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BDO New Zealand recently released its Business Wellbeing Index findings for the second half of 2023. The biannual study explores the relationship between wellbeing and business performance by surveying more than 500 of the country’s business leaders. Although we’re certainly not mental health experts, as advisers to over 16,000 businesses across New Zealand, we are in a unique position to see the impact of financial, economic, regulatory, environmental and social factors.

Now on our fourth edition, we have accumulated sufficient data to identify distinct trends, some of which we’re delighted to see are improving. The index has, however, confirmed over the years that finances are a leading and growing contributor to a lack of wellbeing among business leaders and this influence has remained unchanged as economic conditions and political shifts provide more uncertainty for decision makers.

When reflecting on their wellbeing in October (BDO’s online survey was conducted in the two-week period following the 2023 general election), New Zealand business leaders posted a record high wellbeing index score of 74 – up from 63 in our April 2023 report. The improved score reflects a growing sense of certainty among business leaders around economic policy following the general election and hopes of better market conditions ahead. It is likely this has also been aided by recent Reserve Bank guidance on interest rates. 

Looking back over the past six months, an increasing number of business leaders reported feeling less mentally healthy than normal – rising from 48% in our April 2023 report to 57% in November’s. This result shows how external factors, such as political uncertainty and concern around interest rate rises, has been weighing heavily on business leaders.

Many of these underlying challenges remained or worsened over the second half of 2023. Significantly more business leaders singled out cashflow as a driver of negative wellbeing than in our April report. The other leading drivers include external economic factors (although this has dropped since April), supply-chain issues and workloads being too high. 

While it is ominous to talk about worsening wellbeing, financial challenges can often be rectified, especially cash flow problems, if addressed promptly. In all aspects of life, we surround ourselves with experts – if we break an arm, we go to a doctor, and the same applies to cash flow problems or other financial challenges. Outsourcing the review and forward planning of these business pressure points provides a fresh perspective, especially if provided by industry experts who can draw from a wide pool of resources.

Compliance, including the cost of compliance and tax legislation, has also been identified as a leading driver of negative wellbeing over the past six months. However, in our two-week survey window, there was a significant increase in the proportion of business leaders feeling positive about meeting regulations and compliance. Again, this could suggest increased confidence and certainty around tax policy post-election. Furthermore, both National and ACT campaigned on cutting ‘red tape’ and making it easier to do business. When completing your strategic planning for 2024 it is key to keep these potential changes in mind and to create open communication with your accountant to ensure your practice management is aware of impending tax policy changes and is ready to maximise any benefits.

Looking ahead positively, there has been a large increase in the percentage of business leaders expecting to feel positive about business performance in six months’ time, a sentiment which has been a long time coming.

While we are still in a period of uncertainty, for the first time in a long time, business leaders are feeling optimistic. For business owners who are bold, brave and proactive enough, the moment has arrived to turn this optimism into opportunities.

Focus on Business is supported by The Independent Optometry Group (IOGroup).

David Pearson is an advisory consultant with chartered accountants and business advisors BDO Hawke’s Bay. He has a special interest and extensive experience in providing advisory services to the optometry sector. Contact David at david.pearson@bdo.co.nz or visit www.bdo.nz