Embattled Smaller Businesses Face Challenging 2024

Fewer New Zealand small businesses grew in 2023 than in 2022, and fewer expect growth over 2024, results from CPA Australia’s Asia-Pacific Small Business Survey 2023-2024 show.

Small businesses cited rising costs and the state of the economy among the top reasons for 2023’s weak performance.

Only 48 per cent of businesses grew during 2023 compared with 60 per cent in 2022, placing New Zealand third last of the 11 economies surveyed.

The percentage of respondents that expect to grow over 2024 fell to 60 per cent from 66 per cent in 2023, although the percentage expecting New Zealand’s economy to grow rose to just over 50 per cent, from 40 per cent in 2023.

Increasing costs, poor overall economic environment, tax and cash flow difficulties were the top four barriers to growth amongst New Zealand’s small businesses in the latest survey.

The survey’s results also pointed to demographics as a factor underlying New Zealand’s relatively poor performance.

Among the 11 surveyed economies, New Zealand had the second highest percentage of small business owners aged over 50. Half were 50 plus, against a survey average of 28 per cent.

Rick Jones, CPA Australia’s Regional Head, said CPA Australia’s survey shows older business owners are much less likely than their younger counterparts to run businesses that are growing, and more risk averse.

“Older business owners are also less likely to use technology such as e-commerce or social media in their businesses, both of which are characteristics of growing businesses.”

Jones said the age factor contributed to a raft of survey-bottom rankings for New Zealand small businesses in the areas of technology use, innovation and exports.

When New Zealand small businesses do invest in technology, they are the least likely to report such investment improved their profitability in the short term. Only 20 per cent said technology investment improved their profitability in 2023, compared with 76 per cent of small business owners in Vietnam.

They were also least likely to derive more than 10 per cent of revenue from online sales, to use social media in their businesses, or to receive more than 10 per cent of sales through digital payment options such as PayPal or Google Pay.

New Zealand small businesses are the least likely to expect a cyberattack in 2024, and the least likely to have reviewed their cyber protection in the last six months.

Only 12 per cent said they had lost time or money to a cybersecurity incident in the last 12 months, compared to a survey average of 41 per cent.

“This might seem like a positive, but it’s actually evidence of our relatively poor integration of technology,” Jones said.

“It’s important for the future health of our small business sector that policymakers consider how we can encourage more young New Zealanders to start or buy their own businesses.”

Only seven per cent of small businesses expect to introduce a new product or service, to strongly grow revenue from overseas markets, or to seek external funds in 2024 – all at or near the bottom of the survey.

The number of respondents expecting to take on staff this year fell to 18 per cent, from 34 per cent a year earlier.

Link to survey

Link to infographic

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