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Light at the end of the tunnel for struggling SMEs

12 Jul 2013

While local business owners see a long road ahead for the economic recovery, positive revenue prospects have boosted their confidence as bright spots emerge within the market.

The latest 2013 MYOB Business Monitor report found small and medium business operators (SMEs) are optimistic about their prospects in the year ahead.

This is despite only a one percentage-point increase in the proportion of SMEs whose revenue rose in the prior year, when comparing the latest study with the June 2012 study.

In this study, one quarter of business operators (24%) expected the economy to improve within 12 months – up on 18% in June 2012, while two thirds (66%) expected improvements in more than one year and the remainder were unsure.

Revenue expectations had also improved, as had the level of work in their quarterly pipeline.

MYOB NZ general manager, Business Division, James Scollay says it suggests business owners have welcomed a more positive last quarter of 2012 and are hoping to extend that to performance in 2013.

“New Zealand businesses have been determinedly resilient throughout the economic recovery and we see them becoming more confident despite the protracted pace of improvement,” he says.

“32% of SMEs experienced a revenue increase over the last year and 38% experienced stability, which is positive.

"However, what’s more telling is the 41% expecting an increase in the coming 12 months, in addition to 42% who expect stable revenue. Things appear to be on the up for the engine room of our economy.”

Christchurch leads the way

As Christchurch sees increased momentum in its rebuild, it leads the way in the recovery, with the city well ahead of other main cities when it comes to economic positivity, revenue growth and expectations.

According to Scollay, 34% of Christchurch operators were optimistic the economy will improve within 12 months, compared to a 24% national average.

Auckland followed closely, with 30% expecting an improvement within 12 months. Only 15% of Wellington respondents agreed.

“This indicates the pick-up in Christchurch’s rebuild has given business operators a burst of confidence for their revenue prospects, cementing the region’s status as an economic driver of the recovery," Scollay says.

Not only have 45% of Christchurch SMEs seen a revenue rise in the last 12 months, up 17 percentage points since the last study, 57% expect to see a rise over the coming year.

They also have a significant work pipeline, with 35% reporting more worked booked than usual for the upcoming quarter, compared to 19% with less work.

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