MYOB Business Monitor. November The voice of New Zealand s business owners. myob.co.nz

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1 MYOB Business Monitor The voice of New Zealand s business owners November 2009 myob.co.nz

2 Quick Link Summary Just over half (55%) of New Zealand s business owners surveyed expect that the economy will begin to improve over the next 12 months, up from 43% reported in July 2009 More businesses report a decrease in revenue over the past year Almost a third (29%) of businesses report that work or sales levels in the pipeline are higher than expected or usual, up from 24% reported in July 2009 A majority of businesses (44%) expect to see increases in revenue over the coming year A third of New Zealand businesses have seen profits fall over the 12 months, while a quarter have seen an improvement in profitability Half of the business owners in New Zealand expect their profits will increase in the next 12 months Price margins and profitability are now expected to put even more pressure on New Zealand businesses in the coming year than fuel prices, cash flow, competitive activity, interest rates and exchange rates Business owners in New Zealand currently have most difficulty with marketing to get new customers or new business; getting affordable and reliable business advice; getting funding or finance to grow their business; chasing customer payments; and managing the cash flow of their business Business owners are most likely to source tax and compliance information or advice from their Accountants or from the IRD (Inland Revenue Department) A third of the business owners surveyed aren t looking for information that will help them to improve their business Improved supplier relationships and pricing would most help New Zealand business owners work smarter in the coming year, along with an affordable business mentor or advisor Many business owners are missing an opportunity to track business cash flow in a systematic way The majority of business owners are still being paid in the same time as they were six months ago The majority of business owners in New Zealand rarely or never run credit checks on their clients or other businesses before accepting a contract or project Half of business owners surveyed use their personal credit or charge card for business purposes, and almost half use their personal savings to start or maintain their business 2

3 Nearly half of the business owners surveyed use their business savings or profits in their business, and a third use a business credit or charge card for business purposes The general business management activities that business owners report that they do and do most often are to actively review or research the latest industry or market trends; and to network and meet up with other business owners Over a third (34%) of New Zealand businesses are currently dissatisfied with the Government s level of support for small businesses like theirs, compared to only 21% that are satisfied with their support However, businesses believe Government support is improving, with more businesses (27%) reporting the Government s level of support for businesses like theirs is better than a year ago Kiwi business owners feel the regulatory environment has gotten worse over the past year Improved access to information such as and other online business tools are seen as the most helpful of the Government changes and initiatives measured in this survey Businesses have had a very negative response to the ACC changes, with 40% of all business owners surveyed seeing them as unhelpful and only 9% supporting the changes Climate change initiatives and exchange rate changes are both seen as more unhelpful than they have been helpful 3

4 Table of Contents Quick Link Summary... 2 Table of Contents... 4 About the study... 7 Reporting by Industry, State and Business Size... 8 BUSINESS ISSUES SECTION... 9 Business owner expectations for economic improvement in New Zealand... 9 Business revenue compared with a year ago Work or sales in the pipeline for next three months Expectations of business revenue growth over next 12 months Improvement or deterioration in business profitability over last 12 months Improvement or deterioration in business profitability over next 12 months The main pressures on business owners in New Zealand over next 12 months The business tasks that New Zealand business owners find most difficult Sources of information or advice on tax and compliance issues Sources of information about improving business performance Improvements to help businesses work smarter in the next 12 months How they track cash flow in their business Time it is taking to get paid by customers or clients How often credit checks are done before a project or contract is accepted Personal banking or financial services used in the business Business banking or financial services used in the business What they do to manage their business finances and how often they do it What they do to generally manage their business, and how often they do it GOVERNMENT ISSUES SECTION Present satisfaction with the Government s support of New Zealand business Whether the Government s support is better or worse versus a year ago Whether the regulatory environment is better or worse versus a year ago The helpfulness to business of nine Government changes and initiatives APPENDIX: SURVEY QUESTIONNAIRE

5 Lists and Figures BUSINESS ISSUES SECTION... 9 Business owner expectations for economic improvement in New Zealand... 9 Figure 1: Time expectations for future economic improvement in New Zealand (% of n = 1,001) Figure 1.1 Expectation of economic improvement in the next 12 months: by Number of Employees (% of n=1,001). 10 Figure 1.2 Expectation of economic improvement in the next 12 months: by Location (% of n = 1,001) Figure 1.3 Expectation of economic improvement in the next 12 months: by Industry (% of n = 1,001) Business revenue compared with a year ago Figure 2: Revenue increases vs. decreases last 12 months, as reported by total sample (% of n=1,001) Figure 2.1: Revenue increase percentages in last 12 months, as reported by 22% of the total sample (% of n = 223) 13 Figure 2.2: Revenue decrease percentages in last 12 months, as reported by 36% of the total sample (% of n = 361) 14 Figure 2.3 Revenue increases and decreases: by Number of Employees (% of n=1,001) Figure 2.4 Revenue increase and decrease percentages reported over last 12 months: by Location (% of n = 1,001). 15 Figure 2.5 Revenue decrease percentages reported over last 12 months: by Industry (% of n = 1,001) Work or sales in the pipeline for the next 3 months Figure 3: Work or sales in pipeline for next 3 months compared with usual: by Total Sample (% of n = 1,001) Figure 3.1: Work or sales in pipeline for next 3 months compared with usual: by Location (% of n = 1,001) Figure 3.2 Work or sales in pipeline for next 3 months compared with usual: by Industry (% of n = 1,001) Expectations of business revenue growth over next 12 months Figure 4: Expectations of business revenue in 12 months time (% of n = 1,001) Figure 4.1: Expectations of business revenue in 12 months time: by Number of Employees (% of n = 1,001) Figure 4.2 Expectations of business revenue increases in 12 months time: by Location (% of n = 1,001) Figure 4.3 Expectations of business revenue increases in 12 months time: by Industry (% of n = 1,001) Improvement or deterioration in business profitability over last 12 months Figure 5: Improvement or deterioration in business profitability last 12 months: by Total Sample (% of n = 1,001) Figure 5.1: Improvement or deterioration in business profitability last 12 months: By Number of Employees (% of n=1,001) Figure 5.2: Improvement or deterioration in business profitability last 12 months: by Location (% of n = 1,001) Figure 5.3 Improvement or deterioration in business profitability last 12 months: by Industry (% of n = 1,001) Improvement or deterioration in business profitability over next 12 months Figure 6: Improvement or deterioration in business profitability in 12 months time: by Total Sample (% of n = 1,001) Figure 6.1: Improvement or deterioration in business profitability in 12 months time: By Number of Employees (% of n=1,001) Figure 6.2: Improvement or deterioration in business profitability in 12 months time: by Location (% of n = 1,001).. 27 Figure 6.3 Improvement or deterioration in business profitability in 12 months time: by Industry (% of n = 1,001).. 27 The main pressures on business owners in New Zealand over next 12 months Figure 7: Pressures on their businesses in the next 12 months (% of n = 1,001) The business tasks that New Zealand business owners find most difficult Figure 8: Difficulties had with sixteen nominated business tasks (% of n = 1,001) Sources of information or advice on tax and compliance issues

