New Zealand small businesses last year recorded their best results for growth and growth expectations since 2014, outperforming Australia and Singapore, according to New Zealand’s longest running longitudinal study of small business performance and sentiment.
CPA Australia’s eighth annual Asia-Pacific Small Business Survey shows New Zealand outpacing many of its competitors in the Asia region, with more than 58 per cent recording growth in 2017 and nearly 62 per cent expecting expansion this year. By comparison, growth expectations for Australia are 55.6 per cent and Singapore is 57 per cent.
Mat Croad, President of CPA Australia New Zealand, says the results demonstrate that the backbone of the economy, small business, is in robust good health.
“In outperforming bigger economies such as Singapore and Australia, New Zealand small businesses are showing they are maintaining their competitiveness on the global stage,” says Croad, who is also Group Financial Controller for Asia Pacific professional services company Beca. “This is a very encouraging result and will instil confidence in the fundamentals of the New Zealand economy.”
The findings follow extensive surveying of nearly 3,000 small business operators in Malaysia, Vietnam, Indonesia, Hong Kong, Singapore, Australia, New Zealand and China.
The survey did pick up on a significant softening in small business confidence in the New Zealand economy but Croad says the drop to 39.9 per cent expecting economic growth (down from 61.5 per cent last year) can be sheeted home to the change of government.
“There’s always an element of uncertainty that comes with any change of government and business confidence can take a hit,” Croad notes. “What matters is stimulating a rebound in confidence and the appointment of the country’s first ever minister for small business demonstrates the new government understands the importance of this sector to the overall Kiwi economy,” he says.
But Croad did point to a worrying downward trend in employment and employment intentions: Only 14.1 per cent added to their staff role last year, compared to 19.6 per cent in 2016. The result was particularly inexplicable given 24.3 per cent of businesses had signaled they intended to hire more people last year.
“In our survey, expectations have historically closely tracked outcomes but this is a real change,” he says. “It’s a worry that only 17.6 per cent expect to hire this year, but that may be a reflection of the tight labour market and business leaders trying to keep a lid on costs.
“Certainly if my intuition is correct and businesses are growing while maintaining fiscal discipline, then that will be a good news story for 2018,” Croad comments.
Small businesses continue to be laggards in their uptake of digital technology as a business tool, particularly when compared to China, Indonesia and Vietnam, while there is an ongoing reluctance by business leaders to invest in innovation, Croad says.
“Our survey shows that businesses that expect to invest in a new product, process or service that is unique to their market in 2018 are significantly more likely to grow,” he says. “I would like to see our sector invest more in order to future-proof their business in the face of the digital revolution.
“Policy-makers and others seeking to promote growth in New Zealand’s small business sector – and seeking to encourage greater digital uptake – should consider a stronger focus on the digital literacy of small business owners,” Croad says.
The CPA Australia Asia-Pacific Small Business Survey provides annual insights into the views of small businesses across the region and forms part of a longitudinal study that began in 2009.
A summary of survey results for New Zealand can be viewed here: https://www.cpaaustralia.com.au/~/media/corporate/allfiles/document/professional-resources/business-management/small-business-survey/2017-market-summary-new-zealand.pdf?la=en
The full results of the CPA Australia Asia-Pacific Small Business Survey can be viewed here: https://www.cpaaustralia.com.au/professional-resources/business-management/small-business/asia-pacific-small-business-survey