New figures reveal the employment recovery is driven by more Kiwis setting up in business for themselves – but these fledgling firms are vulnerable as the country faces another long lockdown
Josh, Emily and Janine have set up a new locally-sourced horse feed business. Nicolas has quit his hotel job to make and sell liquid compost. Anthony lost his job and was down to his last $100 and struggling even to afford to feed his three Pomeranian cross dogs, Cashew, Chewie, and Astrid – so he start making them powdered gravy and realised there was a commercial opportunity. These are the real faces of the employment recovery over the past year.
Reserve Bank data reveals it's not businesses hiring more workers, but Kiwis who have made the big step into self-employment – especially women. The numbers of self-employed and employers are up 0.65 percent since Covid first hit the economy early last year, but the numbers of paid employees are still 0.7 percent down.
"The labour market has adjusted, people have shifted into self-employment," says Yuong Ha, chief economist at the Reserve Bank.
"You tend to see it in the downturns, people switch to self-employment. But they haven't switched back, despite employers crying out for workers."
There are real concerns, though, at how vulnerable these businesses will be as New Zealand faces a second long lockdown.
Rachel Taylor founded the NZ Self-Employed and Small Business Association in 2020, in the middle of New Zealand's first lockdown, to provide support, education, advocacy, and networking opportunities for new business operators.
She argued Covid-19 had brought about change that has both created opportunities for new products and services, and has forced people to adapt to survive financially. For instance, the number of self-employed women without employees increased almost 14 percent to 143,500 in the year to March 2021.
Remote working is becoming more accepted, which may give companies the confidence to out-source to newcomers. That also reduces risk and overheads for those bigger companies, which is beneficial during uncertain times.
"Starting a business at any point is risky," she said. "However small businesses have fewer overheads and the ability to pivot quickly to meet customer needs – which can allow them to adapt to change easily.
"Heading into a lockdown is a great opportunity to work on your business, not in it, and create contingency plans to minimise risk, brainstorm business solutions with peers or mentors, and continue to communicate with customers and key stakeholders. By making calculated decisions and creating a structured plan small businesses have the opportunity to thrive in this sort of environment."
Taylor has been working with Anthony Gardiner, an Otago MBA graduate who lost his job in the travel industry during the first lockdown.
By the the start of December last year, he'd had no income for five months. He had applied for 134 jobs. The two jobs he was in the running for both decided to "pause the recruitment process until after the holidays".
"Down to one income, my fiancée Beth and I couldn't afford the expensive dog food our three fur babies were used to," Gardiner says.
"Our sales dropped 74 percent in one week – and I've been stressing about whether I made the right decision to start a business," – Anthony Gardiner, The Fussy Dog Co
If that was a first-world problem, he found himself a first-world solution. Making powdered gravy for their dogs was an answer to their immediate household problem; it was never supposed to be a job.
But in desperation, with not even $100 to spare and wanting to drive down to his graduation in Dunedin, he tried to sell some of the dog gravy online. "I had no choice," he said. "The first lockdown and ensuing impacts on my industry forced me to start a business."
Fast forward to now, and The Fussy Dog Co gravy is sold in all the major pet shops. He's leased a little production kitchen next to a gang pad in an industrial part of Christchurch – and suddenly another lockdown.
"Although pet shops are operating, with delivery, as essential for some products under level 4, as a baby company that started with nothing we have had no money for marketing. We rely on our in-store presence for impulse purchasing.
"Our sales dropped 74 percent in one week – and I've been stressing about whether I made the right decision to start a business, knowing with hindsight there is a massive labour shortage right now."
He's finding work-arounds, though. The printer cartridge ran out on the first day so customers are getting black and white invoices. And it's an excellent time to work on the business: he's perfected the next few products, made from possum meat. "There are always ways to find a silver lining."
From laying off staff to working alone
Nicolas Souto was front-of-house and housekeeping boss at the luxury Millbrook Resort near Queenstown. But when the last lockdown his, the business had to make some tough calls.
He had to lay off 45 staff – nearly 70 percent of his team. And although he kept his own job, that time in lockdown spurred him to think about whether he wanted to continue managing decline. He and his partner were both working the rollercoaster industry of tourism. He decided it was too risky; no more.
So he used his savings to buy a liquid compost company, Biofeed, that supplies garden stores, The Warehouse and – fortunately in lockdown – supermarkets. He took over the property and business in February this year, and for a few months did both jobs working seven days a week until, in June, he finished up at Millbrook. "I love the simplicity of the operation. It was a perfect opportunity for me."
A new shutdown is daunting, though. "I'm an essential service. I supply supermarkets and spring is here, so I have a few orders. I normally keep some stock at home but today I'm down at the business to produce more."
"I'm from Argentina originally, so I know that in life, you do have uncertainty. After the first lockdown and having to lay off all those staff, I've learned not to worry."
The Warehouse's usual fortnightly order didn't arrive last week, so he plans to apply for the wage subsidy. "Despite the financial stress, the safety net from Government is quite good."
New opportunities in lockdown
Josh Rushton is a farmer. He already knows about running a business in challenging times. But when he and business partner Emily Daly decided to set up Hekeao Feed Co, they didn't anticipate quite what a rocky road was ahead.
It was just weeks before Covid hit and the country went into its first lockdown.
Fortunately Daly didn't quit her day job in sales, but even so, it's especially nervous for her and sales manager Janine Simmons as they make their first steps into a new business.
Daly and Simmons both own and ride horses; it's exciting for them to now be selling their locally-sourced equine feed through 40 stockists. "It's just three of us, a small team, and it's certainly been challenging," said Rushton, the company's director. "We've faced a few difficulties – and now here we are again.
"Money is going to get tight. People may have to sell their horses because they can't afford to feed them, that's certainly going to be an issue. But what do you do, you've got to just try to make the best of a bad situation and look forward." – Josh Rushton, Hekeao Feed Co
"There's the uncertainty of how long we're going to be in Level 3, and is the virus going to emerge in the South Island, are we going to be locked up until Christmas time? It's certainly worrying. Are we looking down the barrel of a financial crisis – we're sharing the same concerns as the rest of the country.
"Money is going to get tight. People may have to sell their horses because they can't afford to feed them, that's certainly going to be an issue. But what do you do, you've got to just try to make the best of a bad situation and look forward."
He said operators of new businesses like Hekeao would feel vulnerable, because of the uncertainty.
But Hekeao found new opportunities in the last lockdown, like an increased marketing opportunity on social media as people spent more time at home, and with their horses.
Rushton said they planned to treat this lockdown as an opportunity to develop the business further. "We did it before, we'll do it again."