6 Figure 9: Sources of Information or Advice on Tax and Compliance Issues (% of n = 1,001) Sources of information about improving business performance Figure 10: Sources of Information on or help with improving business performance: (% of n = 1,001) Improvements to help businesses work smarter in the next 12 months Figure 11: Improvements to help businesses work smarter in the next 12 months (% of n = 1,001) How they track cash flow in their business Figure 12: Business owners main method of tracking their cash flow (% of n = 1,001) Time it is taking to get paid by customers or clients Figure 13: Time taken to get paid compared with 6 months ago: Total Sample (% of n= 1,001) How often credit checks are done before a project or contract is accepted Personal banking or financial services used in the business Figure 15: Whether and which personal banking or financial services used in the business: Total Sample (% of n= 1,001) Business banking or financial services used in the business Figure 16: Whether and which business banking or financial services used in the business: Total Sample (% of n= 1,001) What they do to manage their business finances and how often they do it What they do to generally manage their business, and how often they do it GOVERNMENT ISSUES SECTION Present satisfaction with the Government s support of New Zealand business Figure 19: Dissatisfaction & Satisfaction with the Government s support of business in New Zealand: By Total Sample (% of n=1,001) Figure 19.1: Satisfaction & dissatisfaction with the Government s support of business in New Zealand: by Business Size/Number of Employees (% of n=1,001) Figure 19.2: Satisfaction & dissatisfaction with the Government s support of business: by Location (% of n = 1,001) 48 Figure 19.3: Satisfaction & dissatisfaction with the Government s support of business: by Industry (% of n = 1,001) 48 Whether the Government s support is better or worse versus a year ago Figure 20: Whether the Government s support of business in New Zealand better or worse versus a year ago: By Total Sample (% of n=1,001) Figure 20.1: Whether the Government s support of business in New Zealand better or worse versus a year ago: by Business Size/Number of Employees (% of n=1,001) Figure 20.2: Whether the Government s support of business in New Zealand better or worse versus a year ago: by Location (% of n = 1,001) Figure 20.3: Whether the Government s support of business in New Zealand better or worse versus a year ago: by Industry (% of n = 1,001) Whether the regulatory environment is better or worse versus a year ago Figure 21: Whether the regulatory environment better or worse versus a year ago: By Total Sample (% of n=1,001) 53 Figure 21.1: Whether the regulatory environment better or worse versus a year ago: by Business Size/Number of Employees (% of n=1,001) Figure 21.2: Whether the regulatory environment better or worse versus a year ago: by Location (% of n = 1,001).. 54 Figure 21.3: Whether the regulatory environment better or worse versus a year ago: by Industry (% of n = 1,001) The helpfulness to business of nine Government changes and initiatives

7 About the study The MYOB Business Monitor is designed to research key areas of business performance, including profitability, cash flow and pipeline work, as well as business confidence and satisfaction in the support of Government. This report presents the summary findings for key indicators from the MYOB Business Monitor comprising a national sample of 1,001 business proprietors and directors, conducted in October The businesses participating in the online survey are defined as both non employing and employing businesses with 0 employees ( sole traders ), 1 4 employees ( micro businesses ), 5 19 employees ( small businesses ) and employees ( medium businesses ). Industries have been grouped (see next page) for the purposes of providing meaningful results based upon sample segments of reasonable size, and with a lower margin of error. This research report was prepared by The Financial Research Company and fieldwork was completed by Colmar Brunton (a Millward Brown Company) for: Julian Smith General Manager New Zealand MYOB NZ Limited julian.smith@myob.com All information provided in this media survey is the property of MYOB, and may not be reproduced without permission. Any data used must be referenced to the MYOB Business Monitor. 2009, MYOB Limited, all rights reserved. Copyright strictly enforced. The key indicators presented in this report include: Business Issues: Expectations for future economic improvement Business revenue compared with 12 months ago Projected work or sales for next 3 months compared with usual Expectations of business revenue in 12 months time Improvement or deterioration in business profitability in last 12 months Improvement or deterioration in business profitability in next 12 months Main pressures on business owners in New Zealand in next 12 months The business tasks that New Zealand business owners find most difficult Sources of information or advice on tax and compliance issues Sources of information about improving business performance Things that would help them work smarter in the next 12 months How they track cash flow in their business Time it is taking to get paid by customers or clients How often credit checks are done before a project or contract is accepted Personal banking or financial services used in the business Business banking or financial services used in the business What they do to manage their business finances, and how often they do it What they do to generally manage their business, and how often they do it Government Issues: Present satisfaction with the Government s support for business Whether that support is better or worse versus a year ago Feelings about the regulatory environment in New Zealand versus a year ago The helpfulness to business of each of nine Government changes and initiatives 7

