Kiwi entrepreneurs increasingly pessimistic, fighting multiple battles, new survey finds

Eye of the storm? Business leaders and entrepreneurs expect a recession to hit. Photo / Getty Images

Kiwi entrepreneurs are growing increasingly pessimistic, amid labour shortages, inflation and the tail end of the pandemic, new research shows.

A shortage of skilled workers compounded with inflationary pressures and the increasing costs of everything from wages, logistics, goods, services and equipment is proving to be an ongoing headache.

Research from the Entrepreneurs' Organisation's latest State of Kiwi Entrepreneurship Report shows there is creeping pessimism from a traditionally optimistic bunch.

Staff retention and recruitment are among top concerns for business, but so is the threat of layoffs if a recession hits and business reduces, and the reality of firms being forced at record pace to pass on rising costs.

Entrepreneurs were optimistic by nature, Richard Conway of the Entrepreneurs' Organisation (EO) told the Herald.

"But half of the people we speak to are concerned or are not expecting massive growth in the next year or two and I think that's the impending recession we hear about and lots of different factors like staffing," he said.

"It is one of the least optimistic times over the last few years."

Just under half of the entrepreneurs in the report said they were looking at expanding in the next year and believed they would grow revenue and staff numbers.

A lot of pessimism among entrepreneurs could be linked to certain sectors, including construction, tourism and hospitality, said Conway.

This is the fourth year EO has contacted this research. Compared with the same report last year, Kiwi entrepreneurs were now split 50/50 on pessimism and optimism at the current business environment and future prospects.

Conway said entrepreneurs believed a recession in New Zealand was likely, but at least not a deep one.

"There is the thinking that there is a lot of capital about still and a lot of it will depend on what happens with the [election] next year and factors outside of our control. But most people expect there to be some kind of recession coming up in the future."

The report summarised New Zealand businesses at present as "skint on time, money, and manpower".

It warned business development fell by the wayside when resources were stretched to the limit.

"While rising costs were our greatest challenge during the last quarter, now we face the wrath of resignations, migration, and scarce hiring potential that have overtaken money matters.

"Without our people, we simply can't deliver on our promises and the small teams left to fill the gaps are feeling the strain," the report outlined.

People were stressed about wage inflation and increasing costs because many had to increase their own prices, perpetuating the cycle of rising prices.

"On the other side, in businesses that are relevant at the moment, there is so much demand. For example, in digital marketing at the moment, there is so much demand because everyone wants to be online after what has happened in the past few years."

The report also outlined current market conditions and the possibility of recession meant New Zealand business was feeling the pinch.

"Businesses are short. Without any room for any spare resources to feed into development, that invaluable growth mindset of our leaders and the teams they lead has stifled."

Despite the doom and gloom, Conway said there had been a shift in appreciation among entrepreneurs about quality people.

In recent weeks, despite wage inflation challenges, recruiting efforts increased in line with international trends, he said.

"The time to recruit is much shorter now than it was only a couple of months ago. There are more people coming into the market."

EO also noticed an influx of new young entrepreneurs in the past 12 months, which it put down to a combination of those having lost or left their jobs during the pandemic's height.

"We're see a raft of new ideas and new people coming up through the ranks. It is encouraging to see."

EO has a membership of over 100 entrepreneurs in New Zealand.