NZ SMEs to outstrip Australians in 2014

29 January 2014

NZ business confidence soars over AU
Currency challenge as AU$ falls
Internet offers new possibilities for SME export economy

2014 will be a good year for trans-Tasman success – especially for New Zealand SMEs, who expect to outpace their Australian counterparts by a considerable margin.

According to the latest analysis by New Zealand’s largest accounting software provider, MYOB, local SMEs are expecting to outperform their Australian cousins across a number of key measures in 2014 – including confidence, revenue expectations, and sector based growth. The company’s first Trans Tasman report, released today, highlights that New Zealanders are enjoying some of the highest levels of confidence seen over the last decade.

MYOB CEO Tim Reed says, “In 2014, both Australia and New Zealand enjoy the prospect of improving economic conditions. Here, the effects of the Canterbury rebuild and growth in Auckland, combined with the rural sector’s performance, are underpinning what is likely be one of the most significant and sustained periods of growth in the country’s recent history.

“In Australia, businesses are more optimistic about growth in the year to August 2014 than they were in the previous 12 months, but the opportunities are probably at least six to 12 months behind where New Zealand sits. Although the winding down of the mining boom remains a concern, investment in construction is on the rise, and the falling Australian dollar is helping both exporters and the tourism economy.”

The comparison report, created as part of MYOB’s long-running Business Monitor research, highlighted that Australia’s SME economy fell behind New Zealand’s in 2013. In the year to August 2013, 39% of Australian SME operators reported a fall in revenue while just 18% recorded a revenue increase. In contrast, 30% of New Zealand SMEs reported an increase in revenue in the year to August 2013, while 24% saw their revenues decline.

Although revenue falls outweighed gains in 2013, Australian operators have greater performance expectations for this year. A quarter (25%) expect to see revenue improve in the 12 months to August 2014, while 22% believe revenue will be down. New Zealand’s expectations are almost double that, with 43% forecasting an increase in revenue in 2014, and just 10% a decline.

“Where the differences are particularly evident is in the relative performance of key sectors,” says Mr Reed. “New Zealand’s construction, retail, manufacturing and rural sectors are all expecting to outperform Australia’s.”

The Australian manufacturing and wholesale, and construction and trades industries expect to see some of the lowest growth when compared to other industries. Only 17% of both sectors expect annual revenue to increase.

By contrast, in New Zealand, two of the sectors expecting the best performance in 2014 are construction and trades and a resurgent manufacturing and wholesale industry. 59% of the latter expect to see a revenue increase in the year to August 2014, the largest of any sector, while 44% of construction and trades businesses expect growth, rounding out the top three performing industries.

“New Zealand business operators should enjoy a sense of pride in how well they are doing, after facing some of the most difficult challenges the country has seen from both prevailing economic conditions and a series of natural disasters,” says Mr Reed.

“But, it’s worth remembering how important the Australian market is to this country, and ensuring your business is well positioned to enjoy any opportunities that may arise – particularly as the Australian economy improves.”

For SMEs to take full advantage of the opportunities a trans Tasman trade boom might bring, Tim Reed recommends local operators take a new look at their online strategy.

“One of the most efficient and cost-effective ways to crack any market – international or closer to home – is to make the most of the internet and the opportunities it affords for increasing both customer inquiry and revenue,” he says.

“Technology, and in particular internet technology, is an irreversible force that is continuing to pervade the business communities of both countries. As SMEs embrace the potentially transformative benefits of the cloud and other available technologies, we see an increase in productivity that delivers real benefits for both economies.

“Despite the challenges and pressures both countries face, SME operators have proven themselves to be continually resourceful and resilient, regardless of the prevailing economic conditions. And the good news for Australasia is that both countries are poised to end 2014 in a better place than where they started.”

ENDS

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