8 Reporting by Industry, State and Business Size Mind Your Own Business. Smarter. The findings of this research are reported by industry type: (Industries have been grouped as follows for the purposes of providing meaningful results based upon sample segments of reasonable size, and with a lower margin of error. Occasionally in this report, industries have been de grouped where there are very different results between those in an industry grouping.) Industry Sample Agriculture & Manufacturing & Wholesale 197 Construction & Trades & Transport 149 Finance & Insurance 56 Professional & Business Services 328 Retail & Hospitality 127 Other Industries (not included above, but included in total results) 144 Total 1,001 The findings of this research are also reported by Auckland, Wellington, Christchurch and Rest of New Zealand for some questions, and the sample size in each of these segments is as follows: Location Sample AUCKLAND 349 WELLINGTON 146 CHRISTCHURCH 118 REST OF NEW ZEALAND 388 Total 1,001 The findings of this research are also reported by City/Metro, Regional and Rural for some of the questions, and the sample size in each of these segments is as follows: Location Sample CITY/METRO 433 REGIONAL NEW ZEALAND 421 RURAL NEW ZEALAND 147 Total 1,001 The findings of this research are also reported by the number of employees in each of the businesses surveyed and was capped for companies with less than 200 employees. The proportions of sole, micro, small and medium businesses are broadly in line with their proportions of all businesses in New Zealand: Number of Employees/Business Type Sample 0 Employees/Sole Traders Employees/Micro Business Employees/Small Business Employees/Medium Business Employees/ Sole, Micro, Small, Medium Businesses 1,001 8

9 BUSINESS ISSUES SECTION Mind Your Own Business. Smarter. Business owner expectations for economic improvement in New Zealand Just over half (55%) of New Zealand s business owners surveyed expect that the economy will begin to improve over the next 12 months, which is up from 43% reported in July % expect economic recovery in New Zealand within the next 12 months The last MYOB Business Monitor (July 2009) revealed that 43% of business owners surveyed expected the economy to improve within 12 months. This latest survey shows business owners optimism about the economy has now risen, with to 55% expecting the economy to improve from its present position in 12 months. (See Figure 1) More optimism now than expressed in last survey While in the July 2009 survey only 11% of business owners surveyed expected recovery within the next 6 months, this has more than doubled to 26% of business owners who now expect the economy to recover within that period of time. (See Figure 1) Owners of medium sized businesses and small businesses slightly more optimistic than others 60% of medium sized business owners ( employees) and 59% of small business owners (5 19 employees) believe that the economy will improve in the next 12 months, compared with 56% of sole traders (0 employees) and 50% of micro business owners (1 4 employees). Start up business (trading less than 2 years) owners are the most positive, with 59% believing that the economy will begin to improve within 12 months. This optimism is slightly less amongst businesses with employees, with 50% of micro business owners, 53% of small business owners and 51% of medium sized business owners expecting the economy to improve in the next 12 months. (See Figure 1.1) Business owners in city areas more optimistic of recovery than rural business owners 60% of business owners in City/Metro New Zealand expect the economy to recover over the next 12 months, compared with 55% of regional business owners and 45% of rural business owners. (See Figure 1.2) Business owners in Agriculture, Forestry, Fishing and Transport industries not as optimistic about economy Business owners in the Agriculture, Forestry & Fishing industry (38%) and Transport industry (42%) are less optimistic about New Zealand s economy over the next year than business owners in most other industries. Most optimistic about the economy over the next 12 months are business owners in the Finance & Insurance industry (62%) and business owners in the Retail & Hospitality industry (61%), who see the economy improving over the next year. (See Figure 1.3) Base: Business owners and directors (n = 1,001) Q. When do you believe that New Zealand s economy will start to improve from its present position? 9

10 Figure 1: Time expectations for future economic improvement in New Zealand (% of n = 1,001) Nov 09 Jul 09 Next 3 months 3 6 months 13% 13% 13% 3% 13% 8% 6 12 months 29% 29% 26% months 26% 26% 32% months >2 years Don't Know 7% 5% 6% 7% 18% 5% 7% 6% 6% Figure 1.1 Expectation of economic improvement in the next 12 months: by Number of Employees (% of n=1,001) ALL 55% SOLE (0) 56% MICRO (1 4) 50% SMALL (5 19) 59% MEDIUM (20 199) 60% 10

11 Figure 1.2 Expectation of economic improvement in the next 12 months: by Location (% of n = 1,001) Nov 09 Jul 09 NZ TOTAL 55% 55% 37% (AUSTRALIA) 58% 58% 45% AUCKLAND 61% 61% 36% WELLINGTON 55% 55% 28% CHRISTCHURCH 55% 55% 45% REST OF NZ 50% 50% 38% Figure 1.3 Expectation of economic improvement in the next 12 months: by Industry (% of n = 1,001) Nov 09 Jul 09 Agriculture, Forestry, Fishing 38% 38% 38% Manufacturing & Wholesale 55% 55% 38% Construction, Trades 52% 52% 38% Transport 42% 42% 39% Finance & Insurance Professional & Business Services 62% 59% 62% 40% 59% 41% Retail & Hospitality 61% 61% 42% 11

12 Business revenue compared with a year ago More businesses report a decrease in revenue over the past year Only 22% of business owners report increases in revenue over the last 12 months While 36% of business owners surveyed indicate that their business revenue has not changed in the last year, 36% report a decline in business revenue (35% in July 2009), and only 22% report an increase in business revenue over the last 12 months. The percentage of businesses reporting a 12 mnonth revenue increase is the same as in the July 2009 survey. (It is also identical to the business revenue result of MYOB s November 2009 survey in Australia.) (See Figure 2) Revenue increases and decreases of between 1 19% most often reported Of the 22% of business owners reporting a revenue increase over the last 12 months, over half (53%) reported an increase of between 1 19%, while 32% report a revenue increase of 20 39%. Of the 36% of business owners reporting a revenue decrease in the last 12 months, the most common (42%) reported decrease is 20 39%. (See Figure 2.1 and Figure 2.2) Fewer sole traders report improvements in revenue, more small business owners report falls in revenue Only 19% of sole traders report an increase in revenue in the last year, compared with 27% of both micro and small business owners and 29% of medium sized business owners. On the other hand, 41% of small business owners report business revenue decreases, compared with 37% of medium sized business owners, 36% of sole traders and 35% of micro business owners. (See Figure 2.3) Business owners with a business website report a more successful year Interestingly, those business owners who have a business website are the most likely (30%) to have had a revenue increase in the last year, compared with only 18% of business owners who do not have a website. Older businesses more likely to have lost revenue in last 12 months Businesses that are most likely (43%) to have had a decrease in revenue in the last year are those which have been established for more than 10 years, which contrasts with start up businesses (less than 2 years in business), where only 26% of owners report a fall in revenue in the last 12 months. Business owners in Wellington and Auckland slightly more likely to have sustained falls in business revenue, Wellington business owners also report less business revenue increases 39% of business owners in Wellington and 38% of business owners in Auckland report revenue losses over the last year, compared with 31% of business owners in Christchurch and 36% of business owners in the rest of New Zealand. Revenue gains, on the other hand, are reported by 25% of business owners in Auckland, 24% in Christchurch and 20% in the rest of New Zealand, but only 18% in Wellington. (See Figure 2.4) Business owners in the Transport, Construction & Trades industries report more decreases and fewer rises in revenue 61% of business owners in the Transport industry report revenue decline in the last 12 months and only 6% report business revenue increases. 48% of business owners in the Construction & Trades industry report revenue is down on a year ago, while only 15% report business revenue is up. While revenue increases are lower (12%) amongst business owners in the Agriculture, Forestry & Fishing industry, a close to average 34% of them report revenue is down when compared to a year ago. (See Figure 2.5) 12

