Survey: optimism ticks up as revenues lag

More than half of New Zealand’s small business owners say they are optimistic about the future, despite less than half reporting revenue increases over the past year, reports the latest Canstar Small Business survey.

The survey of more than 700 business owners, conducted through July and August, found 55 percent were optimistic about the future of their businesses, up from 49 percent last year.

Less than half (44 percent) said their revenue had increased over the past year, although that was a significant jump from the previous 12 months.

The increase comes as small businesses implement artificial intelligence into their workflow and rely more heavily on online sales.

Canstar’s survey gives numerous insights into the ‘mood’ of the small business sector, and identifies which providers are considered the best in the market. The results showed that Xero is, for the fifth year running, winner of Most Satisfied Customers, Accounting Software.

Jose George (pictured), Canstar New Zealand’s GM, says Xero’s repeat win of this award showed how important its software was to its customers, and how its focus on simplifying business made it a firm favourite.

Xero Country Manager, NZ Bridget Snelling says they are delighted to be recognised by Kiwi small businesses for the fifth consecutive year. “It reaffirms our ongoing focus on helping small businesses achieve their goals – particularly in what has been a very challenging economic climate.”

Mr George also noted that the uptick in small business owners reporting an increase in revenue was positive.

“Small business owners have been doing it really tough the last few years, and those who got through COVID will be battle weary. We’ve hurtled straight into new crises, including a labour shortage, the spike in inflation and cost pressures on households and customers.

“Small business owners are continuing to face multiple challenges to their long-term viability. Many will be analysing their business structures and revenue streams to ensure they can continue to grow in a rapidly changing world. This is where technology will really help.”

A more downbeat mood was reflected in the NZIER’s quarterly business opinion survey, which showed a net 59 percent of businesses expect deterioration in general economic conditions over the coming months. The survey showed the retail sector was the most pessimistic, with a net 64 percent expecting a worsening in economic outlook.

The role of AI

Canstar’s survey highlights how small businesses are pivoting as they find ways to streamline and save on costs. The majority of small business owners (65 percent) are already using, or saying they intend to use, AI. Two-thirds are using it for social media, 59 percent for communications and 64 percent for marketing. Nearly a third are using it for strategy.

This year’s increase in revenue compares favourably to past years, conducted when small businesses were still suffering the impacts of COVID, including lockdowns, a drop in customers and staff sickness.

This year, less than a quarter (22 percent) said their revenue had dropped, compared to a third last year and 34 percent in 2021. Over the three years, those who said their revenue remained steady was consistent.

Despite the challenges, more than a third of small business owners (36 percent) intend to expand in the next 12 months, compared to just 25 percent last year. The majority (58 percent) do not expect their employees to return to the office full time, with 62 percent saying remote working improves or doesn’t impact productivity.

Labour shortages continue to be a challenge, with 19 percent saying finding good employees is their biggest challenge. Finding funds for growth opportunities is the second biggest challenge, along with managing cashflow and increased competition.