The 2022-2023 Asia Pacific Small Business Survey by CPA Australia has found that 40.3% of New Zealand’s small businesses expect the national economy to grow, while 43.2% expect it to shrink in 2023. While this is the second lowest result among the 11 Asia Pacific economies surveyed, 65.6% of these small businesses still expect their own enterprises to grow in 2023. This is up from just 56.1% that expected their businesses to grow in 2022.
According to CPA Australia’s Country Head, Rick Jones, small businesses are expecting sunshine despite the gloom. He termed it a positive result given the small business pessimism about New Zealand’s economy. He pointed to the persistently high inflation, interest rate rises, natural disasters, and worsening GDP results in the last quarter of 2022 as contributing factors.
Jones also noted that rising costs were likely to create challenges for businesses in 2023. It has also been linked to declining investment in digital technologies. Businesses with over 10% of their revenues coming from online sales are reported to have dropped to just 36% in 2022, from 40% in 2021. The report also found that small businesses were least likely to make use of social media for business purposes and offer digital payment options to customers.
The poor digital uptake has been attributed to the short-term returns that businesses achieve on such investments. Jones said that only 37% of small businesses that invested in technology saw improvement in their profitability.
When it came to external financing, the survey found that small businesses were second least likely to seek such funding. There was a marked increase in the number of small businesses reporting difficulty in accessing financing in 2022. 53.7% of businesses that required financing found it difficult to access, compared to just 18.4% in 2021. Pessimistic feelings persist as 49.7% of New Zealand businesses expect to continue having difficulty accessing funding in 2023. This is against an average of 27.4% for all the economies surveyed.
The ELMO HR industry Benchmark Report found that despite the economic turbulence, 65% of New Zealand businesses are intending to expand their workforce in 2023. This is higher than the 52% of businesses that reported the same in 2022. The research, however, found that the situation was more optimistic amongst enterprise-level companies with 2,000+ employees, than small businesses. Enterprise-level firms are expected to grow their labour force by 24% while SMBs with less than 180 employees are expected to expand their teams by just 12%.
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