13 Base: Business owners and directors (n = 1,001) Q. At the present time, is your business revenue (i.e. your gross from sales) up or down on a year ago, or about the same? Please indicate how much your business revenue (i.e. your gross from sales) is up or down on a year ago? (Please type in the percentage in the box below) Figure 2: Revenue increases vs. decreases last 12 months, as reported by total sample (% of n=1,001) 7% Nov 09 Jul 09 Increase 22% Increase 22% 22% Remain the same Decrease 36% Same 36% 38% Decrease 36% 35% Don't know/not sure 36% DK 7% 4% Figure 2.1: Revenue increase percentages in last 12 months, as reported by 22% of the total sample (% of n = 223) Nov 09 Jul % 21% 21% 14% 10 19% 32% 32% 34% 20 29% 24% 24% 23% 30 49% 12% 12% 10% 50 59% 4% 4% 8% 60% or more 7% 7% 11% 13

14 Figure 2.2: Revenue decrease percentages in last 12 months, as reported by 36% of the total sample (% of n = 361) Nov 09 Jul % 9% 9% 5% 10 19% 28% 28% 24% 20 29% 29% 29% 27% 30 49% 50 59% 10% 19% 19% 22% 10% 13% 60% or more 5% 5% 8% Figure 2.3 Revenue increases and decreases: by Number of Employees (% of n=1,001) NZ TOTAL 22% 36% SOLE (0) 19% 36% MICRO (1 4) 27% 35% SMALL (5 19) 27% 41% MEDIUM (20 199) 29% 37% Increases Decreases 14

15 Figure 2.4 Revenue increase and decrease percentages reported over last 12 months: by Location (% of n = 1,001) Decreases Nov 09 Jul 09 NZ TOTAL 22% 36% 36% 35% (AUSTRALIA) 22% 39% 39% 39% AUCKLAND 25% 38% 38% 45% WELLINGTON 18% 39% 39% 39% CHRISTCHURCH 24% 31% 31% 28% REST OF NZ 20% 36% 36% 30% Increases Decreases Figure 2.5 Revenue decrease percentages reported over last 12 months: by Industry (% of n = 1,001) Nov 09 Jul 09 Agriculture, Forestry & Fishing 34% 34% 34% Manufacturing & Wholesale 37% 37% 38% Construction, Trades 38% 38% 41% Transport 61% 61% 39% Finance & Insurance 40% 40% 22% Professional & Business Services Retail & Hospitality 30% 36% 30% 34% 36% 42% 15

16 Work or sales in the pipeline for next three months Mind Your Own Business. Smarter. Almost a third of businesses report work or sales levels in the pipeline are higher than expected or usual More businesses report an increase of work in the pipeline, but over a quarter still seeing work reduced 26% of business owners surveyed report less work/sales in the pipeline than normal, while 29% of the total sample report more work/sales in the pipeline than normal. In July 2009, 24% of businesses indicated more work/sales in their pipeline. (See Figure 3) Most business owners report a little more or little less, rather than a lot more or lot less work/sales in the pipeline While 40% of business owners surveyed report about the same amount of work or level of sales as usual, 23% report a little more, and 19% report a little less in the pipeline. This contrasts with only 6% who say that they have a lot more work/sales in the pipeline than normal, and only 7% who say that they have a lot less work/sales in the pipeline than normal. (See Figure 3) Larger businesses seeing more work or sales than usual 50% of medium sized business owners say that they have more work/ sales in the pipeline than expected, which contrasts with only 27% of sole traders who report the same. (This almost exactly matches the pipeline results of the concurrent MYOB Business Monitor in Australia.) (See Figure 3.1) Few business owners in rural New Zealand report more work/sales in the pipeline Only 16% of business owners in rural New Zealand have more in the pipeline than usual, and the majority (52%) report normal levels of work/sales, while 24% report less than normal work/sales in the pipeline. This contrasts with the 36% of business owners in regional New Zealand who report more than normal work/sales in the pipeline, and 31% of business owners in City/Metro areas who report the same. (See Figure 3.2) Business owners in Manufacturing & Wholesale, Retail & Hospitality industries report better business 45% of business owners in the Wholesale & Manufacturing industry report higher than normal levels of work/sales, as do 42% of business owners in the Retail & Hospitality industry. This contrasts with only 12% of business owners in the Agriculture, Forestry & Fishing industry who report more than normal work/ sales in the pipeline. Finance & Insurance business owners appear to very much less work in the pipeline than they had in July Base: Business owners and directors (n = 1,001) Q. Please indicate how much work you have got on in the next 3 months, compared to what you would usually expect or normally have. (Please select one only) 16

17 Figure 3: Work or sales in pipeline compared with usual: by Total Sample (% of n = 1,001) 6% 7% 4% A lot more Nov 09 Jul 09 6% 7% 19% 23% A little more About the same 23% 17% 40% 45% A little less 19% 18% A lot less 7% 8% 40% Don't know 4% 5% Figure 3.1: Work or sales in pipeline compared with usual: by Number of Employees (% of n = 1,001) NZ TOTAL 29% 26% SOLE (0) 27% 26% MICRO (1 4) 31% 28% SMALL (5 19) 36% 24% MEDIUM (20 199) 50% 20% More than usual Less than usual 17

