As many Kiwi households tighten their purse strings to combat inflation and the rising cost of living, it’s clear small businesses across the Waikato have been feeling the effects.
Xero’s latest Small Business Index has painted a picture of how small businesses in the region are faring, with the results reflecting the challenging ongoing economic climate for communities across the country.
Sales growth for small businesses in the Waikato usually tracks closely with the national results, however there was a surprising contrast in September. Small business sales growth in the Waikato fell 8.1 per cent year-on-year – which was much softer than the national average of a 1.5 per cent decline.
For sales growth in the September quarter, Waikato was the second weakest region in the country, experiencing a 2.3 per cent drop, followed only by Taranaki (-3.9 per cent).
Bridget Snelling
Sales are inconsistent across the country, with some regions facing more challenging times than others.
Across Aotearoa New Zealand, it’s clear Kiwi households are reducing their discretionary spending, which has a flow on effect to spending with small businesses in their community.
Despite the weak sales, small businesses across the Waikato remain eager to hire talent, with the region experiencing 5.3 per cent jobs growth in September.
These figures are impressive and consistent across the country as small businesses continue to compete with large businesses for talent.
However, if sales continue to trend downwards, this fast pace jobs growth could be difficult for small businesses to maintain.
Wages for Waikato small businesses rose 3.6 per cent year on year to September, which was broadly in line with the national average. For the September quarter, wages averaged 3.6 per cent growth for Waikato small businesses, which was the third largest rise of all regions. Wage growth still remains below inflation and this puts small businesses in a vulnerable position as real wages are falling, meaning small businesses could remain under pressure.
Waikato small businesses were paid on average 5.9 days late in September, closely in line with the national average of six days.
Thousands of Kiwi small businesses fold each year. More often than not, it’s because they’re unable to overcome cash flow issues.
The drop in small business sales is a concerning factor that shouldn’t be overlooked.
It is clear the road ahead remains challenging for our small businesses as inflation, interest rates and the cost of living stay top of mind.
That’s why it’s crucial to keep supporting them wherever possible and shop local when we can.
We also encourage small businesses from around Waikato to look into the digital tools available, which have been carefully designed to help cash flow and improve productivity.
- Bridget Snelling is country manager for Xero.
