Aotearoa's small business economy is outperforming other countries on paper, but the next month's results will show the true impact of the Omicron outbreak.
Small business owners are being told to stay calm and plan ahead as the Omicron outbreak wreaks havoc on staffing and confidence.
Matthew Aitchison, manager of Stanley Avenue Wine Bar and Bistro on Auckland’s North Shore, was among those in the hospitality sector holding their breath and seeing how the next few months would play out.
Workforce shortages were his top concern. Out of his 12 staff, two part-timers were isolating and he was working 90-hour weeks to keep the place running.
“Things are getting worse by the day. There’s this constant fear that staff are going to have to isolate,” he said.
“As cases increase, more people are nervous about venturing out. We’re getting more cancellations as people are worried about being exposed.”
The joint was marked as a location of interest in late January after a positive case visited over a number of days, meaning the premises were shut and all 12 staff had to be isolated for 10 days.
Aitchison was trying to secure rapid antigen tests for his staff, but he had not had luck yet.
In the meantime, he planned to reduce capacity and opening hours in order to keep the doors open if staff were forced to stay away from work, along with revving up their takeaway options.
Account software firm Xero’s managing director for New Zealand Craig Hudson said small businesses faced some of the biggest curveballs the pandemic had thrown yet.
This included workforce shortages due to staff needing to isolate, reduced cash flow, and even shutting up shop if the premises could not be occupied or all employees needed to isolate.
At the same time, Xero’s small business index for January 2022 fell slightly below average to 97 points since December, after sitting above average scores in the 100s for three months in a row.
The downturn was mostly due to slowing small business sales, which slowed by 4.6 percent year-on-year in January following double-digit growth as Auckland’s lockdown restrictions eased in late 2021.
Hospitality and accommodation suffered the biggest hit, with year-on-year sales growth rate slowing by 2.2 percent and job growth by 4.2 percent. Agriculture, forestry, and fishing also slowed by 1.4 percent, and job growth was down 1.9 percent.
This data did not include the direct impact of the Omicron outbreak after New Zealand was shifted into the red light setting on January 23.
The index also cast an eye abroad to get an idea of the damage an Omicron outbreak could do to small business. Australia reported an index of 86, while the United Kingdom sat at 85 following outbreaks in each respective country.
Craig Hudson said Australia’s situation - where rising cases and required isolation periods meant fewer people were able to work - illustrated what small businesses here needed to prepare for.
He urged business owners to focus on what was in their control and stay calm, while ensuring they had a plan on how to deal with staff isolating as best they could.
“It’s best to be prepared for it than deal with it when you’ve been hit in the guts … be prepared, be pragmatic, and don’t catastrophise,” he said.
Infometrics principal economist Brad Olsen said the “writing was on the wall” on the disruption Omicron would inflict,
Businesses were uncertain whether there would be demand for their goods or services, while also being unsure that they’d have a workforce to meet this, Olsen said.
While the Government had previously provided some financial support through the wage subsidy and resurgence payments, Olsen said businesses were essentially forced to go “cold turkey” this year with none of that support on offer.
This week Finance Minister Grant Robertson announced a new targeted support payment for struggling businesses, but Olsen said this was not enough to boost confidence.
Meanwhile, Matt Aitchison just hoped the Omicron peak was as short and sharp as possible.
“It’s going to be seriously tough in the next six weeks. Hopefully most of us can carry on and survive.”