18 Figure 3.2: Work or sales in pipeline compared with usual: by Location (% of n = 1,001) NZ TOTAL 29% 28% (AUSTRALIA) 37% 29% AUCKLAND 31% 28% More than usual Less than usual WELLINGTON 26% 35% CHRISTCHURCH 32% 21% REST OF NZ 28% 25% Figure 3.3 Work or sales in pipeline compared with usual: by Industry (% of n = 1,001) Agriculture, Forestry & Fishing 12% 21% Manufacturing & Wholesale 45% 24% Construction & Trades 25% 43% Transport 35% 44% Finance & Insurance 22% 34% Professional & Business Services 30% 27% Retail & Hospitality 42% 19% More than usual Less than usual 18

19 Expectations of business revenue growth over next 12 months A majority of businesses (44%) expect to see increases in revenue over the coming year 44% of business owners expect revenue increases over next 12 months While only 22% of business owners surveyed report improvements in revenue in the last 12 months, 44% expect to increase their business revenue over the next 12 months, 37% believe that it will remain the same, 10% believe that their business revenue will decline in the next 12 months, and 9% are unsure. (These expectations are almost identical amongst business owners in Australia at this time) So, while 55% of business owners expect the economy to improve in the next 12 months (see earlier), not all of them expect this to translate into revenue gains for their own business. (See Figure 4) Owners of medium sized businesses are more optimistic about growing revenue in the coming year 61% of medium sized business owners expect revenue increases in the next 12 months, and only 5% of these business owners expect that their revenue will decline over that time. This means that they are considerably more optimistic about their next years business revenue than owners of small businesses (47%), micro businesses (45%) and sole traders (43%). 57% of start up (<2 years old) business owners expect revenue gains in the next year, which contrasts with only 35% of business owners of mature companies (established for 10+ years) who feel that way. (See Figure 4.1) Business owners in the city areas more optimistic than those in rest of New Zealand 46% of business owners in Wellington and 50% of business owners in Auckland expect business revenue to increase over the next year, compared with 39% of business owners in the rest of New Zealand. Business owners in rural New Zealand have a distinct lack of confidence in their future prospects, with with only 26% expecting revenue increases in the next 12 months. Comparing these results with those obtained in July 2009 indicates that confidence has returned most to Wellington (from 24% to 46% expecting business revenue gains) and Auckland (from 33% to 50% expecting business revenue gains). (See Figure 4.2) Business owners in the Retail & Hospitality industry most optimistic, business owners in Transport industry most pessimistic 55% of business owners in the Retail & Hospitality industry expect revenue increases in the next 12 months, and only 5% expect revenue decreases. At the pessimistic end of the scale, 27% of business owners in the Transport industry expect a decrease, and only 20% expect an increase in business revenue in the next 12 months. (See Figure 4.3) Business owners with a website more optimistic of business revenue increases 58% of business owners with a business website expect their revenue to increase in the next year, and only 5% expect it to decrease. This expectation of success contrasts with owners of businesses without a business website, with 39% of this group expecting their business revenue to increase, and 12% expecting their business revenue to decrease in the next year. Base: Business owners and directors (n = 1,001) Q. And how do you expect your business revenue (your gross turnover or sales) in 12 months time to compare with your business revenue at the present time? 19

20 Figure 4: Expectations of business revenue in 12 months time (% of n = 1,001) Increase 10% 9% Nov 09 Jul 09 Increase 44% 34% Remain the same 44% Same 37% 42% Decrease Don't know/not sure 37% Decrease 10% 16% DK 9% 18% Figure 4.1: Expectations of business revenue in 12 months time: by Number of Employees (% of n = 1,001) ALL (0 199) 44% 10% SOLE (0) 43% 11% MICRO (1 4) 45% 8% SMALL (5 19) 47% 11% MEDIUM (20 199) 61% 5% Increases Decreases 20

21 Figure 4.2 Expectations of business revenue increases in 12 months time: by Location (% of n = 1,001) % Expecting Revenue Increase Nov 09 Jul 09 NZ TOTAL 44% 10% 44% 34% (AUSTRALIA) 46% 12% 46% 37% AUCKLAND 50% 9% 50% 33% WELLINGTON 46% 11% 46% 24% CHRISTCHURCH 48% 14% 48% 41% REST NZ 39% 9% 39% 34% Increases Decreases Figure 4.3 Expectations of business revenue increases in 12 months time: by Industry (% of n = 1,001) Nov 09 Jul 09 Agriculture, Forestry, Fishing Transport 23% 20% 23% 32% 20% 25% Manufacturing & Wholesale 53% 53% 35% Construction & Trades 43% 43% 23% Finance & Insurance Professional & Business Services 44% 50% 44% 52% 50% 35% Retail & Hospitality 55% 55% 33% 21

22 Improvement or deterioration in business profitability over last 12 months A third of New Zealand businesses have seen profits fall over the 12 months, while a quarter have seen an improvement in profitability A quarter of New Zealand business owners report improved profitability over the last 12 months 33% of business owners surveyed report that their business profitability has deteriorated a little (25%) or a lot (8%) in the last year. 26% of business owners surveyed report that their business profitablity has improved a little (21%) or a lot (5%) in the last year. These results are very similar to those reported in July (See Figure 5) Owners of medium sized businesses more likely to have improved profitability in last 12 months 38% of medium sized business owners surveyed report improved business profitability in the last year, while 38% report business profitability deteriorated in the last year. Medium sized business owners have been more profitable than sole traders, only 25% of whom report better business profitability over the last year. Owners of small businesses are the more likely (43%) to have seen a fall in business profitability in the last year. Start up businesses (33%) are more likely to have increased business profitability in the last 12 months than more mature businesses, and businesses with an annual revenue of more than $5 million (40%) are far more likely to have been profitable than businesses with lower annual revenues. (See Figure 5.1) More businesses in Auckland claim better business profitability, more in Wellington claim worse 30% of business owners in Auckland say that their business profitability has improved in the last year, while 36% of business owners in Wellington say that their business profitability has deteriorated in the last year. 24% of Christchurch business owners report improved profitability in November 2009, which is down from 34% who reported improved profitability in July 2009, indicating a possible downturn in profitability in that market over the past six months. (See Figure 5.2) More business owners in the Manufacturing & Wholesale sector report improving profits, while more business owners in Transport industry report falling profits 38% of business owners in the Manufacturing & Wholesale industry report that their business profitability has improved in the last 12 months, whereas 48% of Transport business owners say that their business profitability has deteriorated over that time. (See Figure 5.3) Base: Business owners and directors (n = 1,001) Q: At the present time has your business profitability deteriorated or improved compared with a year ago, or has it remained about the same? 22

