The Xero Small Business Index data for September is out and highlights what we're seeing on the ground in Auckland: a full month in lockdown was tough for business.
Small business sales in Auckland were down 18.4% in Auckland and fuelled the National decline of 7.1% year-on-year (y/y).
Xero’s managing director for New Zealand & the Pacific Islands, Craig Hudson, said this was the largest drop in sales since April 2020 during the initial alert level four lockdown, which saw sales fall 43.9% y/y across Aotearoa.
This time around, businesses were better-prepared and as a consequence more resilient, but the toughest hurdle now is living with uncertainty.
"The uncertainty is painful. Like all of us, small business owners don’t know how long we will be in lockdown. But, particularly in Auckland and Waikato, small business owners have the added stress of not knowing how long their operation and income will be affected," said Hudson.
Being longer in lockdown than other parts of the country, Auckland was the hardest hit.
"The decline in small business sales in Auckland was partially offset by small rises in other major cities, less impacted by restrictions, such as Canterbury (+3.3% y/y) and Wellington (+2.1% y/y)," said Hudson.
Hospitality and construction, industries where work from home was not possible, were the hardest hit with year-on-year decreases of -16.8% and -12.9% respectively.
Professional services, with a workforce more likely to be able to continue remotely, saw a small boost of +0.3% growth y/y.
Cash flow also ran low for some, according to the report, with New Zealand small businesses waiting an average of 26.2 days to be paid in September.
This was 1.8 days longer than August, 2.7 days longer compared to July, and the highest since June 2020.
“What this tells us is people are holding on to their money, putting further stress on small business cashflow. This points to the uncertainty of what the near future holds for Aotearoa,
“Right now small businesses are running very low on cash. They will be relying on a quick bounce back like we experienced after the 2020 lockdowns, but they’re worried because this isn’t guaranteed with Covid-19 likely to be in the community. It's more important than ever that we do everything we can to support our local businesses at this time.” said Hudson.
Xero Small Business Insights look at the sector's overall health and are drawn from data collected from hundreds of thousands of subscribers and result in the monthly Xero Small Business Index.
The resulting graph, showing monthly progress against average conditions (100), is informed by four factors: sales, jobs, wages and time to be paid.
In September, the index fell 16 points, to 86 points.
Xero's analysis stated that this was the third consecutive monthly fall, the lowest level since May 2020 and the first time the Index has been below 100 since January 2021.
Index movement is closely tied to the lockdowns of the past 18 months and for small business, in line with just about every other aspect of society, vaccination uptake will be the most effective way to move forward as Christmas approaches.
Hudson recognised the "ongoing importance of digitalisation for Kiwi small businesses to pivot and remain functional during lockdown."
Xero has developed guides to help small businesses stay on the ball in the current climate, including assistance with digitisation and employee wellbeing programmes.
16 Comments
And once we open back up, they're going to be lumped with the responsibility of policing vaccinations for both staff and customers, on behalf of a government obsessed with chasing arbitrary targets.
I bet they're glad the World Bank ditched their "ease of doing business" list recently.
Was talking to the owner of the gym I go to last night about this.
It's a small fitness boxing gym (around 200 members on the books, and six staff).
Half of the staff have said they won't get vaccinated, and would rather quit than comply. One doesn't really need the money and just works as a hobby, and the other two will just do cash job personal training as they have a loyal following of clients outside of the classes they run.
You can't just replace staff like that easily.
Furthermore, he's already had about a dozen members say they'll be cancelling as soon as the vax passport stops them from coming in (and I suspect more will be in that camp).
Nightmare stuff for a small business really ... forced to enforce the government's edicts and lose out on business or staff either way.
This is an excellent example.
I own a small % shareholding in a gym too and we're seeing similar numbers. It'll be the end of the business unless the rules are relaxed.
The only thing giving me hope is the almost certain govt incompetence to actually put an effective, strict mandate in place.
I remember talking to a few small business owners back when QR codes became mandatory. They were fully prepared to comply, but reluctantly so. Sure, it's not the end of the world, but it's just an additional cost of compliance, another hoop to jump through in order to get punters through the door.
I remember one went on to relate to me the high cost of Paywave, but said that it was worth it, because those few seconds saved at the till make a notable difference to peoples spending habits. Whether it's psychological or purely practical I don't know, but he feared that mandatory QR scanning at the door would have the opposite effect. Yes, it takes two seconds to whip out your phone and scan, but those two seconds can be the difference between someone wandering in for a browse or just walking on by.
Checking peoples vaccination status at the door is another level altogether. The business leaders speaking out in support of this mandate are insane. Larger businesses and industries might be able to get away with it due to their size, but it will punish SMEs, particularly retail, and SMEs account for over 25% of this country's GDP.
There has been absolutely no thought put into this beyond some neurotic short-term obession with hitting arbitrary vaccination targets.
Wouldn't be surprised if big businesses are on board because they see it as a great opportunity to smash the small retail/hospo sector.
They can afford to pay for extra staff to check customers in at the door, they can afford legal fees for mandated vaccination disputes (if outside of the govt remit e.g. retail where it is up to the business to now decide).
They can "set the tempo" knowing that your average small business cannot keep up.
It's what the masses begged for though, including many of these small business. They were so desperate to end lockdown they haven't understood the fundamentals of what they signed up for.
Many industries will be in the same boat, particularly ECE, Midwives, and likely even nurses. Borders are shut, inflation is rampant, and there are jobs everywhere if the narrative is to be believed. So if you are underpaid and overworked, then the vaccine mandate provides a great opening to negotiate a new salary (even if you are already vaccinated).
Opening line to bosses everywhere: "I am not vaccinated, but for x more a year I could be..."
It is now up to the businesses to determine if they really do value their staff, or will they just not enforce certificates?
Agreed.
All the SMEs I work with just want normality back. They're happy to take reasonable steps and measures, but there's a limit to what they can do.
It's the big businesses, chambers of commerce, industry bodies etc who lap up whatever nonsense the government comes out with because it either doesn't affect them as they get paid either way or it may even have a positive benefit in the case of big businesses (who detect an opportunity to further un-level the playing field).
As an employer, I havent asked my staff whether they are vaxed or not. And I wont. Its a personal choice. If I was 20 something why would I care ?
I sure as shit didnt beg for this. Most small business in my area are operating, probably illegally, no one cares. Unless the thought police are in full force I dont see how the dictatorship can regulate it.
You what...? You might find that if you run your business the new way, that is promote locally, promote and reward word of mouth, and promote your ethical stance to support basic human rights, you could be very well surprised how many customers you gain. And those will not forget your stance and firm support if you are a true supporter in the face of severe pressures.
Many are struggling but most in travel and tourism have given up along with hospitality industry in effected area. Many self emplyed are niw under emoloyed, if not already shut down.
Only industry / economy =, Housing
Robertson and Orr only priority was housing as a result ficused only in supporting and promoting Housing ponzi.
We welcome your comments below. If you are not already registered, please register to comment.
Remember we welcome robust, respectful and insightful debate. We don't welcome abusive or defamatory comments and will de-register those repeatedly making such comments. Our current comment policy is here.