Small businesses predicting bumper year

There’s more evidence of a pick-up in the New Zealand economy in the latest MYOB Colmar Brunton Business Monitor survey of more than 1,000 small to medium enterprises.

The six-monthly survey reveals an increasing number of SMEs are experiencing improved trading conditions and there has been a huge turnaround in optimism about the year ahead.
When asked about their business’s revenue, 39 percent of respondents reported an increase in the last 12 months, up from 37 percent in March. Just 17 percent of SMEs saw revenue fall over the period, down from 21 percent in March and 25 per cent in August 2015.
SME operators are even more bullish on the next 12 months, with 42 percent expecting their revenue to grow in the next year, while just 11 percent are forecasting a decline.
That performance has driven a remarkable turnaround in confidence about the state of the broader economy. A net positive 26 percent of businesses are now optimistic about the economy, up from a net negative 30 percent in August 2015.
Underpinning that confidence is another strong quarter expected up until Christmas. Thirty-seven percent of SMEs have more sales or orders in the pipeline until the end of the year; while fewer than half that number have seen sales fall off.
MYOB NZ Head of SME Ingrid Cronin-Knight says improving conditions are being driven by growth in key sectors and the booming Auckland economy.
“We’re seeing a lot more confidence about the year ahead from small businesses right around the country,” says Ms Cronin-Knight. “Many SMEs are seeing gradual improvements in their revenue as fears ease about the wider global economy, dairy sector optimism improves and consumer spending picks up.”
“SMEs are often the first parts of the economy to benefit from upturns given how important cashflow is to their operations. It’s great to see optimism growing out there.”
 
Auckland driving growth
Significant momentum in the Auckland market is driving a good deal of the growth, with close to half (46 percent) of all SME operators in the city reporting improved revenue in the last 12 months. Auckland business operators are expecting that trend to continue over the coming year, with 44 percent forecasting growth for 2017, off the back of a strong quarter for the end of 2016 during which 45 percent have more work or sales in the pipeline.
Improvements in the Wellington economy have consolidated over the last year, with over a third of SMEs (35 per cent) again enjoying revenue growth, while Christchurch has fallen off the peaks reached during the height of the rebuild.
A diversified economy
The success of the local SME economy is reflecting the ability of a more diversified economy to weather international uncertainty, with growth across key sectors.
“Businesses are a lot more resilient these days. They’re getting smarter about managing their operations to get through difficult times and are now set up for a successful year ahead,” says Ms Cronin-Knight.