ANZ Bank's quarterly survey shows small business sentiment has fallen for the first time since September to a two-year low, but is still positive.
Expectations for business activity, employment and investment have fallen.
Wellington had the highest sentiment for any region for a fourth quarter in a row, while confidence in Auckland fell from a record high last quarter.
Sentiment fell across all sectors but remains upbeat, except agriculture which dropped to its lowest level in more than two years.
ANZ said the biggest challenges include regulation, low turnover and a lack of skilled workers.
It said the small business community was clearly signalling more caution.
Small firms account for 90 percent of New Zealand businesses and provide nearly one in three jobs.