Small businesses delay hiring and expansion until election result

Many business owners are putting off hiring and investment decisions, despite growing confidence about the economy, while they wait to learn the shape of the next Government. 

A survey of more than 500 small and medium enterprise owners by independent research firm Clarity Insight has found 24% are delaying big purchases, vehicles or equipment upgrades. 

The survey, commissioned by fintech firm Prospa, has also found 15% are holding off on expansion and hiring until the results of next month’s election are in. 

About 29% are anticipating profit growth in the next year, up from 19% six months earlier. About 9% are uncertain about the year ahead, down from 15%. 

Cash flow remains a problem for many business owners, with 45% of respondents reporting less than four months of cash reserves as of August, down slightly from 47% six months earlier. 

“I don’t think they’ve been paying themselves properly or taking a break. They’ve been keeping their businesses going,” Prospa New Zealand managing director Adrienne Begbie said. 

When asked what single change from the next Government would have the most impact, 29% said a lower tax bill and 24% said lower ongoing expenses like fuel, power and insurance costs. 

“They’re not looking for a handout. These businesses - we’re talking about hairdressers, mechanics, electricians - they just want to get on with their businesses at the end of the day,” Begbie said. 

Enterprises with 10 to 49 employees and over $1 million in turnover were most likely to postpone decisions, they survey found. 

“Confidence is coming back but confidence and commitment are two different things. They’re not prepared to commit at the moment until the election is decided,” Begbie said. 

“It doesn’t really matter who gets in. It happens every election - once it’s decided and they know what they’re dealing with, they can adjust their businesses accordingly and just get on with it.” 

Results from a separate survey of more than 500 small to medium enterprise owners by software firm MYOB has found about 34% of respondents were reviewing their budgets and cashflow more carefully in the lead-up to the election. 

“Once that clarity arrives, generally more businesses shift from holding steady to making the investments needed to grow as they head into 2027,” MYOB chief executive Paul Robson said. 

Michael Sergel is Newstalk ZB’s business reporter. He’s been covering business, politics, local government and consumer affairs for over a decade.