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MYOB’s 2021 Business Monitor
MYOB’s 2021 Business Monitor - a nationwide survey of over 1,000 SMEs owners and decision makers - has revealed insights showing that over 25% of NZ’s Small and medium-sized enterprises are expecting a small increase in revenue over the next 12 months.
This cautious optimism is balanced with conservative estimates from around 41% of respondents who expect the same level of revenue, and 25% who expect a lowered income over the next 12 months.
While this is accurately described as cautious optimism it is a marked improvement from the 2020 insights where 40% of SME’s expected their revenue to decrease.
MYOB SME Senior Sales Manager, Krissy Sadler-Bridge states that when considering the previous 12 month that led up to this point, “local business owners should be congratulated for not just hanging on but also finding hard-won opportunities in some of the most challenging trading conditions we’ve seen.”
Auckland bore the brunt of the several lockdowns NZ saw over the course of the Covid-19 crisis, with 44% of SME’s in the city reporting a revenue fall while in Christchurch 35% of SME’s did. Wellington however, saw nearly half of their SME’s maintain revenue and 28% saw revenue fall.
Profitability Knock On Effect
Krissy goes on to discuss how business profitability leads to a growth in businesses overall and a more robust market because not only can business owners pay themselves a wage but they can reinvest in their company, hire more employees, and pay their employees more.
Profitability, therefore, has been introduced as metric for the MYOB Business monitor, “given the toll on revenue and the subsequent impact of the past year on confidence levels.”
These findings show that 20% of the surveyed said their profitability of their business had improved since 2020, but more than a third of the SME’s involved in the 2021 Business Monitor said that their profitability had declined in the quarter prior to March 2021 – with 12% of this group classifying the decline as ‘a lot’.
SME have a more positive outlook for the current quarter with 22% expecting an improvement in profitability which is in line with increased revenue forecasts, but more than 27% expect their profitability to decline.
The effect of our unusual year
Despite a general return to normalcy, some industries are not returning as quickly as others. With 33% of industries reporting less work, less sales, and less booking in the pipeline for the current quarter, 40% remaining about the same, and 25% reporting an increase of expected work. Looking at pipeline potential across the country shows that 31% of SME’s in Christchurch have more work in the pipeline whereas Wellington and Auckland are reporting 29% and 20% respectively.
Pressure on Small and Medium Businesses
SME’s are concerned that price margins and profitability will put significant pressure on them in the next years, especially concerning cost of fuel (30%), cashflow (29%), late payments (28%) and the cost of attracting and retaining new customers (27%) – and those on narrower margins are expected to be more concerned than those with some cushion.
Uncertainty can be unsettling, but it is important for SME’s to focus on the aspects they can control – like systems, good inventory practices, and taking opportunities to increase efficiency.
Employment may increase, but so will prices.
10% of SME’s indicated that the plan to decrease the number of full-time employees, similarly 12% intend to cut their contract staff in the next year. More positively, 8% intend to increase staff in both full time and contracts as well as 17% intending to increase pay rates – though this may be due to the minimum wage increase.
Prices and margins are set to increase, with 22% of SME’s planning to raise prices and margins in the next year which could add pressure to the economy.
What should we do?
To businesses Krissy suggests, “to help local SMEs negotiate the coming months, planning for further disruptions should be part of business-as-usual practices – regardless of whether the disruption is driven by an additional lockdown, disruption in the supply chain or any changes relating to the opening or closing of international borders.”
“Continue to focus on supporting local business however [you] can,” is Krissy’s advice to consumers to help maintain and reboot local businesses.