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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.”

About Grant Thornton International Ltd
Grant Thornton is one of the world's leading organisations of independent assurance, tax and advisory firms. These firms help dynamic organisations unlock their potential for growth by providing meaningful, actionable advice through a broad range of services. Proactive teams, led by approachable partners in these firms, use insights, experience and instinct to solve complex issues for privately owned, publicly listed and public sector clients. Over 31,000 Grant Thornton people, across 100 countries, are focused on making a difference to clients, colleagues and the communities in which we live and work.

Grant Thornton International is a non-practicing, international umbrella entity organised as a private company limited by guarantee incorporated in England and Wales. References to "Grant Thornton" are to the brand under which the Grant Thornton member firms operate and refer to one or more member firms, as the context requires. Grant Thornton International and the member firms are not a worldwide partnership. Services are delivered independently by member firms, which are not responsible for the services or activities of one another. Grant Thornton International does not provide services to clients.

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