Keeping small business alive as Covid surges back
On a trip across the nation, we meet small business owner Barry Hart in the pandemic’s shadow
Monday: Tourism
Tuesday: Resilience
Wednesday: Power
Thursday: Health
Yesterday: Māori
Today: Economy Tomorrow: Youth
Rain is chucking it down at The Landscape Yard in Auckland’s Glen Eden in a cold and miserable mirror of life for business owners under the shadow of Covid-19.
It’s one of two businesses owned by Barry and Debbie Hart, who — like so many others — are trying to fit their ambitions and hopes inside a frame contorted by the pandemic.
The New Zealand Herald travelled the nation on a project we called The Road Ahead, interviewing those whose actions and experiences illustrated issues in our country against a backdrop of the upcoming election and Covid-19.
Auckland is the engine room of our nation’s economy and it was there we found Barry Hart and, later in central Auckland, economist Christina Leung.
It’s not like the Harts, both 46, haven’t felt the chill of international change before. They owned a United Video store until four years ago, when advancing technology rendered the business untenable.
Now, they have two businesses — The Landscape Yard, which sells all manner of landscaping needs, and Hart Haulage, a Hamilton-based trucking company with 10 truck-and-trailer units.
Hart worked for others for years, with the odd business on the side, but he never saw himself as someone who would live on a salary.
“Being in my own business means I have a little bit more control — if that’s possible — in what we get out of it.
“We have our ups and downs and every now and then you think, ‘Gee, would it be better to be back on a weekly income where I didn’t have to worry.’ It’s just not who I am. Both my wife and I just love the challenge of taking that extra step.”
That control doesn’t necessarily bring fortunes, that’s not what the Harts are seeking, but the freedom and independence in being able to chart their own course. That comes with its own constraints and stresses.
The couple employs 18-20 people, and Hart says that old adage of saying that “this is a family business” has a core of truth.
“We really enjoy getting to know our staff — finding out when their partner’s having a birthday or kids are having birthdays and getting involved with that.
“Honestly, most of our staff have been more friends than anything else. Obviously there’s a line you have to draw, but it’s great to be able to be part of that.”
So when New Zealand went into the first lockdown, Hart was immediately alive to the threat it posed to his business and the potential to impact even more widely.
“I was one who sat back to begin with and said ‘why are we taking such a strong measure’ with the lockdown we had.”
After the initial shock, and having New Zealand come out of it so well, he came to an appreciation that it was a decision that allowed their businesses to continue.
“You look at the rest of the world — and Australia — and they are now closing down again and again and again.”
In the first lockdown, both businesses suffered. The landscape company was shut for four weeks and then began non-contact deliveries. The haulage company was shut for six weeks.
We spoke to Hart the day the second lockdown was announced. It led to the cancellation of a weekend away with senior staff to plan a way forward for the businesses.
“Rather than look at the negative, let’s look at the positive and what we’ve been left with. This is where we are. I could complain about the dollars that I lost over the last few months, or I can just get on and say, ‘How do we now fix it?’ ‘How do I keep all of my staff ?’ ‘How do I keep my businesses moving so that we can progress?’”
Nowadays, it seems, disruption is a cost of doing business, and Hart’s focus is on minimising that cost as much as possible by spreading the load and increasing opportunity.
“Today the very real stress or concern for us is, ‘What if Covid comes back?’
“Our concern is it’s just one thing that I can do nothing about. I can make sure my customers are happy and they keep coming back. I can make sure we give the right pricing and we win customers. I can’t stop Covid coming back.
“That’s the only thing I can’t control. That keeps me awake more than anything else.”
The Harts’ plan rests on diversification. With the landscaping yard, they’re looking at broadening into hiring equipment. There are also plans to diversify the haulage business.
The doing of it isn’t going to be easy. “We have to do this by ourselves. Financially, that’s going to be the burden and what’s going to slow us down from being able to diversify as quickly as we can.
“We do that based on what we can afford to do, in hopes that with the election coming up, somebody will turn around and say, ‘How can we help?’”
That “somebody”, says Hart, could be the Government.
Hart would like to see the Government supporting businesses forced to adapt to a pandemic world. Finance at cheap rates is one suggestion.
“If we get into the hire side of the landscape yard, for instance, that might take a couple hundred thousand dollars, but we can also see that we’ll end up with more staff involved.
“So there is the ability for them to help. In the meantime, what we’re looking at is how we’re going to do this personally.”
Talking to Hart gives a strong sense of the way small- and medium-sized businesses connect to many different parts of our lives. In the rich fabric of society, those businesses are interwoven in ways that mean a thread pulled can threaten to unravel everything.
