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Year-on-year revenues declined by 6 per cent in the month of January while jobs increased by almost 2 per cent, according to data from Xero Small Business Insights.
The drop in small firm earnings follows seven months of consecutive revenue growth in the June to December period.
Declines were experienced by business across all regions of the country, with Queenstown firms the hardest hit, experiencing a more than 23 per cent decline in revenue.
Big drops were also felt in Otago - revenues down 14.7 per cent, Waikato down 7.8 per cent, Bay of Plenty down 5.6 per cent and Hawke's Bay down 4.6 per cent. Auckland revenues were down 4 per cent, the least of all regions.
Xero managing director Craig Hudson said the downturn in revenue was a sign "Kiwis needed to continue to support local businesses".
"We often see small business revenue fall in January due to the holiday period, with businesses closing for the Christmas and summer break. It's always a tough month and Covid-19 has made it even harder this year," said Hudson.
It was vital that New Zealanders continued to pay small business invoices on time so that they can better manage cash flow, he said.
Xero data shows payments are 1.4 days faster than pre-crisis levels.
Job prospects positive
Job figures in January were up 1.9 per cent in January, despite falling 4.7 per cent month-on-month.
Hudson said the month-on-month drop was expected - as the trend was near identical at the start of 2020 also.
Excluding the hospitality sector, Hudson said it was encouraging to see job numbers remain positive.
Hospitality job prospects remain below pre-crisis levels - down 7.5 per cent in January, while job recovery has continued in a number of industries, including in real estate up 6.7 per cent, retail trade up 5.9 per cent, construction up 5.1 per cent, manufacturing up 4.1 per cent and professional services up 1.4 per cent.
"It's remarkable how similar job figures are year-on-year considering the Covid-19 pandemic and everything the small business sector went through last year," said Hudson.
"It's a testament to how dedicated our small businesses have been towards looking after their staff, and the support they've got from initiatives like the wage subsidies."