Helping SMEs thrive in 2025

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The past few years have helped businesses to build resilience in the face of different challenges. With 2025 now properly underway, it presents an opportunity to think, plan and thrive in the new year

AS WE approach the EOFY period, there are new opportunities and doors to open – it’s a chance for us to re-evaluate our goals for the year ahead. For many, we’ll have returned to work feeling refreshed and revitalised, so now’s the time to double down and keep the momentum going. With 2025 now properly underway, businesses will be reflecting on the year that’s been. What lessons can be learned from 2024, and what worked well that you can carry over to this year? Prospa’s latest SME Insight Report revealed increased positivity among small businesses, with just over half indicating they were cautiously optimistic (56% immediate and 53% longer-term).

Prospa is New Zealand’s small business online lending specialist providing market-leading capital products and solutions to help Kiwi small businesses grow and prosper. Established in 2012 in Australia and 2018 in New Zealand, Prospa ensures applications are simple and funds can be accessed within 24 hours. Its cash flow products and services help small businesses grow and take advantage of opportunities to run their businesses or pay for goods and services.

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“Our latest Prospa SME Insight Report revealed increased positivity among small businesses, with just over half indicating they were cautiously optimistic”

Adrienne Begbie, Prospa New Zealand

Taking that optimism further, roughly half (55%) of SMEs expect market conditions to improve over the next 12 months. This confidence appears to be informing business decisions for the year ahead with around three in 10 SMEs (28%) saying they will expand their market reach, one quarter (27%) saying they’ll change pricing and another 25% planning to invest more in marketing and promotion. This positive sentiment is undoubtedly welcome after a tricky few years, and advisers will know their clients’ struggles all too well. But it’s never going to be smooth sailing. Prospa’s research also revealed that SMEs’ challenges are relatively unchanged when compared to our previous research in May 2024. The top three challenges were staffing and recruitment (17%, compared to 16% in May 2024), government taxes (16%, up 5% from May 2024) and inventory (13%, compared to 16% in May 2024). With these challenges, businesses must manage their cash flow effectively.

While SMEs have demonstrated resilience in uncertain times, whether by raising prices or using personal savings, there are even more effective ways to thrive in 2025. To be best prepared to weather the storms that impact businesses, Prospa’s recommendation is that SMEs have at least three months’ worth of cash reserves set aside in case of a rainy day. However, our research revealed that just half (51%) of those surveyed have a quarter’s worth of expenses covered by cash reserves, and 17% have just one month’s worth stored away. Building a solid financial plan with your clients, including a cash

Small business owner having an inventory

Financial planning with a forward focus

Published 17 Feb 2025

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“Advisers go beyond offering recommendations. As an SME-chosen financial partner, you help streamline processes, ensure thorough documentation and present strong cases to lenders. Your expertise in cash flow management ensures clients maintain smooth operations”

Adrienne Begbie, Prospa New Zealand

reserve, ensures stability and growth while offering peace of mind during unexpected challenges. Smart debt management, such as consolidation, simplifies finances and improves cash flow. Flexible tools like a Business Line of Credit provide ongoing access to funds, empowering businesses to succeed.

This is where advisers step in as strategic business partners. With three in 10 Kiwi SMEs (30%) likely to access external funding over the next 12 months, looking into alternative options could be the right solution for your clients. Advisers go beyond offering recommendations. As an SME-chosen financial partner, you help streamline processes, ensure thorough documentation and present strong cases to lenders. Your expertise in cash flow management ensures clients maintain smooth operations. You can empower businesses to build a solid foundation for long-term financial success by delivering clarity and confidence.

The value of advisers

Historically, alternative lending was seen as a last resort. However, at a time when the Commerce Commission is continuing its enquiry into New Zealand’s banking competition, many small businesses are seeing the benefits of partnering with a non-bank. Prospa’s latest SME Insight Report revealed that two-thirds (65%) of SMEs are aware of alternative financial institutions offering different ways of providing business lending, and almost half (45%) trust alternative financial institutions to deliver effective business lending options. This suggests that Kiwi SMEs want more options that provide flexibility and transparency, and it’s up to you as their financial adviser to scope all potential avenues – including alternative lending. Our country’s fintech landscape is booming right now, and

Alternative financial institutions growing in popularity

Kiwis’ receptiveness to the various alternative banking options available in the market is promising. At Prospa, there are products to suit each of your client’s business goals. As we near the end of the financial year, it might be worth considering a few of these options for your clients in 2025. Our business loans feature five-year terms for loans above $500k, a Business Line of Credit up to $500k and free unlimited extra repayments on business loans. For more information, see here.

Resilience isn’t just about managing finances – it’s about mindset. Cultivating mental strength is crucial. Set realistic goals with your clients and celebrate small wins to maintain a positive outlook. Encouragingly, the economic outlook is improving. The Reserve Bank of New Zealand’s recent string of cash rate cuts signals better times ahead. Inflation is easing, with forecasts pointing towards the 1–3% target range. By focusing on long-term strategies and building a strong foundation, you can continue 2025 with confidence and clarity, ready for sustainable growth.

Creating a resilient mindset

Source: Prospa’s SME Insight Report (December 2024)

Top three challenges for New Zealand’s SMEs

Staffing and recruitment

(compared to 16% in May 2024)

17%

Government taxes

(up 5% from May 2024)

16%

Inventory

(compared to 16% in May 2024)

13%

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