Survey of South Island business leaders reassuring

Follow-up survey of South Island business leaders reassuring

South Island businesses are more optimistic in the aftermath of the triple major events that rocked the South Island last month than previously, according to a resurvey of South Island business leaders following the Canterbury earthquake, the collapse of South Canterbury Finance and the severe southern snowstorms.

The follow-up survey, conducted by business advisors Polson Higgs and McCulloch and Partners, compared key results with those of its previous survey, which was completed at the end of August just before the major events.

Michael Rondel, a partner of Polson Higgs, said the aim of the follow-up survey was to examine whether the events, which rocked the South Island had affected business confidence and growth expectations.

“Profitability expectations have edged up, with 51% of respondents now expecting their business’ profitability to increase, compared with 47% before these events,” Rondel said.

The resurvey showed that business sentiment had changed in some areas. In the original August survey, 52.5% of businesses expected competition to increase – this has dropped to 45%. The slight decline in competition is reflected in the expectations of an increase in profitability.

Key findings included expectations of:
• A decrease in business competition
• Increased profitability
• Reduced cost of finance
• More demand for professional services
• Unchanged availability of finance
• Higher IT investment

One of the biggest changes between the two surveys was in the cost of finance, where before the major South Island events 84.9% thought that these costs would increase compared with 74.5% in the follow-up survey.

There was a significant increase in those planning to get professional advice during the next 12 months – the figure jumping from 30% to 50%.

IT infrastructure continued to be a primary focus for businesses. In the August survey, more than half of the respondents had increased their investment in IT infrastructure, and this has now edged up to 58%.

“The follow-up survey really highlighted the positive response by businesses to the recent challenges, perhaps an indication of the resilience of South Island business leaders to adapt in a changing environment,” Rondel said.

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