NZ Chambers of Commerce business confidence surveys provide valuable insight into business environment

Tony Collins, Chamber of Commerce Northland.

NZ Chambers of Commerce regularly surveys its members as to their level of business confidence.

The Financial Times describes business confidence as an economic indicator that measures the amount of optimism or pessimism that business managers feel about the prospects of their companies and organisations.

Results will vary from area to area and on where the country is in an economic cycle. Also, as a rule most business owners who respond to these surveys seem to have a more optimistic view of their own business than other people's businesses.

In general, having a sense of how people perceive the environment in which they are working is useful, as their levels of confidence will impact on decisions they make as to hiring staff or investing in and growing their businesses.

There are many factors that influence this confidence.

It is this optimism or pessimism that underpins many businesses appetite for risk. So, when uncertainty exists around what is happening that is beyond the business owners control, they may well think differently about the decisions they make.

This is not to say business should expect to operate in an unchanging environment and nor do they. They accept things are dynamic and much of what impacts on them is beyond their control.

For this reason alone, their perceptions based on what they observe are at times fragile and can be influenced by those who set policy and allocate tax or rate payer resources.

The more uncertain the times, the more critical and resilient the owner must be. People today are much more aware of the economic environment they exist in than in the past.

The fact there are so many more channels though which information can be consumed can lead to some businesses becoming more reactive and less strategic than may be in the best interests of them and the communities in which the operate.

Increased awareness of economic news results in increased awareness in broad concepts relating to cycles of good times and bad. They accept that good times will not last for ever and that many businesses have experienced downturns in the past.

These past experiences influence how they behave today and how they prepare for the future. While the messages contained within clear unambiguous statements of intent may not always be the message businesses want to hear, clarity of message from local or central government will at least better empower them when deciding what level of risk, they wish to take.

■ Tony Collins is the Northland Chamber of Commerce's chief executive.