SMEs seeing the highest growth levels in five years

10 Sep 2014

Growth now spreading to the regions

The performance of local SMEs has steadily improved over the last 12 months, with local businesses across the country reporting the highest levels of revenue growth recorded in the last five years.

Thirty-nine per cent of SMEs saw revenue increase in the last 12 months according to the September MYOB Business Monitor survey of over 1,000 business owners and operators from around the country, conducted by Colmar Brunton.  The proportion of SMEs reporting revenue growth has risen from 35% in March and 30% in September 2013. Fewer businesses also saw revenue fall: 19%, down from 21% in March.

MYOB CEO Tim Reed says it is heartening to see New Zealand’s SME sector in such good shape.

“What’s particularly positive is that growth is no longer confined to just the two largest centres, with the rebuild in Christchurch and the expansion of Auckland no more the only drivers of the economy,” says Mr Reed.

“This latest MYOB Business Monitor paints a picture of a whole country enjoying solid levels of economic growth.”

Positive news for the regions

Although Christchurch SMEs continue to report the highest growth levels, with over half (51%) of the SMEs in the city seeing revenue improve in the last 12 months, the Monitor has also highlighted strong revenues in the regions.

In the March report, a number of North Island areas, including Bay of Plenty (21%), Manawatu/Wanganui (24%) and Northland (27%), were well below the national revenue growth average of 35%. The latest Business Monitor shows the regions much closer to the national average of 39% revenue growth, with just Wellington experiencing reporting subdued revenue.

CENTRE/REGION

YEAR TO AUGUST 14 - REVENUE UP

YEAR TO AUGUST 14 -REVENUE DOWN

Northland

38%

18%

Auckland

38%

24%

Waikato

44%

10%

Bay of Plenty

45%

18%

Hawkes Bay

37%

12%

Manawatu/Wanganui

35%

22%

Wellington

28%

27%

Christchurch

51%

11%

Otago/Southland

37%

18%

Strong turn-around in key sectors

The past six months has also seen a significant turnaround in key sectors of the SME economy. The retail and hospitality sector, which in March 2014 reported revenue falls (33%) outweighing gains (30%), has experienced a major improvement. In the latest survey, 43% of retail and hospitality SME operators have seen revenue increase in the 12 months to August 2014, while just 23% report a fall.

The primary sector has also recorded an improved performance, with 41% of operators in the agriculture, forestry and fishing industry seeing a revenue rise in the past 12 months, up from 29% in March. The industry also has the lowest numbers reporting falling revenue over the period – just 13%.

The logistics sector has experienced the largest fall off in growth over the past 6 months, with 24% reporting an annual revenue increase, down from 36% in March. However, the industry is experiencing a high level of stability, with nearly half (49%) reporting steady revenue in the year to August 2014.

Fuel prices still concerning businesses

The main concern of SMEs over the next 12 months is the rising cost of fuel, with over a quarter expecting pain at the pump – including 52% of transport industry businesses and 36% in the primary industries.

Pressures on SMEs in next 12 months

  1. Fuel prices - 26%
  2. Interest rates - 21%
  3. Cash flow - 19%

Steady growth ahead for 2015

Looking ahead to 2015, SME operators are expecting similar levels of growth to those they experienced this year, with 38% forecasting revenue to increase in the next 12 months, and 43% expecting steady revenue levels. Just 11% expect to see revenue fall in the next year.

Several of the regional economies that reported strong growth this year, should see that trend continue, as SMEs forecast high revenue levels for 2015. Northland and Manawatu/Wanganui in particular – regions that have often struggled somewhat through the five years of the Business Monitor survey – are expected the strongest levels of growth in 2015.

REGION

YEAR TO AUGUST 15 - REVENUE UP

YEAR TO AUGUST 15 -REVENUE DOWN

Northland

45%

4%

Auckland

43%

12%

Waikato

39%

17%

Bay of Plenty

37%

16%

Hawkes Bay

31%

20%

Manawatu/Wanganui

45%

10%

Wellington

33%

13%

Canterbury

43%

5%

Otago/Southland

22%

10%

Jobs and wages also up in 2015

The positive performance of SMEs will translate into jobs in 2015, with 10% of the operators surveyed planning to increase the number of full time staff they employ in the next year, and 13% planning to increase the number of part time positions. It will also support wage growth across New Zealand, with 20% of SME operators planning to increase wages and salaries in the coming 12 months.

“New Zealand’s SMEs have earned the rewards they are currently enjoying,” says Tim Reed. “Achieving this current level of growth has been hard fought, and hard won and we congratulate them on their success.”

“Over the coming months, many business operators will be looking to consolidate gains, and invest more in their people, their systems and their operation, so they can enjoy these benefits for some time to come – no matter what the global economy may do over the years ahead.”

“A key part of that will be their investment in technology to make their business more streamlined and efficient, and getting the expert advice they need to maximise the benefits of this period of sustained growth.”

For MYOB product information, research results, business tips, discussions, client service and more visit the MYOB website, or its blog, LinkedIn, Twitter, Facebook, Instagram and YouTube sites.

-ends-

For further comment or other information please contact:

Sarah Putt,MYOB NZ Public Affairs Manager

P: 09 925 3515 / M: 029 777 0256/ E: sarah.putt@myob.com

Gerard Blank,The Agency Communications Limited Director

P: 03 341 5841 / M: 0275 243 629 / E: gerard@theagencynz.co.nz

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, mobile payments 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 myob.co.nz.

About the MYOB Business Monitor

The MYOB Business Monitor is a national survey of 1,000+ New Zealand small and medium business owners and managers, from sole traders to mid-sized companies, representing the major industry sectors. It has run since 2009, commissioned to independent market research firm Colmar Brunton. This most recent survey ran in July/August 2014. The Monitor researches business performance and attitudes in areas such as profitability, cash flow, pipeline, technology usage and the government. The weighting of respondents by both geographical location and sector is based on overall market proportions as established by Statistics New Zealand and is drawn from an independent survey group, which includes both MYOB clients and non-clients.