Coronavirus: New Zealand's small businesses divided over likelihood of survival during COVID-19 response

There is a sharp divide in how local small businesses are handling the fallout of the COVID-19 response, according to one business growth expert, the despair of some in stark contrast to the optimism of others. 

Andy Hamilton, the co-founder of the business advisory forum Manaaki, says while it's not necessarily doom-and-gloom for everyone, certain sectors are bearing the brunt. 

"I hear two things: most owners are pretty optimistic. Those that are doing okay are going, 'I'm going to get through this'. But we also hear from the ones in tourism and hospo [who] are just going, 'what do I do?'... I think the Government thought, with the provisions with the banks, that would get money flowing, but it hasn't. That's kind of a problem," Hamilton told The AM Show on Wednesday morning. 

New Zealand's COVID-19 response is largely based on the restrictions under the alert level framework, implemented as part of the Government's "keep-it-out, stamp-it-out" approach. As of 11:59pm on March 25, New Zealand was subjected to mass closures as all non-essential businesses were required to shut up shop for a preliminary four-week lockdown under alert level 4. The country moved to level 3 on April 27, which has allowed more businesses to resume trading as long as stringent physical distancing and contactless service is adhered to. Kiwis are still urged to work from home if possible and sticking within your bubble, which may only be extended to include immediate family, remains as protocol.

While local businesses may be divided in their response to the alert level restrictions, Hamilton says a recent survey showed roughly 70 percent of participating business owners understood and accepted the protocol as being "for the good of all New Zealanders".

It's important to give back 

Buying a coffee from a nearby cafe or ordering food from a local restaurant are simple ways New Zealanders can collectively support small businesses through the devastation of the COVID response, Hamilton says.

He suggests that if utility companies and other agencies reduced levies and bills by 20 percent, it would enable the survival of small businesses for the duration of the health crisis. 

"The best thing small business needs is to get back [to] trading. The challenge is two-fold - how do we help them get back trading so they can earn some revenue? The second thing is if everyone gave 20 percent back to small business - that means discount, deferred payments, support - that would make a material difference to enable them to survive long enough to get through," he said.

"The 20 percent give is really, really important to help these small businesses survive. Otherwise they're going to let people go at the end of June when the wage subsidy runs out and we're going to have a lot of problems in New Zealand."

The Manaaki co-founder says our local business owners need support and belief to get back on their feet. 

"We need to believe and do things that can help them, but number one: revenue. Number two: cash flow... a small business, like a $250,000 revenue business, has probably got $20,000 in costs a month. If you could find a way for them to halve that cost, they can hang in there. That's why the small business loans announced by the Government last week are really good," he said.

"Anything that gives immediate cash for that 20th of the month... we all go and buy coffee, we take out local food - we do something that makes a difference, that turns that money over - I think it will stop the contagion of job losses and businesses closing."

We have control of our purchasing decisions

While health experts and media personalities alike have called for an immediate end to level 3 for the health of the economy, Hamilton says the only response we have total control over is our role as consumers and our ability to make purchases.

He argues that while the borders remain closed to tourists and international visitors, Kiwis need to collectively and consciously put their money into small, struggling enterprises. 

"In the end we do need to get trading, but what we can control is going out and buying a coffee or buying food from a local place, or getting a marketing agency to help with social media," he said. 

"What small businesses need is hope... a lot of small businesses are pinning their hopes on domestic travel. If they see that Australians are going to come over as well, they're going to hang in there. Beyond that, how do we know how long the borders are going to be closed for? It's week-to-week, month-to-month, we deal with that as it comes.

"All I can control [are] my purchasing decisions for small businesses... they just sell one more coffee, get one more customer, all of a sudden [they're] saying 'let's go'... you buy a coffee today, it will make a difference."

Co-host Mark Richardson wasn't convinced.
Co-host Mark Richardson wasn't convinced. Photo credit: The AM Show

The AM Show co-host Mark Richardson wasn't overly impressed with Hamilton's argument, claiming that despite his good intentions, purchasing locally is not a solution. As numerous New Zealanders struggle with unemployment or survive on a reduced income, putting cash into small businesses is an additional cost many simply cannot afford. 

"It's all good intent, but it's just idealistic mumbo-jumbo," Richardson declared.

He argued that many Kiwis, himself included, are opting to have their morning coffee at home rather than heading to the local cafe. 

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