62 percent of respondents to a recent survey of West Coast businesses are reporting major financial impacts from COVID-19 with sales/revenue down 25 percent or more. 26 percent of businesses surveyed also reported reducing their staffing levels.
This data was gathered as part of a survey of local businesses conducted by Development West Coast (DWC) during Alert Level 2.
The survey received around 200 responses between 18 April – 1 June.
64 percent of those surveyed believed their businesses will survive the current COVID-19 crisis, 26 percent were unsure, 5 percent have put their businesses in hibernation and around 4 percent are either considering closing or have already closed.
One respondent said: “We will survive but will have to borrow about $500k to get us through the next 12 months.”
Another respondent said: “We’re going to come out stronger, it has forced us to make some tough business decisions that we needed regardless of COVID.”
The biggest challenges currently facing West Coast businesses were cited as reductions in sales/revenue, customers numbers and staffing hours.
Over the next three months, 58 percent of businesses expect their sales/revenue will be down 25 percent or more. Employment levels are expected to decrease further with 30 percent of businesses stating they will have to reduce staff over the next three months.
One respondent said: “We do not expect to be letting staff go, but we may face reduced production and encourage staff to take annual leave.”
Amongst those surveyed, businesses in the Westland District have been the most heavily impacted by COVID-19. 75 percent of businesses in Westland have reported major negative financial impacts, in comparison to 51 percent of respondents in Grey and 50 percent in Buller.
32 percent of respondents from Buller have reported reducing staffing levels, 30 percent in Westland and 17 percent in Grey.
DWC chief executive Heath Milne said the survey was undertaken to gain a better understanding of the impact of the pandemic across the Coast and how this has changed over time across the different industries.
“These insights will enable us to target our support more appropriately to meet the needs of our business community. It will also allow us to provide an evidence-based overview of the situation to Government to advocate for further support for the Coast.”
An earlier survey, sent out just as New Zealand entered Alert Level 4 lockdown, showed 50 percent of respondents reporting significant financial impacts from COVID-19 in comparison to 62 percent now.
Mr Milne said the results of the surveys demonstrate the changing impact on businesses during the pandemic.
"All sectors in our economy have been affected. However, businesses in tourism and travel have understandably been the hardest hit.”
96 percent of tourism and travel businesses reported a major negative impact on their sales/revenue compared to 48 percent for the rest of respondents. 45 percent of tourism and travel businesses have reported reducing staffing levels in comparison to 18 percent of other businesses.
One respondent said: “If the borders open, we will definitely survive, however if we are reliant on domestic travel it will be extremely difficult.”
Of businesses in tourism and travel who are heavily reliant on international visitors, 47 percent feel they can adapt to meet the domestic market, while 42 percent are unsure if they can.
A business which is already a popular domestic visitor activity, with pricing set at low margins to be affordable for Kiwi families, was concerned about the increased emphasis on encouraging ‘deals’. “We now have significantly increased competition for a market we already supported.”
The survey highlighted how businesses have responded to the current crisis by utilising different forms of support and advice.
86 percent of businesses had used the Government’s wage subsidy and leave schemes.
A frequent comment amongst respondents was: “We were only able to maintain staff with the wage subsidy.”
37 percent utilised free business webinars, 23 percent accessed the Government’s small business cashflow loan scheme and 23 percent have received advice and support from DWC.
One business said they had received excellent support from DWC “through information, encouraging staff upskilling, additional borrowing for cashflow/creditors, the (delivery) rebate scheme and the (Regional Business) Partner scheme. Wow.”
Businesses were asked which further areas of support and/or advice would best help them manage the impact of the pandemic. 64 percent cited the wage subsidy extension programme, 44 percent marketing support and 19 percent financial advice / cashflow management.
A common concern voiced in the survey was around when the wage subsidy runs out. “Post-subsidy we have concerns about redundancies.”
Another business said: “It’s up to me. No more handouts. I will work this out.”
Mr Milne said: "At DWC, our team has directly engaged with over 360 businesses over the last two months, and the survey results reinforce much of what we are seeing on the ground.
“As usual Coast businesses are demonstrating a lot of resilience, but there is a very real need for continued targeted financial assistance and support services to help them adapt to, and cope with, the challenges that are being presented.”
During the last two months of the pandemic, DWC has delivered COVID-19 Business advisory vouchers to around 70 West Coast businesses for professional services, worth around $140,000, to assist in managing the impact of COVID-19. DWC has also fast-tracked commercial finance worth $1.75m to 12 businesses.
“These aren’t the only ways DWC can help. We are involved in a range of COVID-recovery initiatives and have a variety of support services that may suit your needs,” Mr Milne said.