Saturday, 28 Nov 2020

Revealed: SMEs hit the hardest by Covid-19 pandemic

New research shows that businesses with a two- to five-year tenure have been the worst affected by the Covid-19 pandemic.

A survey commissioned by Yellow New Zealand has found that 74 per cent of small and medium-sized firms, that were founded between two and five years ago, reported a greater impact of disruption than those that were more mature or in early infancy over the past several months since the onset of coronavirus.

That 74 per cent figure represented firms from all industries, not just those in travel, tourism and hospitality sectors, and equated to more than 100,000 business owners, says Yellow.

Businesses that had been operating 10 or more years reported less disruption and were found to be more satisfied with their performance this year.

New Zealand has a “young” small business culture – 50 per cent of small businesses are under 10 years old, while 13 per cent are under two years old.

The research found that business negatively impacted by the pandemic were more likely to be located in Auckland.

While the pandemic and periods of restricted physical trade have proven why an online presence and e-commerce is so important for business, almost 40 per cent of smaller firms still have no online presence, the research found.

Although the effects of the pandemic may recede over time, Darren Linton, chief executive of Yellow, said the technological and economic disruption was not going away any time soon, and young businesses need support to get through the downturn.

“We know travel and hospitality sectors have been knocked sideways, but to now see young businesses heavily impacted across the board calls for concern. This is a vulnerable group who represent the future of our economy, we need to address ways to support them specifically,” Linton said.

More support and education for businesses had never been more important, he said.

In September Small Business Minister Stuart Nash and Tourism Minister Kelvin Davis announced a $20 million digital package to support small businesses and tourism operators to transition digitally in the Covid-19 world.

The Ministry of Business, Innovation and Employment (MBIE) has partnered with the private sector to help businesses within the Small Business Digital Boost programme to access tools and technology to boost efficiency and to learn and develop skills to enable them to work digitally.

Linton said 37 per cent of the small business marketplace had no online presence at all; no Google business listing, website, LinkedIn or Facebook, this was despite 70 per cent of firms surveyed saying that they believed those within an online presence were more likely to survive the economic downturn.

“The reason most give for not being online is a lack of ‘relevancy’. Relevancy is a subjective thing, not every business is looking for new customer growth, but the existing customer experience can also be improved with a digital presence,” he said.

“53 per cent of all respondents said more support and education is required when it comes to getting online.”

According to MBIE, there are approximately 530,000 small and medium-sized business in New Zealand, making up 97 per cent of all firms and contributing more than 25 per cent to the country’s Gross Domestic Product.

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