​Why greater tech focus will be crucial to NZ SME success in 2016

After outperforming their Australian counterparts in 2015, tech-focused Kiwi small business operators are more confident of improved revenue in 2016.

Tim Reed - CEO, MYOB

Tim Reed - CEO, MYOB

After outperforming their Australian counterparts in 2015, technology focused New Zealand small business operators are more confident of improved revenue in 2016.

According to the latest review of trans-Tasman business performance from the MYOB Business Monitor, which surveyed over 1,000 SME operators in each country, Australia’s SME economy fell behind New Zealand’s over 2015.

In the second half of the year, the proportion of Australian SME operators reporting a fall in revenue (30 percent) significantly outweighed those who saw a rise in revenue in the 12 months prior to the survey (22 percent).

In contrast, 31 percent of New Zealand SMEs reported a revenue rise in 2015 and 25 per cent saw their revenues decline.

MYOB CEO Tim Reed says that the relative performances in the two country’s SME economies over the previous 12 months have had a major impact on how confident local business operators are going into 2016.

“Both countries reported a healthy level of steady income, with 46 percent of Australian SMEs and 41 percent of New Zealand SMEs saying their revenue levels remained constant over the 12 months,” Reed says.

“However, given the solid performance of New Zealand’s SME businesses in 2015, it is no surprise that operators are also more optimistic about improving their performance this year.”

When asked how they expected their business revenue to fare in 12 months’ time, a large number of New Zealand operators are forecasting growth (34 percent), while fewer (21 percent) expect revenue to fall.

In comparison, the Australian SME economy is more finally balanced, with 28 percent of Australian operators expecting a revenue increase this year and 27 percent a decline.

Tech focus

Findings suggest that Australian SMEs invest in employment, marketing and advertising, while Kiwi SMEs focus more on technology.

“Given the revenue reports and expectations of Australian SME operators, it is understandable that they would be looking to invest further in marketing and advertising in 2016, however we were surprised to find that they were also still more likely to be creating employment opportunities than their trans-Tasman counterparts,” Reed adds.

According to the report, 19 percent of Australian small business operators expect to increase the number of part time or casual staff they employ in 2016 - this was compared to only 11 percent of New Zealand small business operators who said the same.

The number of full time roles is also expected to increase significantly in Australia, with 14 percent of operators expecting to hire more permanent staff, while in New Zealand, that number is only nine percent.

Australian SMEs are also more likely to spend more on marketing and advertising their business, with 23 percent planning to increase their spending online and 18 percent offline.

Findings show that this is compared to 19 percent of New Zealand SMEs increasing their marketing and advertising online, and 13 percent offline.

However the MYOB Business Monitor revealed New Zealand small business owners have more of a focus on technology than their counterparts across the Tasman.

Almost half (47 percent) of New Zealand respondents said they had acquired computer hardware or software for their business in the last 12 months - this is compared to the under one third (31 percent) of Australian respondents who said the same.

In addition, 25 percent of New Zealand business operators said they would look to increase their investment in IT systems and processes in the 12 months following the survey, while 21 percent of Australians plan to do so.

“It is fantastic to see small business owners on both sides of the Tasman making strategic investments in their business,” Reed adds.

“And while increasing employment opportunities and spending on traditional methods of marketing can aid business growth, technology in particular should be a key focus.

“By embracing new technologies SMEs can experience benefits such as improved productivity and efficiency, greater ability to reach and interact with customers, and having access to real-time information to support better decision making.

“Over the six years that we have been tracking the use of technology in small and medium sized businesses, we can confidently say that those businesses who are utilising technology to its fullest are doing better across every performance measure.

“With technology making it even easier than ever before to do business on a global scale, and trading with international markets high on the agenda for many countries, it no longer matters which side of ‘the ditch’ SME operators do business on.

“What should be a priority for small and medium sized businesses is making the most of the opportunities that technology can provide in order to remain competitive and grow.”

IT investment

For Reed, the increase in investment in IT systems and processes is reflected in the greater use of technology, particularly cloud solutions, New Zealanders have in their business.

The greatest difference between the business owners in the two countries when it came to activities undertaken for their business was apparent in the following technologies:

However, when asked about their online presence, Australian operators were more likely to say that they have either a website or a social media site for their business.

Half of New Zealand SME operators said they had a business website or social media site, compared to 55 percent of Australian operators.

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