SME ECONOMY IN THE LIMELIGHT
SMEs expecting bumper year – almost half forecasting revenue growth
Christchurch outstripping Auckland Manufacturing posts remarkable turnaround
The SME sector can take a bow as a major contributor to New Zealand’s
‘rockstar economy’, according to the latest research data from leading
accounting software provider, MYOB.
The March MYOB Business Monitor, released today, highlights that New
Zealand’s small and medium businesses have enjoyed the highest levels of annual
revenue growth seen in more than four years. It also shows expectations are for
an even better 12 months ahead.
35% reported revenue growth in the year to February 2014 – up five percentage
points on the August 2013 Monitor. 42% saw steady revenue, while just 21%
reported a fall. Looking ahead to 2014, 47% of operators expect their revenue to
improve – up four percentage points on August. 38% expect it to remain the same
and just 11% expect a fall.
MYOB CEO Tim Reed says, “This latest MYOB Business Monitor highlights the
importance of the role SMEs have played in the country’s recovery and continue
to play in its future growth. The hard work and resilience of New Zealand’s SME
sector, the very coalface of the economy, is now bearing fruit in the strongest
growth we have seen in almost five years.”
“Much of the public focus has been on the effects of the Christchurch
rebuild, the performance of our major exporters and the housing markets on the
growth in the economy. These factors are clearly evident in the survey, however
there is plenty of positivity in other areas.”
Mr Reed points in particular to the ‘remarkable’ turnaround in the country’s
manufacturing sector, saying, “Just over a year ago, many commentators were
expressing alarm at what they saw as a crisis in the New Zealand manufacturing
industry. Yet in the last 12 months, our local manufacturers have seen more
revenue growth than any other sector, and in 2014, they expect to do even
According to the survey, 53% of manufacturing businesses saw revenue improve
in the 12 months to February 2014, while only 14% reported a fall in revenue.
70% expect revenue to rise over the next 12 months and just 1% expect a fall.
“In looking across the industries, only the country’s retail and hospitality
sector has continued to struggle, with revenue falls – 33% – outweighing gains –
30%,” said Mr Reed.
“Having said that, this sector has seen steady improvement in the last six
months and is confident of a positive 2014, with half expecting to see revenue
Fuel prices still weighing on businesses
Consistent with previous Monitor reports, the cost of fuel remains the number
one pressure faced by local SMEs. A quarter believe it will place significant
pressure on their operation in the year ahead. Interest rates are seen as the
next biggest concern, followed by cash flow, price margins and competitive
activity – ranked an equal third by business operators.
2014 pressures on SMEs:
1. Fuel prices - 25% 2. Interest rates - 22% 3. Cash flow; Price margins and
profitability; Competitive activity - 21% apiece Wages and prices on the up The
next challenge for the country could be rising inflation, as upward pressure
moves on both wages and prices. Almost a quarter (23%) of SMEs expect to
increase wages this year, while 11% will increase the number of full time
employees (FTEs) in the business, and 18% the number of part timers (PTEs).
“We are now seeing a growing number of employers considering taking on more
full and part time employees, and noticeably more preparing to increase wage and
salary levels,” says Mr Reed.
“Once again it is manufacturing leading the way, with 28% expecting to
increase FTEs and 35% PTEs, and 30% expecting to raise wages.”
He says the pressures of the rebuild on the Christchurch employment market,
already showing the lowest levels of unemployment in the country, may become
more acute in 2014.
“19% of Christchurch SMEs would like to increase their full time staff this
year, and 18% the number of part time employees. To no doubt help attract them,
more than a third – 34% – will increase wages.
“For consumers across the country, some of these costs will be offset by
rising prices, as 30% of SMEs intend to increase their margins in the coming
year. This is most evident in Christchurch, where 35% intend to put prices up,
and in the construction and trades sector, where 38% plan to.”
“Overall, what we are seeing is a picture of sustained and widespread growth
over most of New Zealand’s SME sector. This is really going to be their time in
the sun,” says Mr Reed.
“Of course, growth is not without challenge, and as a smaller business
operator you don’t want to be looking back over 2014 feeling like you missed
opportunities or failed to make the most of a booming economy. Things are really
looking up and if you aren’t investing now I suggest stopping in your tracks and
reassessing your plans.
“Our advice remains: work closely with your financial advisors and use
effective business systems to explore all the available opportunities. At the
same time, keep a very close eye on performance indicators to ensure costs are
not running away on you as you seek to meet growing demand. And celebrate your
successes!” For MYOB product information, research results, business tips,
discussions, client service and more visit the MYOB website, or its blog,
LinkedIn, Twitter, Facebook and YouTube sites.
For further comment or other information please contact:
Sarah Putt, MYOB NZ Public Affairs Manager
P: 09 925 3515 / M: 029 777 0256/ E: email@example.com
Gerard Blank, The Agency Communications Limited Director
P: 03 341 5841 / M: 0275 243 629 / E: firstname.lastname@example.org
About MYOB Established in 1991, MYOB is New Zealand’s leading accounting
software provider. It makes life easier for approx. 1.2 million businesses
across New Zealand and Australia, by simplifying accounting, payroll, tax,
practice management, CRM, websites, job costing, inventory and more. MYOB also
provides ongoing support via many client service channels including a network of
over 40,000 accountants, bookkeepers and other consultants. It is committed to
ongoing innovation, particularly in cloud computing solutions, and now spends
NZ$35+ million annually on research and development. For more information, visit