Times still challenging for SMEs

31 October 2013

Times still challenging for SMEs

Strong housing markets in Auckland and Canterbury, along with the Christchurch rebuild, are masking the tough times that some businesses are facing around the rest of New Zealand.

Eugene Sparrow, partner at chartered accountants and business advisers Grant Thornton New Zealand, said the economic environment remains “challenging” for many SMEs.

His comments follow a report released by Statistics New Zealand that shows the number of businesses operating in New Zealand has fallen by about 8,300 since 2009, but the pace of firms falling by the wayside has slowed in the past year.

The figures show that New Zealand had 472,600 businesses in February 2013, down 0.2 per cent from 2012. The number of businesses has declined for the fourth year, although total staff numbers increased in the past year.

“We hear a lot about positives – and they’re certainly evident – but there are also real challenges. Our clients tell us that people are still very cautious about discretionary spending, especially in the likes of restaurants and bars,” he said.

“Yes, things are better than they were in the recession, but it’s not booming yet.”

Sparrow said hurdles for SMEs included strong competition, pressure on pricing and tighter lending criteria.

“Bigger businesses have more equity which can act as a buffer in uncertain times. We’re finding that they’re starting to pick off some of the smaller businesses that just can’t compete.

“The small guys only have so many reserves. They can only nibble away at their capital for a while, waiting for the anticipated substantial recovery – but it’s not here yet.”

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