Growth within the small business sector has stalled and is down around 40 per cent, according to a new study by a professional accounting body.
Kiwi small business growth slipped below the Asia-Pacific average last year, and almost two-thirds of the country's small firms were affected by the pandemic, according to CPA Australia's Asia-Pacific Small Business Survey, which has been tracking small business performance for the past 11 years.
Just 29 per cent of small businesses reported growth last year, down from 49 per cent reported a year earlier.
The survey found that the average Asia-Pacific growth rate was 46.2 per cent in 2020, compared with 65 per cent recorded in 2019.
Of the 11 Asia-Pacific markets surveyed, New Zealand small businesses performed the third-worst for growth last year - behind those located in Australia and Hong Kong.
New Zealand also ranked last out of the 11 nations for earning revenue through online sales last year, the survey found.
CPA Australia New Zealand country head Rick Jones said the survey findings illustrated the economic impact of the coronavirus pandemic was far greater for small firms than that of the Great Recession of 2008-2009.
"E-commerce complacency" was identified as a key contributing factor for local firms' poor performance last year, Jones said.
"Small businesses which were more integrated in the digital economy fared better than those with little online capability and correspondingly few online sales," said Jones.
"This shows how vulnerable New Zealand businesses are to economic shocks like Covid because of their lack of participation in the digital economy."
He said New Zealand small firms had consistently lagged behind Asia-Pacific neighbours for investment in innovation and participation in the digital economy in the eight years its performance had been tracked, he said.
Early indicators pointed towards small business performance being subdued again this year, said Jones.
Just 44 per cent of New Zealand small businesses surveyed expected to grow during 2021, a 27 per cent reduction on last year.
The average growth expectation among Asia-Pacific nations is 60.8 per cent.
Data from Stats NZ shows the economy contracted and GDP fell 1 per cent in the December quarter, another indicator of softening in business activity.
2020 - a year in review
Data from small business accounting firm Xero shows Kiwi small businesses ended 2020 in a similar position to how they started the year.
Between January and February, revenue growth averaged about 7.1 per cent year on year, while job prospects were relatively flat ahead of the onset of the pandemic.
Average payment times were around 25.9 days over the two-month period.
From March to May the shock of the pandemic hit for local firms.
Following the mandatory lockdown orders, the impact on small business was immediate, with revenues free-falling and landing in a trough at 37.6 per cent in April.
The government wage subsidy cushioned the blow for many firms. By late April, jobs were down 4 per cent on early March levels and average payment times peaked at 30.7 days.
Come June, through to December, the country's ability to eradicate Covid-19 from the community meant businesses were able to open up further and bottom lines started on a path of recovery.
Xero insights show the recovery was almost as rapid as the impact of the lockdown, with positive revenue growth returning by June and staying there for the final seven months of the year.
Revenues increases averaged about 5 per cent year on year in the latter part of the year, and small business jobs had recovered to pandemic losses by mid-October.
Average payment times fell in May and June and stabilised to be quicker than
pre-pandemic times by July, ending the year at 24.1 days in December.
But despite the general positive rebound for businesses, hospitality businesses and those in other sectors located in Queenstown and Otago continue to face tough trading conditions.
Queenstown revenue was down 21.4 per cent year on year in December and jobs were down 8.1 per cent compared to pre-crisis.
Hospitality revenue was down 14 per cent year on year in the last month of the year, while jobs were down 4.9 per cent lower than pre-crisis levels.