“You increase diesel and bread and milk has to go up. Somehow the Government’s got to look at how they can reduce costs of getting product to where it needs to be, which is largely by trucks, so that bread and milk can be cheaper.
“If our bread and milk is slightly cheaper, our wages don’t have to keep rising.”
Those links businesses create between all aspects of life are vulnerable to the virus, and Hart’s keen awareness of those connections is matched by his frustration at those who threaten stability.
The quarantine bolters are maddening, given “all the stress and strain that we’ve gone through”.
“It’s been a fight and a struggle. Somebody breaks out of these things — it just makes me angry.
“They don’t realise that it’s not just my livelihood and my business that they’re putting in jeopardy, but it’s . . . my 18 staff and their 15 children. It’s the future of those people.”
IN CENTRAL Auckland, Christina Leung, principal economist at the New Zealand Institute of Economic Research, offers a view across the entire landscape.
At the time of our interview, the eve of the second lockdown, New Zealand had emerged from the initial storm into calmer seas than expected.
The rebound revealed unexpected resilience. “A lot of people don’t realise that we’re doing better than expected because we’ve had that sheer amount of stimulus into the economy. And that’s the economy responding to that.
“That’s helping to keep people in jobs, keeping households buoyant, businesses feeling a bit better than what they would . . . New Zealand has done pretty well relative to a lot of the other economies.”
A large part of that is the wage subsidy, and the ability to return, largely, to normal life showed that healthbased results have an economic payoff.
“That’s helped keep a lot of workers in their jobs and helped support spending as well. So that’s why we’ve seen, just after the lockdown, this rebound in activity.”
New Zealand’s starting position was also better than many other countries, with years of careful spending and a focus on paying down debt in anticipation of that “rainy day”.
“This is the rainy day that we’re getting and then some.”
To get through this, the Government has borrowed in a way not seen since World War II. Debt, says Leung, is not bad in itself.
“It’s more about the cost of borrowing. As long as the return on the investment that you’re borrowing for is greater than that cost of borrowing, then it does make sense to borrow to go out and invest in things.
“But of course, then the big question is, ‘What is that benefit?’ There’s a lot of subjectivity when assessing these benefits.” There are difficult decisions ahead, with some sectors lined up to experience long-term effects.
“So the Government will have to make some pretty tough calls on which ones they have to let go, rather than keep throwing more money at them to keep them on life support.”
With the border closed, international education and tourism are two of those vulnerable sectors.
“On the other hand . . . areas such as meat and dairy and fruit, we’ve actually seen an improvement in demand globally. Even with the outbreak . . . people still need to eat.
“And so New Zealand, as a key producer of meat and dairy and protein more generally, we’re very well placed to meet this increased demand.”
Technology, too, is a sector well placed to meet a pandemic world. Leung says there’s a tongue-in-cheek question circulating in the city over “who has been the one to accelerate change in technology in your organisation?
“Is it the CEO, the CTO or Covid-19 — and it’s Covid-19 because it’s pushed a lot of people to use Zoom and cloudbased technology.”
Piecemeal is not the way forward, she says, but “how well the economy as a whole can adapt to the fastchanging environment”.
To that end, effort needs to be invested in creating an environment that allows businesses — and workers — to shift from areas hobbled by the pandemic to those that will grow.
“It’s not an easy thing just to say, ‘Okay, since you’re not getting any international tourists, now you have to become a whole new organisation and a whole new business.’
“It’s inevitable that a lot more government support will be required and it’s important that it’s got to be good-quality spending.
“But the important question is, ‘What do we invest in?’ And while it’s tempting to just keep throwing money at things . . . it’s about whether the benefits of that growth will be greater than the costs of that spending.”
The unknown permeates all of this. When will border restrictions ease? Will there be an effective treatment for Covid-19? Does New Zealand turn its back on international tourism to take advantage of opportunities or does the Government continue indefinite support?
“It makes sense to have government intervention, to help support the economy and hopefully rebuild to something that we are wanting for the longer term.
“What is needed is at least some certainty. The resolution — in terms of debt — is decades in the future. While it might be impossible to forecast a way out of this mess, there needs to be a plan to guide us through it.
“Businesses hate uncertainty. It makes it that much harder to plan in terms of hiring and investment. The more uncertainty and risk they might have to shut up shop, the greater the likelihood that they’re going to hold off making any long-term plans, which then is a self-fulfilling cycle.
“In the absence of these plans, we don’t have that investment and spending that takes place, which then helps to promote growth in the economy.
“It’s important to have a long-term vision of where we want to be — of where we want New Zealand to be.”