Why Are So Many NZ Businesses Closing?

Why Are So Many NZ Businesses Closing—And What Can You Do to Stay Open?

Small to medium-sized enterprises (SMEs) are the heartbeat of the New Zealand economy—but right now, many are feeling the squeeze. From hospitality to construction and retail, we’re seeing a wave of businesses shutting their doors across the country. At SME Financial, we work closely with business owners, and we understand the toll this climate is taking.

Whether you’re facing cashflow issues, increased operational costs, or a shrinking customer base, you’re not alone. But there are steps you can take to steady the ship and future-proof your business.

The State of NZ Business in 2025

Recent stats from MBIE and the Companies Office have shown a noticeable rise in deregistrations and liquidations in the first half of 2025. Key reasons include:

• Rising operational costs: Fuel, rent, and wage increases are putting pressure on already tight margins.
• Cashflow crunches: Many businesses are seeing longer payment cycles and fewer upfront deposits.
• Declining consumer confidence: Households are tightening their belts, which affects demand across multiple sectors.
• Labour shortages: Skilled staff are harder to find and retain, impacting productivity and service delivery.
• Increased Tax Compliance Enforcement: The IRD has intensified its efforts to ensure tax compliance, adding pressure to businesses already navigating a challenging economic landscape.

Common Warning Signs to Watch For

Often, the signs of trouble show up before a crisis hits. Here are a few red flags to keep an eye on:

• Regularly dipping into personal savings to cover business expenses.
• Falling behind on GST, PAYE, or supplier payments.
• Customers are taking longer to pay invoices.
• Lower-than-expected sales for three or more months.
• You’re losing sleep or feeling overwhelmed by financial stress.

If any of these resonate, now is the time to act—not later.

What Can You Do to Stay Resilient?

At SME Financial, we specialise in helping Kiwi businesses not only survive but thrive. Here are five proactive steps you can take today:

1. Get Clear on Your Cashflow:
   Cashflow is king—especially in tight times. We help clients build cashflow forecasts so they know what’s coming in and out at all times. It gives clarity and helps you make better decisions.
2. Review and Reduce Costs: This isn’t about cutting corners—it’s about cutting waste. We’ll help you identify which expenses are truly essential and where you can save, from renegotiating supplier contracts to trimming low-return marketing efforts.
3. Reassess Your Pricing Strategy: With inflation and rising costs, undercharging is a silent killer. We can help you calculate your true breakeven point and evaluate whether your current pricing reflects the value you provide.
4. Diversify Your Revenue Streams: Relying on one or two big clients? That’s risky. We’ll work with you to explore new services, products, or markets—whatever suits your business model.
5. Talk to a Trusted Advisor: Don’t do it alone. The earlier you bring in an expert, the more options you’ll have. Whether it’s restructuring, financial modelling, or just soundboard advice—we’re here to help.

You Don’t Have to Go Down With the Tide

Business ownership in 2025 is not for the faint-hearted. But with the right advice and a plan in place, your business can withstand the storm—and come out stronger on the other side.

If your business is feeling the pressure, get in touch with one of our Business Advisors today. Let’s sit down, look at the numbers, and work together on a plan to keep your business moving forward.

Together we can achieve more.