NZ SMEs enter 2025 with improved sales outlook

Nearly a third of New Zealand’s small and medium-sized enterprises (SMEs) are starting 2025 with stronger-than-expected sales pipelines for the first quarter, according to new research from MYOB.

A nationwide survey of over 500 SME owners and decision-makers found that 30 percent reported more work lined up for January to March than they typically expect. Meanwhile, 41 percent indicated that their sales pipelines remained steady, while 27 percent reported having fewer work commitments than anticipated.

This follows a challenging end to 2024, during which 43 percent of SMEs experienced lower-than-expected sales for the final quarter. In contrast, 37 percent of businesses saw sales in line with expectations, while just 18 percent exceeded their forecasts.

MYOB Chief Customer Officer Dean Chadwick says the improvement in SME sales outlook is a positive sign for 2025, despite ongoing concerns around inflation and the global economy.

“Inflation and the cost of living continue to influence SME confidence coming into 2025, as well as factors like transport costs, the country’s economic performance, and interest rates,” says Chadwick.

“Many will also be keeping a close eye on international markets with more change likely over the next 12 months.

“However, reinvigorated demand for their goods and services as consumer confidence increases will help to ease some of the pressures many business owners have been feeling over the past few years. While it’s certainly still early days, it’s heartening to see local SMEs are beginning the year with more momentum than many will have seen in some time.”

The survey found that medium-sized businesses (50-99 employees) are particularly optimistic about 2025. Among this group, 57 percent reported a stronger-than-expected sales pipeline for the first quarter, following a solid performance at the end of 2024, where 33 percent saw higher-than-forecast sales.

As signs of economic recovery emerge, many SMEs are shifting their focus toward business improvements.

According to the survey, 24 percent of business operators plan to increase spending on improving their operations this year, while 50 percent intend to maintain their current investment levels. However, 21 percent of SMEs plan to cut costs in this area.

Marketing and sales are set to be the biggest investment priorities, with a third (33 percent) of SMEs planning to allocate most of their budget to these areas. Other key investment areas include technology and digital transformation (28 percent), equipment and machinery upgrades (25 percent), team training and development (24%), and customer experience enhancements (19 percent).

“As local business owners look to stimulate growth this year, it’s all about the customer – driving foot traffic and attracting new custom by homing in on their marketing and sales activities,” says Chadwick.

“Then, it’s about doing what they can with their teams to keep these customers returning and improving the customer experience.”

He adds that the continued focus on technology investment will help SMEs maximise their growth potential.

The research also highlights the importance of innovation for SMEs, with half of those surveyed considering it crucial for business success. Over a quarter (27 percent) of SMEs see innovation as a significant priority, with the median estimated spend on innovation for 2025 sitting at just over $33,000.

Investment in innovation varies by sector, with manufacturing and construction SMEs planning to spend the most. The median investment for manufacturing businesses sits at $74,000, while construction and trade businesses expect to allocate around $63,330.

“In determining how much they’ll spend on innovation, we know local business operators are still carefully balancing lower demand volumes and higher costs, so it’s a delicate trade-off between managing those challenges and exploring innovation as a way to help boost their business performance,” says Chadwick.

“If business owners bed down their investment plans now, they will be better positioned to start realising their ambitions – whether that is business expansion, revenue growth, or upskilling their teams – when they enter the new financial year.”