Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search


SMEs warned to brace for business finance crunch

24 April 2019

While a capital gains tax is no longer an issue, small to medium businesses are still confronting the prospect that securing business finance is set to get a lot harder, a scenario that may spell disaster for many.

Former BNZ general manager small business and now managing director finance at OneHQ, Harry Ferreira, today urged SME owners to smarten up their business finances ahead of what will be difficult times.

“The fact that business sentiment is down in what some are still calling a ‘rock star economy’ is evidence many business owners and management are already sensing that something is wrong. Low unemployment looks good for politicians, but it’s not good for business.

“For example, low unemployment means business owners can’t find the right staff – a situation that is made worse by the fact that tighter visa restrictions are leaving too many businesses short-handed.”

Ferreira said, in addition, rising costs like the recent fuel taxes and an increase in the minimum wage – combined with a tightening housing market – and a banking sector that is running scared after the Australian Financial Services Royal Commission, are going to make conditions close to impossible for the average Kiwi SME.

“The contracting of the housing market will also have a significant impact on small businesses. Your trades people like builders, plumbers and electricians are the lifeblood of the economy and when housing suffers, they hurt.

“More than 65 per cent of SME owners fund their businesses by using the equity in their homes or residential property. However, less equity in residential housing, coupled to labour shortages stifling growth and higher costs from taxes and wages mean lower profits, which then makes it harder to get finance. Without finance, business slows down.”

Ferreira said that small business owners need to take stock and act now to ensure that they can succeed in a tougher business climate. He offers the following three tips on how to do that:

Evaluate costs
“Now, today, this minute is the time to eliminate unnecessary spend. When the housing market contracts, business will get harder and your overheads will kill you. Reduce costs by price shopping on everything from office supplies to rental space.

“Consider renting flexible space with no fixed lease commitments. Modernise your marketing with automation, and make sure you are using your time efficiently,” Ferreira said.

Smarten up your borrowing
The one thing going for businesses is that interest rates are at historic lows, but not enough businesses are taking advantage of them.

“Shop around. Speak to an adviser who can negotiate on your behalf and aim to fix your mortgage or debt as low as you can for as long as you can – even three or four years if you can get it,” Ferreira said.

Make it easy for customers to buy
Ferreira said far too many New Zealand SMEs make it hard for customers to buy because they haven’t sat down and evaluated the customer experience journey.

“Analyse every step on the journey your customer takes with you – from your website to your Facebook to your accounting set-up so that you can identify and eliminate the obstacles. You will need every competitive advantage you can get.

“It’s not uncommon to find processes that make it easy for the business but harder for the customer. Think first about making it easier for the customer,” Ferreira said.

For more information:


© Scoop Media

Business Headlines | Sci-Tech Headlines


TradeMe: Property Prices In Every Region Hit New High For The Very First Time

Property prices experienced their hottest month on record in December, with record highs in every region, according to the latest Trade Me Property Price Index.\ Trade Me Property spokesperson Logan Mudge said the property market ended the year with ... More>>

Motor Industry Association: 2020 New Vehicle Registrations Suffer From Covid-19

Chief Executive David Crawford says that like some other sectors of the New Zealand economy, the new vehicle sector suffered from a case of Covid-19. Confirmed figures for December 2020 show registrations of 8,383 were 25% ... More>>

CTU 2021 Work Life Survey: COVID And Bullying Hit Workplaces Hard, Huge Support For Increased Sick Leave

New data from the CTU’s annual work life survey shows a snapshot of working people’s experiences and outlook heading out of 2020 and into the new year. Concerningly 42% of respondents cite workplace bullying as an issue in their workplace - a number ... More>>

Smelter: Tiwai Deal Gives Time For Managed Transition

Today’s deal between Meridian and Rio Tinto for the Tiwai smelter to remain open another four years provides time for a managed transition for Southland. “The deal provides welcome certainty to the Southland community by protecting jobs and incomes as the region plans for the future. The Government is committed to working on a managed transition with the local community,” Grant Robertson said. More>>


OECD: Area Employment Rate Rose By 1.9 Percentage Points In The Third Quarter Of 2020

OECD area employment rate rose by 1.9 percentage points in the third quarter of 2020, but remained 2.5 percentage points below its pre-pandemic level The OECD area [1] employment rate – the share of the working-age population with jobs – rose ... More>>

Economy: Strong Job Ad Performance In Quarter Four

SEEK Quarterly Employment Report data shows a positive q/q performance with a 19% national growth in jobs advertised during Q4 2020, which includes October, November and December. Comparing quarter 4, 2020, with the same quarter in 2019 shows that job ad volumes are 7% lower...More>>

NIWA: 2020 - NZ’s 7th-warmest Year On Record

The nationwide average temperature for 2020, calculated using stations in NIWA’s seven-station temperature series which began in 1909, was 13.24°C (0.63°C above the 1981–2010 annual average). New Zealand’s hottest year on record remains 2016, when... More>>

Quotable Value New Zealand: Property Market Set To Cool From Sizzling To Warm In 2021

Nostradamus himself could not have predicted the strange series of events that befell our world in 2020 – nor the wild trajectory of New Zealand’s property market, which has gone from “doom and gloom” to “boom and Zoom” in record time. Even ... More>>