Research from accounting firm MYOB has revealed confidence among small and medium businesses is plummeting as revenue and profits are smashed from current Covid-19 lockdowns, labour shortages and the supply chain crisis.
MYOB’s October Economic Snapshot, conducted October 1-16, shows SME business revenue has taken the biggest hit since the 2008 global financial crisis.
MYOB head of customer service, Jo Tozer, said the snapshot was a wake-up call for SMEs and the Government, particularly after many businesses had been on a steady recovery after the initial impacts of the pandemic last year.
Tozer said the impact from lockdown restrictions and the continued pressure from disrupted supply chains, rising production costs and skills shortages were hitting home now.
“While in early 2020 we saw a short, sharp shock in terms of business performance, prior to the pandemic, we hadn’t seen these levels of revenue declines over 13 years of our SME surveys.
“In fact, SMEs reported a more significant fall in revenue for the 12 months to October 2021 than they did in the aftermath of the GFC.”
“As the revenue data in our latest research highlights, businesses have been hit incredibly hard by the latest lockdown restrictions.”
Tozer said businesses were urgently seeking better targeted financial support and more certainty from the Government and they would have appreciated the opposition’s focus on that yesterday.
National’s “Back to Business” plan to provide immediate, targeted support – especially to sectors like hospitality and tourism – which have been particularly affected by the ongoing impacts of the pandemic, was what SMEs are looking for, Tozer said.
The Labour Government is due to announce on Friday a new Covid-19 protection “framework” taking into account higher vaccination rates and will potentially signal the next phase away from using alert level restrictions.
Finance Minister Grant Robertson is also expected to reveal an “enhanced” business support package on Friday.
The exact dates for when current restrictions – particularly in Auckland – will ease is crucial for businesses so they can plan ahead for the lead up to Christmas.
Tozer said increasing the vaccination rate was an essential part of any strategy to not only protect the health of New Zealanders but also that of the economy.
Yesterday, National called for every vaccinated person to be given a $100 voucher to spend on tourism venues or eateries, as well as temporary tax cuts for workers and for small businesses.
Tozer said small and medium businesses were hoping for more clarity from the Government – in particular when the industry could expect to see restrictions being lifted and the types of support that were available to help the country recover.
This latest economic snapshot survey – conducted with 500 SME business owners and decision-makers – found that 55 per cent of New Zealand’s SMEs expected the economy to decline in the next 12 months, and 24 per cent were expecting that decline to be significant.
That compared to the July survey which showed 38 per cent expecting the economy to decline in the year ahead.
The trend was more noticeable in Auckland where businesses have borne the brunt of restrictions, with 57 per cent of businesses in the region seeing their annual revenue fall.
Nationwide, 60 per cent of retail businesses reported a decline in their revenue.
The outlook for 2022 looks more positive, but negativity is still weighing on SME owners and operators.
“Just under a third or 31 per cent of SMEs believe their revenue will be down in 12 months’ time, while almost a quarter or 24 per cent are forecasting increased revenue and 36 per cent expect their revenue will be about the same,” the survey reported.
“Although the Covid-19 pandemic is continuing to have by far the most significant effect on the mood of SMEs, with 68 per cent saying it is having the biggest impact on their confidence (up from 49 per cent in July) a broader range of factors emerging in the economy is also making the picture more complex and uncertain for local businesses,” Tozer said.
They included staff and skill shortages, surging house prices and general consumer confidence.
“Finding the right staff to meet their needs, getting goods into New Zealand or out to export markets, and the rapidly rising costs of components in everything from construction to electronics, are all putting real pressure on their operations and their margins,” Tozer said.
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