16 February 2009
As economic circumstances change, there will always be winners and losers. The economy is changing dramatically with New Zealand’s retail spending falling for a fourth straight quarter, the most prolonged decline on record, and house sales plunging to a 20-year low, adding to signs the nation’s recession is deepening. New Zealand’s smaller businesses are in a prime position to benefit from the current economic down turn.
“Smaller businesses tend to be able to respond more rapidly than large companies to downturns. They can also take a longer term view away from the short term focus of stock market investors,” said Builderscrack.co.nz director Keith Roberts. “In our business we have found consumers are much more focused on getting the best bang for their buck than they were when we first launched 2 years ago. Back then tradesmen were in short supply so they were glad to get any good tradesman, and much less focused on the cost. Now they are looking for the best deal, and there are better deals to be had as there are more good tradesmen out there looking for work. This is good for websites like ours which enable people to compare what different tradesmen can offer”.
Builderscrack.co.nz was one of the few businesses to be excited by Real Estate Institute figures showing that just 3706 houses changed hands in January, the lowest level in 17 years. “While we are sympathetic to those that need to sell their homes, we expect our business to benefit,” said fellow director Mark Dickson. “A number of our new customers last year had their houses for sale, but when they realized they would not be able to get the price they sought, decided to stay in their homes and renovate. We expect this trend to continue”. Small business can benefit from reduced costs as larger companies scale back, particularly in advertising.
“The big guys tend to follow a predictable pattern – when times get tough, they scale back for a year or so to try and support their share prices. This leave more advertising inventory for privately funded smaller companies to take advantage of. Particularly online, we are finding it easier to secure better advertising spots for the same spend,” said Roberts. Attitude is also important. “Small businesses also tend to be run by people who are inherently a lot more optimistic, and optimism is going to be what gets us out of this recession”.