23 Figure 5: Improvement or deterioration in business profitability last 12 months: by Total Sample (% of n = 1,001) 5% 8% 4% Improved a lot 25% 21% Improved a little Remained the same Deteriorated a little Deteriorated a lot Don't know 37% Figure 5.1: Improvement or deterioration in business profitability last 12 months: By Number of Employees (% of n=1,001) ALL (0 199) 26% 33% SOLE (0) 25% 31% MICRO (1 4) 28% 35% SMALL (5 19) 26% 43% MEDIUM (20 199) 38% 38% Improved Deteriorated 23

24 Figure 5.2: Improvement or deterioration in business profitability last 12 months: by Location (% of n = 1,001) % Reporting Improvement Nov 09 Jul 09 NZ TOTAL 26% 33% 26% 27% AUCKLAND 30% 34% 30% 23% WELLINGTON 22% 36% 22% 19% CHRISTCHURCH 24% 29% 24% 34% REST NZ 26% 33% 26% 30% Improved Deteriorated Figure 5.3 Improvement or deterioration in business profitability last 12 months: by Industry (% of n = 1,001) Agriculture, Forestry & Fishing 20% 39% Manufacturing & Wholesale 38% 34% Construction & Trades 18% 32% Transport 18% 48% Finance & Insurance 24% 30% Professional & Business Services 28% 29% Retail & Hospitality 29% 33% Improved Deteriorated 24

25 Improvement or deterioration in business profitability over next 12 months Half of the business owners in New Zealand expect their profits will increase in the next 12 months Half expect business profitability to improve, only 1 in 10 expect it to deteriorate 50% of business owners surveyed expect their business profitability to improve a little (41%) or a lot (9%) in the next year, whereas only 10% expect their business profitability to deteriorate a little (9%) or a lot (1%) over that time. (See Figure 6) Owners of businesses with more employees more likely to expect profitability gains 65% of medium sized business owners expect improved business profitability in 2010, compared with 60% of small business owners, 47% of micro business owners and 49% of sole traders, who expect the same. Owners of start up businesses (49%) are more confident than other business owners about profitability next year. (See Figure 6.1) Owners of businesses with a business website have much greater expectations of profitability 68% of business owners who have a business website expect profitabilty to improve, while only 43% of business owners without a business website are similarly optimistic. Business owners in Christchurch are more likely to expect profitability improvements over the next year 58% of business owners in Christchurch and 55% of business owners in Auckland expect their business profitability to improve over the next year. This compares with 47% of business owners in Wellington and 45% of business owners in the rest of New Zealand who say the same. (See Figure 6.2) Business owners in Manufacturing & Wholesale sector most optimistic, business owners in Transport industry least optimistic about future business profitabilty 63% of business owners in the Manufacturing & Wholesale sector expect their business profitability to improve in the next 12 months, whereas only 29% of business owners in the Transport industry have the same expectation. In both cases, levels of optimism or pessimism appear to reflect business profitability in their respective sectors over the last 12 months. (See Figure 6.3) Base: Business owners and directors (n = 1,001) Q: And do you expect your business profitability to have deteriorated or improved or deteriorated in 12 months time, or to remain about the same? 25

26 Figure 6: Improvement or deterioration in business profitability in 12 months time: by Total Sample (% of n = 1,001) 9% 1% 4% 9% Improved a lot Improved a little Remained the same 36% 41% Deteriorated a little Deteriorated a lot Don't know Figure 6.1: Improvement or deterioration in business profitability in 12 months time: By Number of Employees (% of n=1,001) ALL (0 199) 50% 10% SOLE (0) 49% 9% MICRO (1 4) 47% 14% SMALL (5 19) 60% 9% MEDIUM (20 199) 65% 4% Improved Deteriorated 26

27 Figure 6.2: Improvement or deterioration in business profitability in 12 months time: by Location (% of n = 1,001) % Expecting Improvement Nov 09 Jul 09 NZ TOTAL 50% 10% 50% 41% AUCKLAND 55% 9% 55% 39% WELLINGTON 47% 10% 47% 31% CHRISTCHURCH 58% 13% 58% 51% REST NZ 45% 10% 45% 41% Improved Deteriorated Figure 6.3 Improvement or deterioration in business profitability in 12 months time: by Industry (% of n = 1,001) Agriculture, Forestry & Fishing 34% 12% Manufacturing & Wholesale 63% 7% Construction & Trades 54% 10% Transport 29% 27% Finance & Insurance 47% 16% Professional & Business Services 54% 9% Retail & Hospitality 56% 8% Improved Deteriorated 27

