Is it a bad time for buying a business in NZ?

(buying a business NZ – 7 minute read)

Is it a bad time to buy a business?

The new financial year in Aotearoa NZ has kicked off with the shocking announcement of Trump’s ‘Liberation Day’ on April 3 2025. The news has sent shockwaves throughout the global economy. Business owners and entrepreneurs all around the world are facing great economic uncertainty.

In other words, it’s business as usual for business owners and entrepreneurs.

Uncertainty is something that we live with on a daily basis. Every waking moment of our lives is spent not knowing if our next paycheck will come through, or worse, if we’ll have enough to make our team’s paycheck come through. I regularly run financial coaching and forecasting sessions with my clients to mitigate some of this uncertainty. But by the end of the day, you have to stomach some level of uncertainty if you want to get into business.

I digress, let’s get back to the first question here:

Is it a bad time to be buying a business in NZ?

Let’s preface that question by talking about your expectations.

What are your expectations for buying a business in NZ?

If you’re expecting a turn-key solution that will automatically generate money for you passively while you sip cocktails on Rarotonga, well, such deals are often rare. There is usually a good reason why folks are selling up their businesses. If the business is doing so well that the owner can make passive income from it, then you should ask yourself: WHY are they selling it? Don’t get stuck with a business with aging assets that need replacement in the next year or so. There are a lot of cases of folks selling off aging businesses as ‘passive income generators’ because they can’t afford the upkeep to refurbish their assets.

If you’re expecting easy, passive money – then yes, it is always a bad time to buy a business. Unless you get lucky. Good luck.

If you’re expecting to put in some hard mahi to turn around an ailing operation (because let’s face it – most businesses that are put on sale aren’t absolute money makers) then you’ve got the right attitude to become a business owner.

If this is you, then any time is a good time to buy a business. But let’s try and narrow down the factors to find the BEST time for you to buy a business.

What are the interest rates looking like?

So you’ve done your research and settled on a business that you like (and have the skills to operate). The next step is to acquire the capital to fund your business purchase. Most business brokers have lenders that they work with who will assist you with organising finance. Or you can organise your own financing. Whatever your choice, you need to keep an eye on the interest rates.

Interest rates in Aotearoa are governed by the Reserve Bank of NZ’s overnight cash rate (OCR). Throughout 2023 and most of 2024, the interest rates were jacked up to beat inflation. This hit a high of 5.5% in Feb 2024. From Sep 2024 onwards, the interest rate has been steadily trending downwards. As of 9 April 2025, this is sitting at 3.5%.

Is the OCR low at the moment?

Relatively speaking, this current OCR level is low. Its not as low as 0.25% (which was where it was at for most of the COVID period) but given that we’re not facing a global pandemic, it is low. The reason why the interest rate has been dropping as of late is to kickstart spending to get NZ out of its current recession. However, this needs to be balanced against the need to also fight inflation which we only JUST beat – as of 22 Jan 2025 inflation is down to 2.2% from a high of 7.3% in June 2022.

I can’t say for certain if more OCR cuts are on the way. But it is safe to say that if you can arrange financing before the end of 2025, you should get a pretty good deal on your loan’s interest rate. If the economy picks up again at the end of 2025, then OCR is liable to come back up to put a damper on inflation.

Which brings us to our next point:

What is the economy looking like?

Technically speaking, NZ just climbed out of recession last month in March 2025. Inflation is down to 2.2% but unemployment has climbed to 5.1%. So its a bit of a mixed bag really. It’s too soon to tell the impact that the new USA tariffs will have on Aotearoa. The USA is our third largest trading partner, so businesses that export to the USA may find a tougher market for their goods.

That being said, in our accounting firm, we’ve been seeing a general rise in the order books of our construction clients and robust sales growth from our retail clients since the start of 2025. None of our clients trade directly with USA, so they are insulated from any tariff shenanigans for the moment. The biggest impact of tariffs will be on the price of imported supplies – however this will likely differ from nation to nation, so it’s still too soon to tell.

What’s the best kind of business to buy in this economy?

If you’re buying a business in NZ, best focus on businesses that:

Have minimal USA trade exposure (IE – most businesses in Aotearoa)
Are not reliant on international supply chains to deliver products/services

Point #1 is easy enough. Just stay clear of businesses that sell only or primarily to the USA market. Point #2 is trickier. Many retail and construction businesses rely on international supply chains so its not an issue you can easily work around. The best advice I can give for those looking at buying an import reliant business is to wait until mid-2025 to see how the USA Tariffs have impacted global supply chains. That being said, if you’re happy stomaching a bit more uncertainty, now is as good a time as any other.

Which brings us to our last point:

What is your personal financial situation looking like?

Ultimately, buying a business is a personal choice with financial implications. If you have a cushy, well-paying job, don’t throw it all away to pursue your business dreams. Heck, unemployment in NZ is the highest it has been for the past 5 years! Jobs are hard to come by right now!

Buying a business also means that you’re going to be in debt for the first 3 to 5 years of running that business. This means that your income earning capacity will likely be lesser than your current salary. It will take some time to recoup that investment. In fact, if you’re planning on transitioning from employment to business ownership, you will need to be ready for a drop in your income until the business finds its feet.

If you have a lot of financial obligations and/or many mouths to feed, now may not be the best time to buy a business. Conversely, if you have savings to fall back on and/or have a partner who can financially support you, now is a good time to buy a business. It all depends on your personal financial situation. Talk to an accountant or financial advisor for more personalised advice. Hit me up – I’m always happy to dish out some free financial advice!

Or you could start your own business from scratch?

When I got laid off in 2020, I took a leap of faith and started my own accounting firm. Up till that stage, I had never thought of starting my own business. Over the years, we’ve grown our client base and our team. I’ve also had to learn a lot of difficult lessons along the way.

But the great thing is that I started this business with a small capital of $3,000. And now it earns me many more times that amount. Starting from scratch isn’t easy, but at the time, it was the best option for me. You may be in a similar position where I was before. If you have just been laid off and are contemplating buying a business, remember that you’ve got nothing to lose from starting your own business.

The hardest thing about starting your own business is getting started. If you need help getting started, there are lots of entrepreneurs and financial experts out there who are willing to point you in the right direction (like me!).

The best time is taking your time for buying a business in NZ

Buying a business is a big deal. Don’t rush into it. Take your time and consider all your options. Have a think about why you’re wanting to buy a business. Seriously, don’t do it for the money. Instead, do it for the freedom and autonomy that owning your own business gives you. The money will come later.

Consider hiring an accountant to do due diligence work on any business you’re looking to buy. It is expensive, but if you’re looking to invest $100,000 in a business, you might as well spend a few thousand dollars more to make sure you’re not buying a dud. Talk to other people within the industry you’re looking to buy into. Try and gain some insights to the risks that you’ll be facing. If you have a partner, definitely talk to them and get their input on the business you’re looking at buying.

Is it a bad time for buying a business in NZ?