A testament to the resilience of small businesses in New Zealand
As the economy has reached the peak of the cycle, businesses have had to adjust their strategies to stay afloat. However, Kiwi small businesses have managed well so far to readjust to this shifting economic climate, navigating accordingly. Those that have been able to adapt and change with the times have been the ones that have thrived. Known for their innovation and creativity, Kiwi small businesses have had to find new ways to market themselves and their products, and many have turned to online platforms to reach a wider audience. Others have focused on providing unique and personalized services that cannot be found elsewhere. What has remained constant throughout this time is that Kiwi small businesses are able to weather any storm just to come out stronger on the other side. This is good news for the economy as a whole, as small businesses are the backbone of the Kiwi economy. They are the engine that drives growth and creates jobs. Speaking about jobs, the labour market is a key factor in determining the health of the economy. A strong labour market bolsters the economy by providing more people with jobs and incomes. This in turn supports businesses, especially small businesses, as they have more customers with money to spend. A strong labour market is therefore essential for the health of the Kiwi small business economy.
Recently Xero has published the ‘Xero’s small business report.’ Xero is a New Zealand-based technology company, specialising in accounting software for small and medium-sized businesses. The Xero tool is essentially cloud-based and offers a variety of features, such as the ability to track inventory, create invoices and manage expenses. It is also very user-friendly, so businesses and their accountants can easily work with it. Having a lot to gain from using Xero as their bookkeeping tool, it is an excellent choice for small and medium-sized businesses in general, and we highly recommend it. The economy is always changing and so are the needs of businesses, having a tool that can adapt is crucial.
Now let us take a look at a currently published report that aims to equip small business owners with simple but powerful insights, the “Xero’s Small Business Report.”
According to this report, New Zealand businesses are still feeling confident about their sales prospects. Sales growth was strong in September, with businesses reporting an increase of 14.8 per cent year-on-year. This is significantly higher than the wage growth rate of 5.1% in September, which has slowed from a mid-year peak of 6.7 per cent, aiding businesses to cope with pressure. Jobs rose 8.5 per cent year-on-year, which is the largest rise since July 2021, while the unemployment rate is near a record low at 3.3 per cent.
Xero’s country manager, Bridget Snelling, stated that the results are an indicator that Kiwi small businesses are still able to grow their teams and keep hiring despite record-low unemployment, while balancing wage demands and rising inflation.
“The small business economy is still highly attractive to Kiwi employees and competing well with large businesses,” and further she shared “When we factor in the latest inflation figure of 7.2 per cent for the September quarter, this shows sales volumes are still rising.”
Positive developments are reported for the hospitality sector – which increased with 9.2 per cent from a year earlier – and for professional services along with the manufacturing sector, which experienced growth of 10.5 per cent and 10.4 per cent, respectively, in the year to September.
The conducted survey found that there were wage gains in professional services with up to 5.8 per cent, and in the agriculture segment with up to 4.6 per cent, while the retail trade saw a growth of 4.8 per cent.
However, the figures also show that Agriculture businesses are experiencing a 0.3 per cent decline compared to the previous year, as fewer jobs are available.
Looking at the industries by region, the report comes to the following conclusion. While Auckland had the slowest wage growth at 5 per cent year-on-year, the highest was in Otago, Hawke’s Bay, and Waikato with up to 5.5 per cent.
Despite a decline of 12 points, a 125 score in September is still above the average 100 for New Zealand Small Businesses Index. As Bridget Snelling said: “This, coupled with increased activity, is a good indication Kiwis are making an effort to spend locally and support the small business community in a fairly uncertain economic time.”
Further analysis by the Ministry of Business, Innovation & Employment indicates that businesses are beginning to feel confident about future economic conditions, implying the demand for labour will remain elevated in future.
This is a sign of hope that the economy is recovering from Omicron and Covid’s backlash that has lasted more than two years. Nevertheless, there are still many businesses struggling to keep their head above water. The pandemic has taken a toll on many industries, and it will take time for them to recover. But the fact that some industries are seeing an uptick in revenue is a good sign that New Zealand is on the road to recovery.
And as every successful business owner understands, having the right employees can and will make the difference between a company’s success and failure. In fact, a good employee can be the key to taking a company to the next level. But attracting and recruiting the right employees can be difficult, and businesses must be careful not to make costly mistakes. Hiring too quickly can not only impact the quality of business staff, but it can also lead to high staff turnover and lower productivity.
Conversely, recruiting suitable candidates can help businesses save time and money in the long run. In any case, employee recruiting can be a daunting task for businesses. The stakes are high. Nevertheless, competent assistance is always available. As a team, we would like to make it easier for business owners to find the perfect candidate.
We know that every business is different, and that is why we are offering accounting and advisory services that are entirely customizable. We welcome you to follow the link for more information on our services, or to contact us today to speak with one of our accounting and business consulting professionals.