20 September 2004

New Zealand’s Small and Medium Enterprises in Good Heart

The 2004 edition of SMEs in New Zealand: Structure and Dynamics, the Ministry of Economic Development’s annual statistical review of small and medium enterprises (SMEs) shows this sector of the economy is continuing to thrive.

“New Zealand’s small and medium sized enterprises (SMEs) are in good heart. They’re creating jobs and wealth and in many areas (such as profitability per employee and job creation), are outperforming their larger counterparts”, Roger Wigglesworth, Director SMEs in the Ministry of Economic Development said today.

Commenting on the fifth annual report on SMEs (businesses employing fewer than 19 full-time equivalent employees), Roger Wigglesworth noted that:
The total number of SMEs had increased 4.9% (to 285,645) in 2002 The number of FTEs employed in SMEs was up 4.7% (to 645,700) SMEs proportional contribution to national output increased by 2% in 2002 (from 36% to 38%) accounting for $25,959M worth of outputs Average real profits increased across all SMEs (and particularly those with 1-5 FTEs) The number of businesses entering the Department of Statistics business data base exceeded the numbers leaving it, with new firms entering growing faster than the number of exits Average firm size across all New Zealand firms decreased on slightly from 5.22 to 5.18 FTEs.

“These are vibrant, dynamic, and innovative businesses. They are a hot-bed of innovation, they are devoted to their (often world-class) product or service, they are fast-moving, and they get things done. They are New Zealand’s future”, he said.

SMEs in New Zealand: Structure and Dynamics has been jointly produced by the Ministry of Economic Development and Statistics New Zealand since 1999.

The report provides a statistical summary of SMEs in New Zealand, examining their significance to the economy, their financial performance, the dynamics of SMEs and the significance of SMEs internationally. The data are drawn from Statistics New Zealand Business Frame which captures “economically significant enterprises”.

Other reports also show that SMEs are making significant contributions to economic growth. The National Bank Small Business Monitor (July 2004) estimated annual average growth at 4.7% for smaller-sized firms, compared to 3.6% growth overall. In the March 2004 quarter small businesses grew slightly faster than the economy (2.4% against 2.3%) – the eighth quarter in a row that this has happened.

In their recent report the Small Business Advisory Group described SMEs by noting that SMEs are diverse but suggesting, typically, an SME may, amongst other things:

have begun spontaneously from just one idea or new product and may continue to be an incubator for innovative ideas and products have an owner/manager with little formal business experience or few generic business skills have a tight family-like culture where the values of the owner are strongly shared by the staff and workplace practices are flexible and suited to individual employees’ needs have all personal assets, including the owner’s home, committed as security for the business operate flexibly, on a ‘reasonable person’ basis, rather than on an informed and strict observance of regulations

ENDS

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