During 2023, small business sales growth averaged a limp 0.6% year‑on‑year in the first half, only nudging up to 1.9% in the September quarter, according to Xero Small Business Insights data. Jobs went backwards, down 1.3% on average in the first half and down 1.2% in the September quarter.
Talk to a yoga instructor, a hairdresser or a local florist and you’ll hear the same thing: customers stretched out time between their appointments, traded down or focused on the basics. The purse strings tightened – hard – and small businesses wore the brunt.
Now it’s time for the “so what?” and the fact is, when our small business economy is thriving, we all feel it. They account for 97% of all businesses in Aotearoa New Zealand and roughly a quarter of our nation’s GDP.
When they slow, communities hollow out – more “for lease” signs, fewer apprentices and slimmer pay packets to spend on those “nice to haves”. When they thrive, the effects multiply: jobs, investment, innovation and vibrant town centres.
The early signs of a reset
But it looks like we might finally be turning a corner (I dearly hope) as we get a pep back in our step and stare down the barrel of a new year – an election year no less.
Inflation is coming back down. Growth is expected to broaden beyond agriculture. Economists are predicting unemployment will ease slightly as the year progresses.
None of this is a magic wand – but together, these shifts can give small businesses the breathing room they need.
The truth is, our Kiwi small business owners are some of the most resilient operators in the world. They’ve weathered shocks, downturns, and uncertainty before – and done it with creativity, grit and community behind them.
So, what do we need to support and supercharge our small business economy in 2026?
The answer is threefold: what can small businesses do, what can we as consumers do, and what should we look to the government to do?
Running small businesses smarter, not harder
Firstly, small business owners can make big gains this year by working smarter, not harder. Simple productivity upgrades – like adopting digital tools, automating routine admin and upskilling teams – can free up time for the work that really matters.
Generative AI tools can be used to automate time-consuming tasks, such as drafting professional emails, summarising lengthy meeting transcripts and generating first drafts of marketing copy or product descriptions. The efficiency gains are well worth trialling a new approach.
Keeping cashflow healthy is crucial too: using automatic reminders, easy payment options and “pay now” buttons helps reduce late payments and boosts stability.
As customer confidence returns, strengthening loyalty through great experiences and genuine connection will help bring people back.
And because surprises are inevitable, the most resilient businesses will be the ones that stay nimble: keeping costs tight, staying clear on priorities and being ready to pivot when the unexpected happens.
Being conscious consumers
We should all be trying to spend locally as much as possible. We recently found that redirecting just 10% of consumer spending from big to small retailers could add $11b to the small business economy.
Imagine that cash injection flowing through our small business economy. That’s the sort of local multiplier a spreadsheet can’t even begin to capture.
Continuing government support for small business
Finally, all eyes will be on our government and opposing political parties as campaign promises begin to roll out before the election later this year.
From a small business perspective, we’ve seen some strong strides to empower productivity through innovations in Open Banking / Consumer Data Rights, the Investment Boost and the AI funding pilot announced earlier this year.
Looking forward, as the global economy becomes increasingly digitised, New Zealand must ensure our small businesses and the workforce is equipped with the skills to thrive.
Digital literacy, cyber security awareness, AI – these are everyday realities for businesses owners, and ongoing support for upskilling to compete in this economy will be essential.
If we grow a digitally fluent workforce, our local businesses can compete worldwide, attract new investment, hold on to great people and stay resilient no matter what comes our way.
As we shake off the fatigue of last year and step into 2026, the path ahead feels a little lighter. With small businesses doing what they do best, customers choosing local when they can, and continued momentum in digital capability across the workforce, we have every reason to feel optimistic.
Our small business economy doesn’t need grand gestures; just the right mix of support, smarts, and community spirit.
If we can channel that, this year won’t just mark a turning point. It’ll mark the start of a stronger, more resilient chapter for Aotearoa New Zealand.
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