Waikato businesses not banking on better economy
Waikato’s business confidence is lagging behind other regions, as local hospo owners say they’re struggling to turn a profit in tight financial times.
Snehal Karia has been running her Hamilton cafe for a year and a half and says she still can’t save money at the end of the month.
“Ingredients are quite expensive, I’ve got a child and daycare is quite expensive,” the Crave Cafe owner said.
She’s not the only small and medium-sized business owner wondering what the next 12 months will bring, judging by MYOB’s latest business monitor.
It says 22% of Waikato businesses think the economy will improve over the next year – way lower than the national average of 37%. That surprised Waikato Chamber of Commerce chief executive Don Good, but he said there was better news beyond the “gloomy headline results”.
He said the region’s small and medium enterprises (SMEs) are characterised by being “cautious, conservative, and family based”, which is why they often aren’t as optimistic compared to other regions.
“The majority of Waikato SME owners would still rate their cash position as good to very good [in the survey]. Their staff level as ‘about right’ and they do not expect to decrease staff levels.”
This is shown by 44% of Waikato businesses describing their cashflow level as good or very good, and 83% said their staffing level is about right, or high.
Based on principles like “cash is king and you find and keep good people on your team”, Good thinks businesses are ready to bounce back when the economy rebounds.
The MYOB survey, conducted between January 26 and March 8, came during a time when Hamilton was announced the fastest growing city, but businesses have seen mixed effects.
In Maeroa, Sugar Bowl Cafe owner Kaku Guo said population growth is a double edged sword.
“We’re getting more customers, but their mortgages have been putting pressure on them due to the higher interest rates, so they can’t afford expensive dishes from the menu.
“We’re getting more orders than last year, but our profit dropped,” he said.
At Crave Cafe in the city centre, Karia is catering for office workers and some city dwellers.
She had already increased prices in the last six months to smooth out the impact of higher costs. Although she has a growing box of loyalty cards, she hasn’t seen that turn into profit.
She’s betting on a lower GST or income tax bill, which will hopefully mean some pocket money for her.
What’s the point in running a business if you can’t save any money, she finds herself wondering.
But at Cemac – in the furnishing business – there’s more optimism about the coming year.
Industrial salesperson Paul Jones has been in the industry for 30 years and says he’s seen all the cycles..
“We're not planning to have a massive amount of growth this year. I think sales is going to remain about what we turned over last year, but if we can do that, that's still positive.”
The construction sector that Cemac relies on has been more cautious recently.
For Cemac, some partners’ projects have been put on hold, but Jones said he’s expecting them to be back in the pipeline in the next eight to nine months, once the construction sector has more certainty over costs and rates.
Hamilton Central Business Association Vanessa Williams said the region has seen a high volume of developments in the past few years, but has slowed down recently as businesses wait for more certainty.
“It's not to say that I think that the future has stopped. I just think people are naturally pausing and waiting to see what happens. There's just a lot more caution in the air.” Among the drivers are rates changes and other expenses, she said..