Kiwi small firms wary as hopes for budget support remain low

Nearly half of New Zealand's small businesses don't believe the upcoming Government Budget will provide meaningful support, according to new survey findings released by Prospa NZ.

The Prospa NZ SME Sentiment Tracker Report highlights a prevailing sense of cautious optimism among Kiwi small businesses, with many hoping for tangible measures that address their daily operational challenges within the evolving economic landscape.

It comes as the survey, which canvassed 516 decision-makers from small and medium-sized enterprises (SMEs), found that 49% of respondents lack confidence in the budget set to be announced this week.

Views on the current level of government support appear split, with 26% agreeing that recent actions have benefited small businesses, while 37% expressed disagreement.

Despite divisions over the impact of government policies, respondents were consistent on their priorities for the year's budget: tax relief and a reduction in bureaucratic red tape. Tax reform was noted by 39% as the top initiative that could deliver the most positive impact, while 25% called for fewer regulatory barriers.

Government taxes were also cited as the highest business cost by 22% of SMEs.

"The upcoming budget is clearly important to small business owners and what we're hearing from them is a desire for practical changes that would make a difference to their day to day operations," said Adrienne Begbie, Managing Director of Prospa NZ.

"SMEs are the backbone of our economy, and merit targeted support to continue thriving. By removing unnecessary barriers, SMEs can unlock growth and reinvest in their people and products."

The survey also highlighted the perceived importance of the government's annual budget, with 40% stating that the announcement has a significant impact on their business success. This underscores the high expectations many entrepreneurs have, even as their overall outlook remains guarded.

Financial confidence among SMEs remains relatively high, with 57% rating their business health as "good" or "very good." However, cashflow management continues to be a challenge; 59% reported having three months or less in cash reserves, and 22% said they have less than a month's reserve.

Other pressing challenges include a drop in consumer spending, difficulties in recruiting and retaining skilled staff, and heightened competition—factors compounded by the rise of e-commerce, artificial intelligence disruption, and larger market players. Aside from taxes, staffing and recruitment (15%) and inventory or raw materials (12%) were named as key business costs. Marketing expenses have increased from 5% to 9%, whereas fuel costs have dropped from 10% to 5%.

Looking to the future, one-third of SMEs expressed confidence regarding both their immediate and longer-term prospects.

When assessing profitability, 43% expect next year's profits to stay the same, while 35% anticipate growth. However, there is evidence of mounting uncertainty, as only 44% of respondents expect an improvement in market conditions (down from 55% previously), and 37% are now unsure, up from 29%.

Begbie commented, "The reality is that SMEs are doing a great job controlling what they can. Their internal confidence is strong, but like many Kiwis, they're keeping a close eye on broader economic signals."

The survey also found an increasing appetite for external finance among SMEs, with 30% indicating they are likely to seek additional funding over the next year to manage cash flow or invest in growth opportunities. More than half of respondents (55%) reported some level of confidence in non-bank finance providers like Prospa to supply tailored solutions.

"Small businesses are becoming increasingly savvy about their options. With the right funding, many are ready to take the next step in their growth journey," said Begbie. "It's encouraging to see this shift as it shows confidence and capability is still very much alive in the SME community," said Begbie.

The findings are based on Clarity Insight research commissioned by Prospa, surveying 516 decision-makers from businesses with annual revenue below NZD $15 million.