NZ SMEs more optimistic than Oz

More small to medium-sized business owners in New Zealand are optimistic on growth for both their business and the economy over the next 12 months than their Australian counterparts.

Of the New Zealand businesses surveyed, 68 per cent are anticipating business growth, compared with 57 per cent of Australian businesses according to new research* released today by CPA Australia. Reflecting this result, New Zealand businesses recorded the biggest shift in anticipating borrowing for business growth as being a reason for needing finance. CPA Australia New Zealand country manager, David Jenkins, says that the results show a positive shift from local businesses seeking finance for business survival and to cover increasing expenses to invest in growth.

"Forty seven per cent of businesses anticipate additional funding will be used for growth which is great, especially considering the slow economic activity in New Zealand and across the world," says Jenkins. Worryingly, amongst Kiwi small businesses a high percentage of those surveyed rely on overdrafts and their personal credit cards to fund their business.

Of those that required funding, 63 per cent use bank financing and 45 per cent relied on their own resources. This funding was used primarily for business survival (41 per cent).

New Zealand businesses were least likely to have current business loans in place and despite this found access to finance the easiest of all markets surveyed. According to Jenkins, the high number of businesses that have used credit cards and overdrafts as a form of financing and the fact that only 38 per cent of those surveyed seek business advice from an accountant is alarming.

"It is clear in all markets surveyed that business costs went up and that they are expected to continue to rise in the next 12 months. In this market it seems a lot of businesses responded by using personal finance to cope and did not seek advice from an accountant or business financing."

Jenkins says that accountants are well equipped to steer businesses through difficult periods and give advice on business financing options. "Using personal finance is often not a sustainable source of finance and is usually secured at a higher rate of interest than necessary. New Zealand small businesses would be more successful and make a greater contribution to economic development and employment growth if they improved their business and financial management skills," said Jenkins.

*Research was conducted between October 6 and October 11, 2011. In its third year, the survey was conducted with 1500 businesses with fewer than 20 staff. The markets surveyed were Australia, Hong Kong, Indonesia, Malaysia, Singapore, and, for the first time New Zealand. The respondents were either the business owner or a senior employee in the business.