Friday, July 24, 2009

How’s small business doing?

Talking to a few small businessmen this morning, all of them agreed on the view expressed by one chap: "What the politicians don't realise is that small business here is fucked."

Prices and costs for small business all round the country are too high, they agreed (recognising, of course, that one business’s prices are another one’s costs), and small businesses everywhere – especially out of the major centres – are struggling.

What’s your experience?

15 Comments:

Anonymous Russell said...

What appears to be happening in Tauranga is some Landlords are not willing - or perhaps able - to correct downward their rent charges; it can be seen with stores changing locations or closing the doors entirely. I'd say landlords are sweating. The real estate sales data is always hard to read as Real Estate agencies always try and pump up the reality. Also, I have it on good authority that just 1 of the real estate companies here have increased their share & sell 50% of all property; coincidentally the press use them as their anecdotal measure thus creating a distorted picture.

7/24/2009 09:48:00 am  
Anonymous Sean Fitzpatrick said...

Mine is doing ok. The nature of it is low overheads, few regulations and compliance costs plus a unique and valuable service so I think I am pretty robust in the current climate.

7/24/2009 09:50:00 am  
Anonymous Sean Fitzpatrick said...

I have to agree with Russell - rents are too high here in Wellington as well and the amount of commercial property available for lease, even in big shopping malls is the worst I have seen since the early 1990's.

7/24/2009 09:52:00 am  
Anonymous Anonymous said...

The compliance costs, regulations etc, are huge factors seldom considered by the public - what is seen and unseen. As it was with the 30's (ie., with it's new innovation in chemicals, production techniques et al instead of cars & appliances) innovation, inventions, generally better ways of doing things, will be the best bet for the forseeable future, those that put their minds to the new more productive ways of doing old (farming, niche manufacturing)things is where I'd be putting my investment - If I had any. But I do have time for thought of new things; and the rent's free.

7/24/2009 10:20:00 am  
Anonymous Russell said...

Sorry that last one was me

7/24/2009 10:21:00 am  
Blogger Dinther said...

I'm doing ok. Less clients and pressure to reduce hourly rates but we had some damn good years and anyone sensible would have saved up some money.

I am starting to get more overseas clients instead of the regular NZ ones.

The key to survival is to avoid commitment of any kind. No long term leases, certainly no staff or large investments.

All possible in my line of work. Instead I put in the extra hours myself and hire contractors to do parts of it. (And screw them on hourly rates as well of course :-) )

7/24/2009 12:05:00 pm  
Anonymous Elijah Lineberry said...

I think one of the major problems facing small businessmen is the inability to obtain financing for productive activities.

This means a lot of chaps simply have to tread water (which is effectively going backwards) rather than expanding to become 'large' businessmen.

7/24/2009 12:40:00 pm  
Blogger Shane Pleasance said...

My own personal endeavors are going swimmingly. I am capitalising on the recession and moving into gaps particularly not requiring capital. In addition, I have one company looking to franchise nationally one of my operations - and they KNOW (or assume) I have no capital - having adjusted their expectations.

As a director of the local Chamber of Commerce - well, Southland is a funny place. Deep pockets, short arms, and a lot of real wealth down here, being a significant economic powerhouse of the nation. We are usually the last to go into recession and the first to come out. Times are not that hard among our membership. Certainly export is seeing a change, and some of the landscape underpinning usual business is changing.

As a matter of interest, Massey University research indicates that small businesses do not see the failure rate commonly expected. "Only one in five will survive." The reality is somewhat nearer to 75% survival.

I note that our local rate funded Venture Southland were not as excited by that statistic as I was when I advised them.

7/25/2009 08:03:00 am  
Anonymous LGM said...

Shane

That's interesting. Our experience is a little different.

Although export orders are increasing faster than we can up-scale to satisfy them, we find dealing with all the loathsome govt imposts, taxes, regulations and such like very expensive in time and money- not worth the bother. As for local bankers and finance companies, there is not much nice to say about most of 'em. OK, there are a few outstanding exceptions to that, but by and large...

Recently an analysis confirmed that we'd be better off moving the manufacturing operation off-shore and closing the local business entirely. That's an important signal.

We are in business for fun and profit. Aside from that I don't give a tinkers. If things don't work as I want, I change them. That's what entrepeneurs do. Right now the economic signals are indicating that significant change is on the cards. Not good for NZ in the long run.

LGM

7/25/2009 09:02:00 am  
Blogger Ruth said...

Well said Shane.

Every small businessman worth his salt factors compliance costs into the risk.

Anyone can make money in good times - it takes a businessman with *real* talent and imagination to do well in a recession.

Those who say 'small business is fucked' should remember that recession tends to weed out the dead wood, and should look to a field that is more suited to their talents.

7/25/2009 04:26:00 pm  
Blogger gregster said...

Well said Shane.

Every small businessman worth his salt factors compliance costs into the risk.

Anyone can make money in good times - it takes a businessman with *real* talent and imagination to do well in a recession.

Those who say 'small business is fucked' should remember that recession tends to weed out the dead wood, and should look to a field that is more suited to their talents.


Ruth, you once again reveal your ugly statist personality.

You're a sophist and that's not to be partially sophisticated.

Ugly, (can't imagine your pic, please don't put one up).

7/25/2009 07:37:00 pm  
Anonymous LGM said...

Ruth

So you're an experienced, successful businesswoman now? Or is the truth rather more mundane, could it be you are a housewife who married upwards into a bit-o-th'money?

You wrote, "Every small businessman worth his salt factors compliance costs into the risk."

Compliance costs are an overhead, you ninny. When they are high they send an economic signal to the business principal. When they become large enough they result in elimination of profit, destruction of capital (and also wreck other qualities the business owners value). When that situation is reached (as it has been presently for many, many outfits), either the business must be changed or it will eventually run at loss. If that situation continues long enough the business must close.


LGM

7/26/2009 08:22:00 am  
Anonymous FiskingFisk said...

I agree LGM, I think that Ruth is just a housewife who married upwards into a bit-o-th'money.

Ruth is exactly the type of housewife like Debra Coddington who doesn't need to work since the husband is wealthy as Cactus Kate often blogged about.

7/26/2009 03:47:00 pm  
Anonymous Elijah Lineberry said...

Ruth is exactly the type of housewife like Debra Coddington who doesn't need to work since the husband is wealthy

Ummmmmm....so what?

7/27/2009 09:35:00 am  
Anonymous FiskingFisk said...

Elijah, it means that housewife has little clue to running businesses. Do you Mrs Balmer (Microsoft CEO's wife), Melinda Gates (Microsoft Ex-CEO , Bill Gates) or Mrs Trump (Donald Trump's wife) making business comments on public forum or media? None at all, because they know nothing about running a business. Ok, they know bits & pieces here of how a business is supposed to run, but not a complete picture.

7/27/2009 10:07:00 am  

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