The past year has been marked by a period of significant economic challenge, with many industries feeling the strain of shifting market conditions. Wellington, a city once synonymous with job security, has not been immune to these changes. The combination of rising living costs, government cutbacks, and weakening international demand for New Zealand’s goods and services has created a complex and, at times, daunting environment for both businesses and individuals. The recent closure of two major employers in the central North Island, impacting 200 families in the Ruapehu District, is a stark reminder of the challenges facing many regions.
Yet, despite these headwinds, there are genuine reasons for optimism. Many businesses continue to not only survive but thrive, reporting strong profits and steady growth. According to Dave Morgan, business expert at LINK Business, “Even in a tough economic climate, there are numerous businesses that have adapted well and are experiencing healthy profits.” This resilience highlights the opportunities that still exist for those who are willing to adapt and seize them.
The changing job market has also sparked a shift in mindset among those who have been displaced from traditional employment. Morgan notes, “In an environment where traditional job security is no longer guaranteed, many ex-employees are exploring business ownership as a viable path to regain control over their careers and futures.” The desire for independence, coupled with a need to secure one’s financial future, is driving a surge of interest in business ownership.
Interestingly, while the number of new business listings has decreased compared to a year or two ago, the demand from buyers has never been stronger. This creates a unique market dynamic where limited supply meets high demand, often resulting in increased valuations for businesses. Morgan elaborates, “We’re seeing the perfect storm where business valuations are holding strong, and in some cases, increasing, due to the scarcity of available businesses for sale.” This phenomenon presents a significant opportunity for current business owners considering exiting.
In addition to these market dynamics, there are broader economic factors that are beginning to play a role. The Reserve Bank’s decision to reduce the Official Cash Rate (OCR) has prompted retail banks to lower mortgage rates, anticipating further cuts. This easing of financial conditions is expected to free up capital, encouraging more investment and sparking renewed economic activity. “As capital becomes more accessible, we’re likely to see a boost in business transactions as both buyers and sellers take advantage of improved financial conditions,” Morgan predicts.
As the economy continues to stabilise, we can anticipate a shift in market dynamics. An improving economic outlook may prompt a wave of business owners—particularly baby boomers—who have been holding off on selling a business, to finally bring their businesses to the market. When this influx occurs, the market could experience a shift from a seller’s market to a buyer’s market, with increased competition among sellers potentially leading to softening prices.
Therefore, for those contemplating selling their business, the current conditions present a compelling case for action. “Selling now, when demand is high and prices are firm, may be the best strategy to maximise returns,” Morgan advises. The timing of a sale is crucial, and those who act now are likely to benefit from the current favourable conditions.
As the market evolves, proactive decision-making will be key to achieving the best outcomes. In uncertain times, fortune truly favours the bold—those who are willing to make decisive moves in the face of change are the ones most likely to succeed.
