New Zealand SMEs hit by falling revenue & weak confidence

Vero has published research showing falling revenue and weak confidence among New Zealand small and medium-sized businesses, based on a national survey of 550 SME owners and decision-makers.

Nearly two-thirds of respondents, 63%, said revenue had fallen over the past year. Of those, 17% reported income drops of more than 25%.

Confidence was also subdued. More than one in five businesses, or 21%, said they were not confident, while 36% said they felt confident in their operations.

Cost pressures

The survey suggests the sector is under pressure from rising costs and broader economic conditions. Increasing costs were a top concern for 88% of respondents, while 83% cited the economic downturn.

Political and regulatory issues also featured prominently. Changes to tax policy were cited by 69% of respondents, while 61% pointed to regulatory changes and political instability.

Vero General Executive Manager – Business, Sacha Cowlrick, said the figures reflected the strain on smaller firms.

"It continues to be a tough economic environment and declining revenue is taking a toll on business confidence. When some businesses have seen their income slashed by over a quarter, it might be tempting to reduce expenses like insurance but when the unexpected happens, having adequate cover could be the difference between folding under pressure and finding a way through," said Cowlrick.

Resilience gap

The research also found a gap between the risks businesses expect and the planning they have in place. Only 24% said they considered their business very resilient.

Six in 10 businesses said they expected to face at least one major operational risk this year. Yet 53% said they had no structured risk management framework, and 47% said they never or rarely carried out formal risk analysis.

Business owners linked resilience to flexibility and financial strength. More than 60% said it meant being able to adapt to challenges and recover quickly from disruption, while 54% said it meant being able to withstand financial shock.

Cowlrick said external pressures were real, but some decisions remained within business owners' control.

"There is no doubt that there are very real macro-pressures concerning SMEs, but it's critical that business owners focus on the things they can control in order to give them the best chance of weathering the storm," Cowlrick said.

Risk outlook

The findings suggest many smaller firms are dealing with a difficult mix of lower revenue, rising costs and policy uncertainty. That combination has weakened confidence even as businesses prepare for further disruption.

For insurers and advisers, the survey offers a snapshot of a customer base that expects operational risks but does not always have formal systems in place to manage them. The gap could prove significant if trading conditions remain weak and businesses continue to face volatility beyond their control.

Cowlrick said planning before problems emerge was central to resilience.

"Business resilience isn't just about bouncing back after an event. It's about understanding your exposures and making informed decisions before something happens. An insurance broker can offer critical advice to help SMEs develop a resilience strategy," said Cowlrick.