discarded.