Businesses on a growth spurt

ALAN WOOD
Last updated 09:43 20/11/2012
IRD business statistics

PROGRESS: The Inland Revenue tracks business start-ups and closures though the latest figures available are for August 2012.

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Many Christchurch small and medium-sized enterprises are on a growth spurt, nipping at earthquake recovery work and seeking to hire as the rebuild escalates.

Smaller, often family-based Canterbury firms are outperforming their regional counterparts on some measures, including the all-important "growth", according to the BNZ Spotlight on SMEs report.

In the national survey 44 per cent of Christchurch businesses reported growth, compared with just 36 per cent nationally.

The report examined, among other things, the effects of the Canterbury earthquakes on businesses in the region and the gradual recovery from tough months in 2010 and 2011.

BNZ director of retail Andy Symons said optimism in business outlook outstripped the national result by a significant margin.

BNZ surveyed 860 firms nationally, 120 of which were in Christchurch.

Paul Munro, a partner with accountancy firm Deloitte, said the findings of the BNZ survey matched what Deloitte's client base was experiencing.

These companies had held firm in the face of the quakes, partly because many of them operated outside the damaged central business district or had relocated easily.

The CBD-based hospitality sector was obviously hurt, he said.

But the smaller businesses were nimble. "If I look across our client base anecdotally it would be well into the 90s in terms of the percentage of businesses that have just been able to continue."

The survey showed one in three businesses intended to hire additional staff in the next 12 months ahead of those in other centres.

But Munro said enticing qualified staff to Canterbury was not easy at the moment.

The report's findings have been mirrored by Inland Revenue Department data that shows new business registrations have continued to outstrip cessations since the September 4, 2010, earthquake through to August.

Munro said in 2012 the SMEs had started to plan for the huge economic impact of the quake rebuild, with dollars to flow out from construction to designers, website developers, dealers selling vehicles, and into the cafe, restaurant and accommodation sectors.

There would be pockets, including the CBD, where the return of hospitality firms and other SMEs would be a difficult decision.

Businesses would have to judge when there would be a critical mass of people returning to the city to provide custom.

For example, some of the small shops in New Regent St were often only just viable prior to the earthquakes.

The BNZ survey showed red tape and insurance premiums were the biggest barriers to doing business in Christchurch.

One respondent said they were still waiting for an assessment of their earthquake-damaged premises more than 18 months after the February 22 2011 quake.

However, insurance companies were now stepping up and trying to provide innovative solutions.

Symons said nearly 60 per cent of respondents said the earthquakes had changed the way their business operated. Some lost customers and others had to relocate while struggling to maintain cashflow. There were redundancies.

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Business owners had taken actions to increase their chances of survival, including chasing out-of-region sales and operating from home.

For example, one family-owned cafe had chosen to diversify into making takeaway pizzas, seeing there was an opportunity after other restaurants around them closed.

- © Fairfax NZ News

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