Small businesses in the Bay of Plenty and across Aotearoa have had a difficult year in 2022, forced to grapple with the impact of economic unrest, inflation and falling consumer confidence.
And while the last few months have seen small business sales continue to grow, the pressure felt by Kiwi households nationwide is likely to continue impacting bottoms lines for the foreseeable future.
Embracing digital tools
There has been a silver lining to these turbulent times. The last few years have seen small businesses embrace digital tools to remain operational and viable during the pandemic and subsequent lockdowns. The use of these tools have continued long after the last lockdown.
As we look towards the future, we want to continue empowering small business owners to digitise to unlock further productivity gains.
After all, we know a 20 percent increase in the uptake of cloud computing could increase New Zealand’s GDP by between $3.5 billion and $6.2 billion through labour savings, productivity improvements and increased wages and standards of living.
We have to find ways to help SMEs overcome barriers by incentivising technology uptake to unlock productivity and pass on benefits like higher wages, increased spending, and more free time.
Ultimately, it’s about working smarter, not harder – using technology to automate and ensuring every hour spent working is doing something only a human can do, especially considering the ongoing labour shortage.
It’s not just about meeting the needs of now. Kiwi small businesses need to digitise to thrive and keep up with a rapidly developing global market with
Open Banking and e-invoicing.
Alongside continued small business digitisation, 2023 needs to be the year we tackle our systemic cashflow problems.
Getting paid on time is crucial for small business operations. We know late payments cost the NZ small business economy $456 million per year in additional time and lost opportunities.
And unlike large businesses, Kiwi small businesses often don’t have the capital available to manage the time difference between paying the required expenditure to complete a job, and receiving payment when it’s done.
When a business isn’t paid, it compromises their cash flow. They often can’t afford to pay their own suppliers and company debt, which creates this ripple effect through the supply chain.
The Government recently announced plans to develop legislation forcing large companies to disclose their payment times, something to help encourage prompter invoice repayments.
We are thrilled with this announcement, but it doesn’t come into effect until 2024. Xero implores all big businesses and other organisations to make a commitment to improving their repayment times as soon as possible, we know our small business community needs this right now.
Positive cashflow has a significant impact on small businesses, improving confidence to put them in better positions to plan for the future, focus on staff wellbeing, and take calculated risks to grow their businesses.