SME revenue steady, but employers wary of what the future holds

27 Jun 2019

·       42% of Kiwi employers expect economy to decline over the next 12 months

·       30% report increase in revenue since June 2018, while 28% report a decrease

·       41% agree Government spend in skills and training will have positive impact on business

While growth remains steady, SME employers still lack confidence in the economy according to the latest research from leading accounting software provider MYOB.

The company’s Business Monitor Employers’ Snapshot – a survey of more than 300 local SME employers nationwide conducted in June – found that earnings in the last year were finely balanced. Nearly a third (30%) of business operators said their revenue had increased since June last year, while 28% said it had decreased. Around two fifths (39%) said revenue was about the same.

MYOB country manager Ingrid Cronin-Knight said SME earnings look on course to continue to grow over the next 12 months.

“For a lot of employers, it’s steady as she goes, with most business expecting their own returns to be the same or better over the next 12 months,” she said.

More than a third (36%) of New Zealand’s SME employers said they expect their business’ revenue to be up in 12 months’ time, while only 22% said they expect it to be down. Thirty-eight percent said they expect their business’ revenue to be the same.

The short-term outlook is also solid, with a third (33%) of the sector’s employers saying they have more work in the pipeline for the third quarter of the year, while a quarter (25%) said they have less work than usual in the next three months. 

Although more bullish about their own prospects, more than two fifths (42%) said they expect the New Zealand economy to decline over the next 12 months, while only 24% said they expect it to improve.

Ms Cronin-Knight said employers have a lot to manage, particularly in terms of compliance and competitive pressures, and are also faced with a number of issues outside of their control – leading to consistently low levels of confidence.

“Internationally, it seems like there’s a new crisis every week – the US/Iran conflict, Brexit, trade wars – and these threats to international security and trade could have a major impact on the global economy,” she said. “Closer to home there’s increasing speculation about how much underlying strength remains in the current growth cycle.”

“So, if you’re an employer, you’re going to be thinking about the potential impact these things will have on the New Zealand economy and your business.

“On top of that, employers are also having to manage all of the everyday challenges that come with running a small to medium sized business. While revenues are stable they’re not stellar, which would likely give employers greater confidence,” said Ms Cronin-Kinght.

Business operators are welcoming the Government’s initiative to increase investment in skills and training programmes, announced in the Budget. Attracting skilled employees has been consistently identified by SMEs as a key pressure for more than 10 years of the MYOB Business Monitor survey.

More than two fifths (41%) said having the ability to attract appropriately skilled and trained employees would have a positive impact on their business. Nearly half of the businesses in the 20 – 49 employee range (49%) and those with more than 50 employees (47%) were pleased with the Government’s emphasis on skills and training.

“Being able to employ suitably qualified staff will be a relief for the business owners who struggle to attract and retain talent,” she said. “It’s a solution to a growing problem, which may give more businesses confidence to invest in their growth.”