There’s no doubt that the last few years have been a real grind for New Zealand’s small business owners. Thanks to the global financial crisis and a long economic downturn, our businesses have become used to making the best of difficult conditions.
OPINION: But as we look forward to 2013, there are a number of big opportunities for our businesses to take advantage of.
At first glance, there wouldn’t seem to be too much to be optimistic about in the local economy. With growth of just 0.2% in the last quarter of 2012 and unemployment up to 7.3%, there are some big challenges.
Look a little closer however, and 2013 will see conditions that are very favourable for business.
The first big opportunity is the promise of a sustained period of low interest rates. With the economy still not completely firing, the Reserve Bank has promised to keep borrowing costs as low as possible for the foreseeable future, making it easier for businesses to finance new investments.
The most recent MYOB Business Monitor showed the positive impact these sorts of investments can have on a business. According to the Monitor, although more businesses have reported a decline in sales (a shift from 6% down in early 2010 to 8% up in June 2012), businesses that have made significant investments in the last few years have seen revenue growth over the previous 12 months improve, from minus 9% in early 2010 to plus 17% in June 2012.
As well as opportunities for investment, 2013 will offer a better business environment as economic growth is expected to be stronger.
Part of this growth is expected to come from the benefits of the $30 billion Christchurch rebuild. An economic boom in New Zealand’s second biggest city will present big advantages for business and not just in the areas directly associated with the rebuild.
And there is strong academic evidence New Zealand’s economy will be better positioned this year than it has been since the financial crisis.
According to This Time It’s Different, by Carmen Reinhart and Kenneth Rogoff, a major study of financial crises over the last few centuries that has been receiving widespread interest from economists, financial collapses like the 2008 one tend to take around seven years to return to strong growth.
With four years having passed since the 2008 financial crisis, history tells us we are entering the tail of the slow recovery. Businesses have now had four years to pay down debt, restructure and reposition themselves, and our economy is in a much stronger position.
So as small business owners head back to work for the year ahead, they will find themselves enjoying lower interest rates, a recovering economy and a real boost from the Canterbury rebuild.
We’ve seen over the last four years that New Zealand’s businesses are creative and resilient when things are difficult. It’s exciting to think about what they can achieve with the wind at their backs for the first time in a long time.
What is the biggest challenge your small business is facing in 2014?Related story: (See story)