28 The main pressures on business owners in New Zealand over next 12 months Price margins and profitability are now expected to put more pressure on New Zealand businesses in the coming year than fuel prices, cash flow, competitive activity, interest rates and exchange rates. In July 2009, fuel prices were expected to have the most pressure on business owners in New Zealand (and in Australia), but this is now expected to be surpassed by price margin and profitability pressures 24% of New Zealand business owners are expecting that price margin and profitability will create the most pressure in the next 12 months. (See Figure 7) Price margins and profitability are most likely to put pressure on medium sized businesses (35%) and small businesses (33%) and are least likely to put pressure on sole traders (21%). The industries most likely to be pressured by price margins and profitablilty are Transport (37%), Manufacturing & Wholesale (32%) and Agriculture, Forestry & Fishing (31%). Fuel prices will still apply considerable pressure, particularly on business owners in the Transport industry 57% of business owners in the Transport industry still expect to be pressured by fuel prices for some time to come, whereas business owners in the Professional & Business Services (17%) and Retail & Hospitality (17%) industries don t expect the same pressure from fuel prices over the next year. Cash flow expected to be tighter for medium and small businesses Cash flow is likely to apply more pressure on medium sized business owners (32%) and small business owners (31%) over the next 12 months. Competitive activity is expected to have more of an effect on medium and small businesses 29% of medium sized business owners and 29% of small business owners expect competitive activity to put quite a lot of pressure or extreme pressure on their business in the next 12 months. Business owners in the Agriculture, Forestry & Fishing industry (8%) expect to feel the least pressure from competitors over the next year. Business owners appear well served by current IT, accounting and website business systems The least pressure of all on business owners will be felt from current business systems (IT, Accounting, Website) (6%), which indicates that most business owners surveyed are well served by their current business systems. Business owners are also likely to feel little pressure from staff skills and training (7%) or from their number and cost of staff (9%). Base: Business owners and directors (n = 1,001) Q. Whatever level of confidence you have about your business prospects now and in the next 12 months, please rate each of the following on how much pressure they will put on your business in the next 12 months? (Please select one answer only for each statement) 28

29 Figure 7: Pressures on their businesses in the next 12 months (% of n = 1,001) Nov 09 Jul 09 Total Pressure Price Margins & Profitability 20% 4% 24% 21% Fuel Prices 18% 4% 22% 26% Cash Flow 17% 4% 21% 24% Competitive Activity 16% 3% 19% 19% Interest Rates 15% 4% 19% 14% Exchange Rates 12% 7% 19% 16% Business Sales/Projects: by Volume 15% 2% 17% 15% Timing of Customer Payments 13% 3% 16% 14% Business Finance,Funding, Overdraft 12% 3% 15% 13% Business Sales/Projects: by Value 12% 2% 14% 14% Industry/Category Performance 11% 3% 14% 16% Marketing & Customer Relationships 11% 2% 13% 11% Other (Than Staff) Business Costs 10% 2% 12% 14% Number & Cost of Staff 7% 2% 9% 7% Staff Skills & Training 6% 1% 7% 4% Current Business Systems (IT, Accounting, Website) 5% 1% 6% 5% 29

30 The business tasks that New Zealand business owners find most difficult Business owners currently have most difficulty with marketing to get new customers or new business; getting affordable and reliable business advice; getting funding or finance to grow their business; chasing customer payments; and managing the cash flow of their business (These are also the primary present business difficulties of business owners in Australia). Marketing to get new customers or new business is seen as the most difficult of the 16 nominated business tasks 24% of business owners surveyed find marketing to get new customers or new business quite difficult, and 5% find it very difficult, making a total of 29% of business owners who find this task difficult. (See Figure 8) Business owners in Auckland (36%), maturing (5 10 years old) business owners (34%) and business owners in the Transport industry (39%) find this task more difficult than other business owners do. Business owners in the Agriculture, Forestry & Fishing industry (9%) have the least difficulty with this business task, unlike their counterparts in Australia. Getting affordable and reliable business advice is proving difficult for many business owners Getting affordable and reliable business advice is, at 24%, the second most difficult task for business owners in New Zealand. Business owners in Christchurch (33%) find this particularly difficult, as do owners of businesses in the Manufacturing and Wholesale industry (32%). Getting funding or finance to grow the business has the highest very difficult score (as it also does in Australia) 6% of all business owners surveyed find the task: Getting funding or finance to grow the business very difficult and a further 16% find this task quite difficult, making this, at 22%, the third most difficult of the sixteen tasks measured in this survey. This could be a reflection of the shortage of business finance funding following the global financial crisis. This task is particularly difficult at the moment for owners of medium sized businesses (30%) and business owners in the Transport industry (34%). Chasing customer payments is a difficult task for many business owners Chasing customer payments is particulalrly difficult for small business owners (35%) and medium sized business owners (29%), as it is for owners of maturing (5 10 years old) businesses (31%) and business owners in the Construction & Trades industry (31%). Managing the cash flow of the business is the fifth most difficult of these business tasks Managing the cash flow of the business is very difficult for 4% and quite difficult for 17% of business owners. It is considerably more difficult for business owners in the Transport industry (34%) than it is for most other business owners. Base: Business owners and directors (n = 1,001) Q. Please indicate how difficult or easy you personally find the following tasks in your business. (Please select one answer only for each statement) 30

31 Figure 8: Difficulties had with sixteen nominated business tasks (% of n = 1,001) Nov 09 Total Difficulty Marketing to get new customers or new business 24% 5% 29% Getting affordable & reliable business advice 19% 5% 24% Getting funding or finance to grow the business 16% 6% 22% Chasing customer payments 17% 5% 22% Managing the cash flow of the business 17% 4% 21% Doing monthly accounts including tax 15% 3% 18% Keeping business books up to date 15% 3% 18% Finding the best suppliers at the right price 15% 2% 17% Marketing to get repeat business 13% 3% 16% Networking with similar businesses 12% 3% 15% Finding information relevant to your business 11% 3% 14% Paying PAYE tax 11% 2% 13% Attracting new staff 9% 3% 12% Managing existing staff performance 8% 2% 10% ecommerce or emarketing on your website 6% 3% 9% Managing your website 6% 2% 8% 31

