Rural businesses target growth strategies

15 June 2016

Rural businesses target growth strategies

Fieldays focus on helping rural businesses shift to the cloud

Despite the challenging effects of the dairy downturn, businesses in rural New Zealand remain focused on growth strategies, with strong investment intentions for the coming year according a new report on the sector released on the eve of Fieldays.

The latest MYOB Colmar Brunton Business Monitor survey of 210 businesses from across rural New Zealand highlighted that over half (57 per cent) acquired new machinery and equipment in the last year, a third (33 per cent) invested in technology and just under a quarter (23 per cent) spent money on employee training.

MYOB General Manager James Scollay says the sector’s record of investment over the last year highlights not only its resilience but also how strongly focused operators have focussed on up-skilling themselves and investing in productivity enhancements for their operations.

“Despite pressures on the sector, our primary industries and other rural-based businesses are have been focusing on new strategies, skills and technologies as a means of offsetting the worst of the commodities downturn,” says James Scollay.

“Over the next year a large proportion are planning to broaden their investment in IT systems and processes or work with business advisers in order to streamline their operations and find new productivity benefits.”

“With the rural world focused on Fieldays, MYOB wants to help rural businesses to succeed. We’ve got a great Fieldays offer for new customers in attendance – 50 per cent off our Essentials or AccountRight cloud-based accountancy software products for the first year.

“For farmers and other small business owners, managing the fundamentals of their businesses in the cloud helps them to take control of their economic future and delivers huge productivity gains. Fieldays attendees are welcome to come by our stall to learn how their businesses can take advantage of this technology.

Improving outlook

Although revenue in rural New Zealand was behind the national average in the last 12 months, the outlook is stronger for the coming year.

Just 30 per cent of rural businesses reported revenue growth in the year to March 2016 compared to a national average of 37 per cent, while 34 per cent saw revenue fall (21 per cent of all SMEs). Growth in businesses directly involved in the primary industries was even more constrained, with 26 per cent seeing revenue increase in the previous 12 months and 43 per cent reporting a fall.

However, in the year to March 2017, 31 per cent of rural businesses and 29 per cent of primary industry SMEs expect to see their revenue increase, while 28 per and 33 per cent respectively are forecasting a revenue decline.

Sector hard hit by dairy downturn

While a quarter of all New Zealand SMEs saw some effects from the dairy downturn, the impact was understandably strongest throughout rural New Zealand. Thirty four per cent of rural-based enterprises reported an impact on revenue, along with 43 per cent of primary sector businesses. SMEs in rural areas also saw consumer confidence take a significant hit (39 per cent of rural businesses and 45 per cent of primary industry businesses).

Technology holds the key

Despite being strongly dissatisfied with their internet access, with nearly half of all rural businesses unhappy with the speed and cost of their connection and just 6 per cent connected to ultra fast broadband, rural businesses are nonetheless convinced of the importance of technology for their business.

Over two thirds (67 per cent) believe the rural broadband initiative would have a positive impact on their business – if they could get a connection.

Levels of online activity have also increased dramatically for rural businesses in the last 12 months, up from just 27 per cent a year ago, to 42 per cent. This is being driven by the benefits they are seeing in terms of more lead generation (60 per cent), ease of doing business for customers (45 per cent) and increased competitiveness (40 per cent).

James Scollay says the greater willingness to invest in and adopt new technology is beginning to pay real dividends for the rural sector, and is likely to help businesses engaged with the primary industries protect against some of the downside risks in the market.

“In nearly every aspect of rural life, technology has the power to transform business, improving efficiencies and productivity, opening access to new markets and trimming costs,” says James Scollay

“In doing so, it can help protect rural industries against the fluctuations in the market and the environment.

“In our latest MYOB Business Monitor, it has been heartening to see more rural business operators embracing the potential of technology. For others, it may be time to take a look over the fence at the benefits and advantages your neighbours are enjoying,” he says.

To see the full MYOB Rural Business Monitor report, visit: www.myob.co.nz/ruralreport.

-ends-

© Scoop Media