2. Tightening The Belt
How SME Owners Are Navigating Financial Pressures
Shifting Ground series –
This article is part of our Shifting Ground series, where we’re sharing what we’re seeing and hearing from SME owners across Aotearoa in 2025. The landscape is changing fast, and through this series, we’re exploring the key issues and opportunities shaping New Zealand’s small business community right now.
If there’s one thing we hear again and again in our work with SME owners around the country, it’s this - managing money in 2025 is hard going. It’s not just about making ends meet, though for some, that’s the daily reality.
It’s about navigating a financial environment that feels less predictable than it used to be. The numbers might still stack up on paper, but the day-to-day experience of running a small business has become more fragile, more hands-on, more… tiring.
As one owner told us recently “I used to think a lot about growing the business. Now I think about keeping it alive, and then if I can, growing.”
In this second article in our Shifting Ground series, we’re taking a closer look at the financial pressures SMEs are facing right now, what’s driving them, how owners are responding and what the personal toll looks like behind the numbers.
The Cautious Consumer
The story starts with customers. Across almost every sector, we’re hearing that spending patterns have changed. People are still buying, but they’re more selective, more value-conscious, more willing to wait or to do without.
That’s not surprising given the broader environment. Yes, inflation is easing, but mortgage rates remain high, household budgets are stretched and uncertainty about global events lingers. Discretionary spending is one of the first things to tighten in this kind of climate.
For SME owners, this translates into softer demand, unpredictable sales patterns and harder choices about stock, pricing and promotions. In some industries, hospitality and retail in particular, the peaks and troughs are becoming more pronounced.
One cafe owner we spoke to summed it up simply “It used to be about finding new customers. Now it’s about keeping the ones we’ve got coming back.”
The Funding Squeeze
At the same time, the cost of capital has jumped. Higher interest rates have made borrowing more expensive and many banks are more cautious about lending to small businesses, particularly those with lower asset bases.
In our work, we’re seeing this hit hardest in businesses that want to innovate, to invest in new equipment, improve sustainability, or expand digitally. The will is there, but the financial headroom isn’t.
Alternative funding routes, like equity crowdfunding, impact investment, or peer-to-peer lending, are growing in NZ and we’re encouraging more SMEs to explore them. But they come with their own learning curve and often require capacity and confidence that smaller operators are short on.
Meanwhile, some owners are digging deep into personal reserves. More than one has told us they’ve put second mortgages on the table to bridge the gap, a move that weighs heavily.
Managing Cashflow, and Expectations
In this environment, managing cashflow has become a near-daily focus for many SMEs. Owners are keeping a sharper eye than ever on receivables, supplier terms, stock levels and wage costs.
We’ve seen a few common responses emerging -
Shorter stock cycles and more flexible ordering
Increased use of technology to monitor cashflow in real time
Renegotiating payment terms, both with suppliers and customers
Building stronger relationships with key partners to maintain goodwill through tough patches
One risk we see is that the financial squeeze can sometimes lead to an over-focus on the short term, at the expense of longer-term resilience and purpose. Owners tell us they know this, but when survival is at stake, the horizon naturally shrinks.
It’s also a challenging time to balance pricing decisions. Pass on too much cost and risk losing customers, absorb too much and erode margins. There’s no perfect answer and many owners are navigating this tension week to week.
The Human Cost
Behind the spreadsheets, there’s a real human toll here. Many owners we talk to are tired, mentally and emotionally, from the constant pressure to keep the business viable.
One small manufacturer we work with put it this way - “I’ve always worked hard. But I used to have a plan. Now it feels like I’m always responding, always reacting.”
The financial strain also affects relationships, with staff, with family and with the wider community. It can be hard to maintain optimism when margins are thin and the future feels uncertain.
Encouragingly, we are seeing more owners reach out for support, whether through professional networks, wellbeing services, or just more open peer conversations. But the old culture of soldiering on remains strong in many quarters.
What We’re Learning, and Sharing
Here’s what we’re taking away from these conversations with SME owners across the country -
Adaptability matters. The businesses that are staying resilient are those that can flex and move quickly, in pricing, in offers, in cash management.
Relationships matter even more. Strong, trusted relationships with suppliers, lenders, customers and staff can make the difference between hanging on and letting go.
Mindset is crucial. Owners who can balance pragmatism with compassion, for themselves and for those around them, seem to weather the pressures best.
Support is needed. Whether it’s clearer funding pathways, more practical cashflow tools, or better mental health resources, the ecosystem around SMEs needs to step up.
A Closing Word
The truth is, financial pressure isn’t new for small business owners. What’s different right now is the sheer volume of moving parts and the emotional load that comes with navigating them.
Through all of it, though, we continue to be inspired by the resilience and resourcefulness of the SME community. We’ve seen owners dig deep, collaborate more openly and keep a strong sense of care for their teams and customers, even when times are lean.
Our hope is that by sharing these stories and insights, we can contribute to a wider culture of support and understanding. Business is tough, but it shouldn’t be isolating.
Stay Connected
If you’d like to follow this series and be part of the conversation about building a better SME support system for Aotearoa, or you’d like a quiet conversation about how to impact your business results now, here’s how to get hold of us –
📞 Phone +64 275 665 682
✉️ Email john.luxton@regenerationhq.co.nz
🌐 Contact Form www.regenerationhq.co.nz/contact
If you’d like to read more RegenerationHQ thinking on SME business and other things, go here – www.regenerationhq.co.nz/articlesoverview
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Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.