Despite the challenging effects of the dairy downturn, businesses in rural New Zealand remain focused on growth strategies, with strong investment intentions for the coming year according a new report on the sector released on the first day of Fieldays.
The latest MYOB Colmar Brunton Business Monitor survey of 210 businesses from across rural New Zealand highlighted that over half (57 per cent) acquired new machinery and equipment in the last year, a third (33 per cent) invested in technology and just under a quarter (23 per cent) spent money on employee training.
MYOB General Manager James Scollay says the sector’s record of investment over the last year highlights not only its resilience but also how strongly focused operators have focussed on up-skilling themselves and investing in productivity enhancements for their operations.
“Despite pressures on the sector, our primary industries and other rural-based businesses are have been focusing on new strategies, skills and technologies as a means of offsetting the worst of the commodities downturn,” says James Scollay.
“Over the next year a large proportion are planning to broaden their investment in IT systems and processes or work with business advisers in order to streamline their operations and find new productivity benefits.”
“With the rural world focused on Fieldays, MYOB wants to help rural businesses to succeed. We’ve got a great Fieldays offer for new customers in attendance – 50 per cent off our Essentials or AccountRight cloud-based accountancy software products for the first year.
“For farmers and other small business owners, managing the fundamentals of their businesses in the cloud helps them to take control of their economic future and delivers huge productivity gains. Fieldays attendees are welcome to come by our stall to learn how their businesses can take advantage of this technology.
Although revenue in rural New Zealand was behind the national average in the last 12 months, the outlook is stronger for the coming year.
Just 30 per cent of rural businesses reported revenue growth in the year to March 2016 compared to a national average of 37 per cent, while 34 per cent saw revenue fall (21 per cent of all SMEs). Growth in businesses directly involved in the primary industries was even more constrained, with 26 per cent seeing revenue increase in the previous 12 months and 43 per cent reporting a fall.
However, in the year to March 2017, 31 per cent of rural businesses and 29 per cent of primary industry SMEs expect to see their revenue increase, while 28 per and 33 per cent respectively are forecasting a revenue decline.
Sector hard hit by dairy downturn
While a quarter of all New Zealand SMEs saw some effects from the dairy downturn, the impact was understandably strongest throughout rural New Zealand. Thirty four per cent of rural-based enterprises reported an impact on revenue, along with 43 per cent of primary sector businesses. SMEs in rural areas also saw consumer confidence take a significant hit (39 per cent of rural businesses and 45 per cent of primary industry businesses).
Technology holds the key
Despite being strongly dissatisfied with their internet access, with nearly half of all rural businesses unhappy with the speed and cost of their connection and just 6 per cent connected to ultra fast broadband, rural businesses are nonetheless convinced of the importance of technology for their business.
Over two thirds (67 per cent) believe the rural broadband initiative would have a positive impact on their business – if they could get a connection.
Levels of online activity have also increased dramatically for rural businesses in the last 12 months, up from just 27 per cent a year ago, to 42 per cent. This is being driven by the benefits they are seeing in terms of more lead generation (60 per cent), ease of doing business for customers (45 per cent) and increased competitiveness (40 per cent).
James Scollay says the greater willingness to invest in and adopt new technology is beginning to pay real dividends for the rural sector, and is likely to help businesses engaged with the primary industries protect against some of the downside risks in the market.
“In nearly every aspect of rural life, technology has the power to transform business, improving efficiencies and productivity, opening access to new markets and trimming costs,” says James Scollay.
“In doing so, it can help protect rural industries against the fluctuations in the market and the environment.
“In our latest MYOB Business Monitor, it has been heartening to see more rural business operators embracing the potential of technology. For others, it may be time to take a look over the fence at the benefits and advantages your neighbours are enjoying,” he says.
To see the full MYOB Rural Business Monitor report, visit: www.myob.co.nz/ruralreport.
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Fieldays offer terms and conditions:
Offer only available during National Fieldays 15 to 22 June 2016. Offer not available to existing MYOB subscription, businesSUPPORT or MYOB BankLink customers. Offer is available for the first 12 months of an MYOB Essentials or MYOB AccountRight subscription, after which monthly pricing will revert to the Recommend Retail Price (RRP). No contract period is required for MYOB Essentials. For more information including up to date pricing, check myob.co.nz. Offer cannot be used in conjunction with any other MYOB offer.
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MYOB (ASX:MYO) is a leading cloud based business management solutions provider. It makes business life easier for approximately 1.2 million businesses across Australia and New Zealand by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB 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 in 2015 was awarded the BRW award for the most innovative large company for 500+ employees and placed 2nd in BRW’s Most Innovative Companies Award list across all categories nationally. For more information, visit myob.co.nz or follow @MYOB on Twitter.
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 January/February 2016. 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.