The optimistic start to a year that offered the chance of consolidation and growth for New Zealand’s small business fuelled by the post-earthquake Canterbury rebuild, high dairy prices and low interest rates has turned to one that now offers business outcomes that may be somewhat less certain. This reflects the volatile environment that New Zealand’s small businesses operate within and the impact that external influences over which they have little control over can have on them. Given these businesses account for 90 per cent of New Zealand companies and employ nearly a third of all New Zealanders, it also shows the impact that this can have on the wider economy.

The outcome of this dynamic environment has been reflected in a downturn in business confidence as shown in a number of recent business confidence surveys including the NZ Chambers of Commerce’s own quarterly survey. As would be expected the uncertainty surrounding what is happening in the dairy sector, accompanied by housing prices and the possible slowing of the Chinese economy has led to a drop in confidence among many respondents. This is not to say that many business owners do not still have confidence that their own situation will improve, just that the number is lower than the highs of the start of the year.

What is possibly more interesting is what many respondents considered as factors limiting their business opportunities. One key factor was demand for their product or service and the other was the ability to recruit capable employees. When considering demand it could well be that consumer confidence may also be down meaning consumers are less inclined to part with their money. There may however be other deeper underlying issues that the business needs to consider. For example is the product or service being delivered in a manner that meets changes in consumer behaviour and what need is it serving or problem is it solving?

In the case of the challenge in finding workers, is there really a disconnect in between what is being offered and what is required or is there a shortfall in the businesses capability to select, train and maintain workers. In asking these questions in an objective manner and identifying what is actually causing these two factors to be a barrier to growth then the business owner will be better positioned to engage with the various support available within the region to build their capability and improve their chances of business success.

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