If you feel like your business has been fighting an uphill battle lately, you’re not alone. Recent Inland Revenue data shows that more than a third of New Zealand businesses reported a current-year loss in the latest tax year. That’s over 107,000 companies struggling to cover costs – a worrying sign, but also a wake-up call for change.
While the headlines sound grim, they also highlight an opportunity. By understanding the trends and taking targeted action, you can strengthen your business now and set yourself up for recovery when the economy improves.
The Numbers Behind the Story
Between 2022 and 2023, the proportion of businesses posting a current-year loss climbed from 32.3% to 34.6%. That’s the highest share in years. The pain isn’t evenly spread – sectors like accommodation and food services are seeing over 40% of operators in the red, while only one in four arts and recreation firms are profitable.
High costs, sluggish consumer demand, and ongoing labour challenges are putting pressure on margins. Some sectors are more resilient – retail, accommodation, and agriculture have seen steadier sales – but others like construction and telecommunications are battling declining revenues.
Practical Steps
- Analyse your margins – know exactly where profitability is slipping and where efficiencies can be gained.
- Manage debt proactively – talk to lenders before you hit trouble.
- Scenario plan – prepare for slow, medium, and fast recovery timelines.
Why Losses Don’t Always Mean Failure
Economists note that many firms holding losses are still resilient – often waiting for the economy to turn before making major changes.
A loss on paper doesn’t mean your business model is broken. Sometimes, losses are strategic – investing in growth, absorbing costs during a tough market, or restructuring for efficiency.
Practical Steps
- Separate temporary losses from structural issues – if costs are short-term (like supply chain spikes), plan to ride them out; if long-term (like uncompetitive pricing), adjust now.
- Keep customers close – even in lean times, invest in relationships that drive repeat business.
- Review your tax position – carried-forward losses can be used strategically in better years.
Positioning for Recovery
Most economists expect any major improvement in business conditions to take time. Waiting passively isn’t a strategy.
Businesses that adapt now – streamlining processes, improving cashflow visibility, and exploring new revenue streams – will be first to benefit when demand rebounds.
Practical Steps
- Automate low-value admin – free up your time for sales, strategy, and service.
- Diversify income – even small side offerings can buffer against downturns.
- Track cash weekly – stay in control of spending and keep a cushion for shocks.
Forward View Economic cycles are inevitable, but your business’s resilience isn’t just about weathering storms – it’s about using them to sharpen your operations. The businesses that treat today’s challenges as a testing ground for smarter systems will come out stronger when the sun returns.
Curious how these strategies could work in your business? Let’s talk through your numbers and map out a path forward.
