Business Failure

The New Zealand government has enforced a shutdown on all non-essential businesses to stop the spread of covid19. This shutdown has been applied for four weeks, but there are suggestions that the health experts would like it to go much longer. This will make it really hard for many businesses to keep going.

Agriculture is considered to be an essential business, so that sector is still operating. That is good, because agriculture is a really important part of our economy.

New Zealand probably has too many retail and restaurant businesses, so although it will be painful for the staff and owners of those that cannot keep going, it will not be a problem for the economy as a whole. The same applies to many types of personal services.

The close of tourism sector will be painful for many people, but is inevitable given the long-term decline of international travel. This will be a hit on the economy.

Those aside, many businesses in New Zealand that produce things are currently closed down. If they are shut down for too long, many will not be able to keep going, because they cannot do their work from home. As well as being painful for the owners and staff of these businesses, this will be a serious long-term cost for the economy.

The problem is that most of our current government are academics or professional politicians. They have never been involved in running a business, apart from speculating in property, so they have no idea how difficult it is to start a business and keep it going. Few of their advisors have ever been responsible for a real business. Their salaries come in each fortnight, regardless of how many mistakes they may have made. Many people who are smarter than our leaders have tried to start a business, but have failed despite their best efforts. It is an incredibly hard task.

I hope that as soon as possible, the government will relax the constraints on these businesses that make an important contribution to our economy to allow them to start operating again. Business owners are smart, so they will work out clever ways of continuing some of their production, while keeping people with symptoms at home, and ensuring social separation of those who do come to work. If they can keep some of their production going, it might be the difference between survival and failure.