Economic pressures drive unprecedented stress and burnout for Kiwi SMEs

"Around one in two SMEs have had to cut back on personal expenses as a result of economic challenges, with smaller SMEs being more likely to do so."

New research reveals that seven in ten (70%) SMEs are feeling stressed and burnt out, made more alarming given that SMEs make up 97% of all businesses in New Zealand.

The latest RFI Global research commissioned by Prospa highlights the ongoing uncertainty in New Zealand’s business climate, with business confidence continuing to trend downwards despite earlier post-covid optimism. The same time last year, Prospa’s research revealed that business confidence was at its highest since 2019, however, today’s findings show the majority of Aotearoa’s businesses are feeling the pinch with business sentiment decreasing over the last 12 months. Today, less than half (48%) of SMEs feel confident about their business’s future over the next year, a drop from 53% in November 2023.

Despite this, there is a glimmer of long-term optimism. Nearly one in two SMEs (49%) are feeling confident about the future of their business over the next 10 years, a positive shift from 45% in November 2023. This mixed outlook reflects the current economic environment; while consumers are tightening their belts, businesses are anticipating eventual recovery.

In the face of today’s economy, retailers are particularly hard-hit, with 85% reporting feeling stressed and burnt out. Similarly, 75% of SMEs in hospitality are feeling the strain, with over a third (35%) of all SMEs having to work longer hours as a result of the recent challenges within New Zealand’s economy.

Adrienne Begbie, Managing Director, Prospa NZ.

The research found SMEs are most concerned about:

Economic and regulatory factors (35%, up from 23% in May 23 and 33% in November 23)
Business demand and cashflow (27%, up from 15% May 23 and 25% in November 23)

Most SMEs would consider themselves stressed or burnt out (70%), citing economic challenges (29%), cashflow issues (27%) and pressure/responsibilities of being a business owner (19%) as the top three reasons. Around one in two SMEs have had to cut back on personal expenses as a result of economic challenges, with smaller SMEs being more likely to do so.

Prospa New Zealand Managing Director, Adrienne Begbie, says it comes as no surprise that there’s a correlation between economic challenges and the wellbeing of business owners.

“What we’re seeing are the effects of inflation and the cost of living, and the impact this has on business owners’ overall wellbeing. These figures are certainly confronting. But it isn’t the first time our country has faced a recession, and it won’t be the last. What this tells us is that we always bounce back.”

In response to the recent challenges within New Zealand’s economy, SMEs are more inclined to increase prices (42%), use personal funds to cover business expenses (19%) and seek professional advice about business finances (16%).

SMEs have also made significant personal sacrifices for the sake of their business. On a personal level, one in two SMEs have had to cut back on personal expenses (51%), 36% are struggling to save for personal goals, 36% have had to postpone or cancel travel plans, 34% are sacrificing hobbies or leisure activities, and 32% are spending less time with family and friends.

“Business owners should never be forced to choose between their wellbeing and personal life, and the success of their business,” Begbie said. “Business owners should not hesitate to seek external support – see what government grants and rebates are available, check out industry insights on how other like-minded businesses are dealing with current economic conditions, and seek professional advice from a financial advisor.”