New Zealand – Amongst small businesses in New Zealand, about 33.2% grew, compared to 41.9% that shrank, while 56.1% expect to grow in 2022, which is an improvement from last year but still lags the average of 61.9%, according to a new survey by professional accounting body CPA Australia.
The new survey reveals that small businesses in the country continue to be significantly less likely to earn revenue from online sales. More than 35% do not earn any revenue online, compared to just 1.3 % of businesses in Mainland China.
Moreover, the same survey found that NZ small businesses were also the third least likely to begin or increase their focus on online sales as a reaction to the pandemic. Also, nearly 30% made no investment in technology in 2021, compared to just 5.2% of surveyed businesses in Vietnam.
Meanwhile, more than 35% of NZ small businesses have not adopted new payment technologies such as Apple Pay, Paypal or buy now pay later, compared to 0.1% of Mainland Chinese businesses, and about 36.8% did not use social media for business purposes, compared to the survey average of 17.2%.
Gavan Ord, CPA Australia’s senior manager of business policy, noted that results are somewhat surprising given the country’s success in limiting the impact of COVID-19 in 2021.
“Improved expectations for 2022 reflect a more confident economic outlook, along with a higher percentage of small businesses intending to invest in innovation and exporting. However, the economic environment has become more challenging for NZ small businesses recently, with inflation and interest rates rising, oil price shocks from Russia’s invasion of Ukraine, and the effects of Omicron still reverberating throughout the economy,” said Ord.
He further shared that a possible explanation for the lower levels of technology investment by NZ small businesses is the poorer short-term returns they deliver. Of those businesses that did invest, only 32.3% said the investment improved their profitability, compared to the survey average of 53.6%.
“This demonstrates the need to improve the digital skills of our small businesses and for them to seek advice to ensure they adopt the right technology solutions for their business,” added Ord.
CPA Australia noted that another possible reason for a relative lack of investment in digital capability is the demographics of the country’s small business sector. New Zealand was the second most likely of the 11 markets surveyed to have respondents aged 50 or over, and only 24.8% of respondents were aged under 40, against a survey average of 45.2%.
The survey also shows that New Zealand small businesses do, however, take the threat of cyberattack seriously, while 30.3% thought an attack was likely in the next 12 months, about 42.6% reviewed their cyber defences in the last six months, comparable to the survey average of 46.7%.
Moreover, the responses to questions regarding external funding and business growth appeared in part to reflect the different government policy responses last year to the pandemic. Some 45% of NZ small businesses required funds from an external source in 2021. Of those, only 24.8% sought funds for business growth, while 40.4% said they sought funds for business survival.
New Zealand was also the only market in which ‘government grant or funds’ was the most cited source of funds with 28.4%, and only 24.1% said a bank was their main source of external finance.
Meanwhile, only 28.1% of NZ small businesses expect to increase employee numbers in 2022, this is a sharp improvement in 2021, when only 11.3%t of businesses expected to increase their staffing levels.
“This result reflects stronger growth expectations for 2022, but achieving it may prove difficult for many businesses due to labour shortages”, said Ord.
He added, “Year after year, the survey results show a clear connection between increased investment in technology and digital capability, and business growth. That helps explain why many New Zealand small businesses are confident they will grow faster in 2022 than they did in 2021.”