Businesses ‘more positive’
More than a third of small businesses are looking forward to a better year ahead, a new survey shows.
The annual MYOB small and medium enterprise survey shows that 41 per cent of SMEs believe New Zealand’s economy will decline this year while 34 per cent believe it will improve and 23 per cent believe it will remain the same.
By contrast, 79 per cent of SMEs staring down a potential pandemic in early 2020 thought the economy was going to worsen, a record low.
Krissy Sadler-Bridge, MYOB’s SME senior sales manager, said that although things were finely balanced, the return to positive thinking and revenue for some firms was much better than could have been expected last year.
‘‘When you consider the 12 months they have just been through, local business owners should be congratulated for not just hanging on but also finding hard-won opportunities in some of the most challenging trading conditions we have seen.’’
When it came to their own fortunes, the nationwide survey of more than 1000 businesses revealed that 27 per cent were expecting a slight increase and 41 per cent were picking their revenue to stay the same over the next 12 months.
Another quarter were expecting a drop in income but that was much improved on last year, when 40 per cent were expecting revenue to fall.
Sadler-Bridge said it was ‘‘still a fragile operating environment’’ and New Zealanders could help shore up confidence. ‘‘I would encourage consumers to continue to focus on supporting local business however they can.’’
More than a third (36 per cent) of SMEs reported their profitability had declined over the three months prior to March this year – with 12 per cent of this group admitting it had reduced by ‘‘a lot’’, although a fifth had seen profits go up since the start of the year.
This was expected to improve in the coming quarter, with 22 per cent expecting an improvement and 27 per cent expecting a decline.
The biggest economic challenge many businesses foresaw was the risk of further lockdowns (59 per cent), followed by the vaccine rollout (34 per cent), consumer confidence (33 per cent), median house prices (31 per cent) and low interest rates (29 per cent).
Sadler-Bridge said that it was
a stark contrast to the concerns last year.
‘‘At a local level, things like time and cost of compliance, health and safety regulations, and things like the value of the New Zealand dollar, they were the top three areas that were impacting on local level confidence.
‘‘And then when we look at it this time round, it is the Covid-19 pandemic itself, interestingly the vaccine rollout sits next, and then it is consumer confidence as well.’’ Vaccine concerns were probably in no small part due to staff coverage.
‘‘If you have a business where you require your staff members to travel or to be with the public significantly, you will want to make sure all your frontline staff are well protected.’’
International influences on confidence included illness
(59 per cent), the impact of border restrictions on trade (56 per cent), a possible global recession (42 per cent), relations with China (26 per cent) and climate change (19 per cent).
Among all the different sectors, the transport and logistics sector was particularly pessimistic, with half of firms believing the economy would deteriorate this year.
Following close behind were manufacturing and wholesale
(48 per cent), and finance and insurance (45 per cent).
Surprisingly, given its difficulties, tourism was as optimistic as SMEs generally, with 34 per cent believing the economy will improve. Forty-four per cent of tourism SMEs predicted otherwise.
The retail and hospitality sector was also surprisingly resilient, with 40 per cent expecting better times ahead.
‘‘. . . local business owners should be congratulated for not just hanging on but also finding hardwon opportunities in some of the most challenging trading conditions we have seen.’’ Krissy Sadler-Bridge MYOB SME senior sales manager