1. The Shifting Landscape

What we’re seeing in NZ’s SME community in 2025

This is the first article in the series and summarises the coming content.

At the heart of every town and city in NZ Aotearoa, you’ll find small and medium-sized businesses keeping local economies moving, providing jobs and bringing products and services that make a real difference to their communities.

 Right now though, a lot of these business owners are navigating a landscape that feels anything but settled. The last few years have been a tough stretch. And while the worst of the pandemic is (mostly) behind us, new challenges keep emerging - economic uncertainty, rising costs, tech shifts, talent shortages. It’s a lot to juggle.

 At RegenerationHQ, we spend a fair bit of time out in the SME community, in cafes, in warehouses, in boardrooms, in engineering and manufacturing businesses and retail stores. We hear first-hand how business owners are adapting and where the pressure points really are.

 This isn’t a piece about doom and gloom and we’re not here to point fingers. We simply want to take stock of where things stand, openly and practically and share what we’re seeing and hearing around the country. We’ll also touch on how business owners themselves are feeling about the road ahead.

 This article sets the scene for a new series we’ll be publishing, digging deeper into the key issues facing SMEs and some of the ways owners are responding.

Economic Uncertainty - The New Normal?

If there’s one thing that comes up in nearly every conversation we have with SME owners, it’s uncertainty. Even though inflation has eased a bit, the cost of living is still high and people are cautious about where their money goes. Many businesses are seeing this play out in their sales, a bit more stop-start than they’d like.

 Behind this is a tangle of factors - global instability, stretched household budgets, mortgage pressures and a lingering sense of not knowing quite what the next year will bring. Whether we’re talking with a fashion retailer in Auckland or a service business in provincial NZ, we’re hearing the same thing - customers are watching their spending.

To be fair, many business owners are adapting where they can, adjusting offers, trimming costs, finding ways to stay flexible. But the underlying mood is cautious.

 At the same time, we’re seeing a real shift in what customers value. Yes, price matters, but so do trust and purpose. People increasingly want to buy from businesses that stand for something. That’s an opportunity, but it does ask more of owners than it once did.

Access to Capital - A Tougher Road

One of the biggest frustrations we hear about right now is access to funding. Banks are more cautious and borrowing costs are high. Banks seem to love property investors, not SME owners. For a lot of SMEs, that’s making it tough to invest in growth, or even in the basics like upgrading technology or making sustainability improvements.

 We’ve heard this first-hand from business owners across sectors. The desire to innovate is there, but the financial runway often isn’t.

 Alternative funding options do exist, and we’ve seen more businesses exploring things like crowdfunding or community-backed investment, but those routes aren’t simple. They take time and headspace that many owners just don’t have to spare.

 Meanwhile, some owners are leaning harder than they’d like on personal resources. We’ve sat with people who’ve poured savings, mortgages and sheer sweat equity into keeping things moving. It takes grit, but it’s not a sustainable long-term strategy.

Keeping Pace with Technology

There’s no question that digital capability is now a basic requirement for staying competitive. Ecommerce, automation, cybersecurity, these things aren’t optional anymore.

 But making the jump can be tough, especially for smaller operators or those in the regions. Through our work with SMEs, we’ve seen a wide range of digital readiness. Some businesses are flying ahead - others are struggling just to keep up.

 It’s not just about access to tools, it’s about having the time, skills and confidence to implement them well. Owners tell us that finding trustworthy advice is half the battle.

When the right support is in place, though, the benefits are clear. We’ve seen businesses unlock new markets, streamline operations and improve resilience.

 The key is not trying to do it all at once, small, steady steps work best.

The People Puzzle

Attracting and keeping great people remains a top concern. The skills shortage hasn’t gone away and in some industries it’s as tight as ever. Immigration settings are improving, but for smaller businesses, navigating that space can still be tricky.

 On top of that, employee expectations are shifting. Flexibility, purpose, wellbeing. These are front and centre for many workers now. That’s something we hear a lot.

To their credit, many SME owners are going out of their way to create supportive workplaces, offering flexible hours, mental health support, even co-ownership in some cases.

 But it’s a balancing act. Keeping the business afloat while looking after your people takes a lot of energy. One thing we do see consistently, if not universally - owners care deeply about their teams. The challenge is making sure they also look after themselves in the process.

The Sustainability Imperative

More and more, customers are looking for businesses that do the right thing, for people and for the planet. Owners are well aware of this. In fact, many we work with are genuinely motivated to reduce their impact.

 But knowing where to start can feel overwhelming. Carbon measurement, waste reduction, ethical sourcing, it’s a lot to take on, especially when margins are tight.

In workshops and one-on-one conversations, we hear that owners value practical, achievable steps. Sharing ideas and learning from others in the same boat is hugely helpful.

 The truth is, most SME owners aren’t chasing perfection. They want to make progress, and they want to do it in a way that fits their business. That mindset is a good starting point.

Owner Wellbeing - The Unspoken Challenge

There’s one conversation that’s starting to happen more openly, and that’s about owner wellbeing. The mental load on SME owners is real. Managing cashflow, looking after customers and staff, staying across compliance, trying to plan for the future, it’s a lot.

 Many owners carry this load largely on their own. In our work, we hear it often - “I’m exhausted, but I can’t stop.” More owners are recognising the need to look after themselves and services like First Steps NZ are helping. But the old culture of stoicism still runs deep.

 One positive shift we’re seeing - more owners are embracing a bit of compassion and forgiveness, for themselves, for their teams. Mistakes happen. What matters is learning and moving forward. It’s a healthier way to do business.

Looking Ahead - A Cautious Optimism

So how are SME owners feeling about the future? The mood is mixed, but it’s far from hopeless. The owners we work with are remarkably resilient. They care deeply about their businesses, their teams and their communities. There’s a cautious optimism there, but also a recognition that the road ahead will take ongoing adaptability and support.

 What they’re asking for is clear, more clarity in policy and funding, more connection and learning across the SME community and practical tools to help them keep moving forward.

 Above all, they want to run businesses that are fair, sustainable and enriching, for themselves, their people and the communities they serve.

What’s Next

Over the coming weeks, we’ll be taking a closer look at each of these issues, sharing insights, practical ideas and stories from around the country.

We hope you’ll stay with us for that conversation.

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

🔹 RegenerationHQ Ltd - Business Problems Solved Sensibly.
Supporting NZ SME Owners to Exit Well, Lead Better and Build Business Value.