32 Sources of information or advice on tax and compliance issues Business owners are most likely to source tax and compliance information or advice from their Accountant or from the IRD (Inland Revenue Department) Businesses more likely to ask their accountant for tax and compliance information than the IRD Three quarters (76%) of business owners surveyed ask their Accountant for information and advice on tax or compliance issues, while the Inland Revenue Department (IRD) is a source of this kind of information for only 40% of business owners. (See Figure 9) Medium sized business owners less likely to ask Accountant for tax and compliance advice 60% of medium sized business owners ask their Accountant for tax and compliance information or advice, compared with between 73% 82% of owners of sole, micro and small businesses who do so. Rural business owners most likely to source this information from Accountant Owners of businesses in rural New Zealand (84%), and owners of businesses in the Agriculture, Forestry & Fishing (84%) and Construction & Trades (83%) industries are most likely to source tax and compliance information from their accountant. Business owners in Christchurch (69%) are a little less likely than others to source compliance or tax information from their Accountant. Base: Business owners & directors (n = 1,001) Q. Who do you ask for information or advice on tax or compliance issues? Figure 9: Sources of Information or Advice on Tax and Compliance Issues (% of n = 1,001) Accountant 76% Inland Revenue Dept 40% Online Compliance, Tax Info 15% Business Associates/People Bank Manager/Adviser Other Govt Depts (incl Labour) Business Mentor, Adviser, Coach Software Provider Chamber of Commerce NZ Trade & Enterprise Economic Development Agencies Don't ask for info on tax & compliance 9% 8% 7% 5% 4% 2% 2% 2% 1% 7% 32

33 Sources of information about improving business performance A third of the business owners surveyed aren t looking for information that will help them to improve their business. Their Accountant is the primary source for those who want help to improve business 37% of all businesses are likely to ask their accountant for this information, and 21% are likely to seek this information from a business associate, 15% from a business mentor, adviser or coach, and 10% from a bank manager or advisor. Amongst the 65% of business owners surveyed who will seek information nearly 60% see their Accountant as the primary source to help them improve their business (See Figure 10) Sole traders are least likely to seek business improvement information Sole traders are the least likely (39%) to seek business improvement advice, and possibly rely on their own information and experience. Few business owners in use the Internet to source information to help improve their business Very few (8%) of business owners surveyed use online resources to find information that might help them improve their business. In July 2009, 11% of business owners said that they use the Internet to source information to help them improve their business. Base: Business owners and directors (n = 1,001) Q. And who do you ask for information about improving business performance? Figure 10: Sources of Information on or help with improving business performance: (% of n = 1,001) Accountant 37% Inland Revenue Dept 3% Online Business Info Source 8% Business Associates/People 21% Bank Manager/Adviser 10% Other Govt Depts/Agency 2% 3% Business Mentor, Adviser, Coach 15% Software Provider Chamber of Commerce NZ Trade & Enterprise Economic Development Agencies Family Member 1% 2% 3% 3% 1% Don't ask for this kind of advice 35% 33

34 Improvements to help businesses work smarter in the next 12 months Improved supplier relationships and pricing would most help New Zealand business owners work smarter in the coming year, along with an affordable business mentor or advisor. Suppliers key to helping business owners work smarter When asked to choose between seven possible improvements that might help them work smarter over the next 12 months, 28% of business owners surveyed chose improved supplier relationships and pricing. This business improvement is especially wanted by business owners in the Retail & Hospitality (46%) and Manufacturing & Wholesale (39%) industries. (See Figure 11) Improved staff skills and performance are very important to those with more staff Improved staff skills and performance would help medium sized business owners (62%) and small business owners (54%), with micro business owners (27%) finding it somewhat less important. Improved bookkeeping and accounting systems would really help start up business owners 31% of the start up (<2 years old) business owners surveyed believe Improved bookkeeping and accounting systems could help them work smarter in the next year, compared with 26% of establishing (2 5 years old) business owners, 24% of maturing (5 10 years old) business owners and 21% of mature (more than 10 years old) business owners. Female business owners are very keen to have access to an affordable business advisor or mentor While 23% of male business owners surveyed would like access to an affordable business advisor, 34% of female business owners would like access to an advisor who could help them work smarter. Better website and ecommerce facilities wanted most by business owners in Retail & Hospitality, Manufacturing & Wholesale industries 30% of business owners in Retail & Hospitality industry and 29% of bsuiness owners in Manufacturing & Wholesale industry would like better website and ecommerce facilities, which contrasts with only 6% of business owners in the Agriculture, Forestry & Fishing industry who believe that this would help them work smarter. Base: Business owners and directors (n = 1,001) Q. Based on the way you do business today, which of any of the following would most help you work smarter in your business in the next 12 months? 34

35 Figure 11: Improvements to help businesses work smarter in the next 12 months (% of n = 1,001) Nov 09 Jul 09 Improved Supplier Relationships & Pricing 28% 28% 33% Access to an Affordable Business Mentor or Adviser 27% 27% N/A Improved Bookkeeping & Accounting Systems 24% 24% 33% Improved Banking & Business Finance Facilities 22% 22% 22% Improved Staff Skills & Performance 20% 20% 20% Improved Website & ecommerce Facilities 19% 19% 25% Improved Business Information Facilities 17% 17% 21% Don't know 23% 23% 19% 35

36 How they track cash flow in their business Many business owners are missing an opportunity to track business cash flow in a systematic way Many business owners look at bank statements not business books to manage cash flow Some business owners are not tracking their cash flow effectively and this impacts their capacity to make business decisions based upon what they find. Twice as many business owners (41%) say that they only refer to their bank statement rather than use their computerised accounting system (21%) to track their cash flow (as distinct from doing their books ). (See Figure 12) Sole traders and micro business owners are most likely to rely on bank statements Sole traders (35%) and micro business owners (34%) are the most likely to refer to their bank statements to track their cash flow. Small business owners more likely to use computerised accounting system to track cash flow Small business owners are the most likely (33%) to use a computerised accounting system to track their business cash flow, as are 25% of business owners in Wellington and the rest of New Zealand, compared with only 18% of business owners in Auckland and 14% of business owners in Christchurch. Business owners in the Finance & Insurance (37%) and Property, Business & Professional Services (31%) industries are also more likely to use a computerised accounting system. Medium sized business owners would rather their accountants track their cash flow 32% of medium sized business owners engage their accountant to monitor and advise on their business cash flow, while 22% of medium sized business owners will use a computerised accounting system to do so. Few business owners confess poor cash flow management Only 16% of the business owners surveyed admit that they don t track cash flow as well as they should, and very few (7%) say that their accountant monitors the cash flow of their business for them. Base: Business owners & directors (n = 1,001) Q. How do you track cash flow in your business? (Please select your MAIN METHOD from the list below) Figure 12: Business owners main method of tracking their cash flow (% of n = 1,001) Refer to bank statement 41% Use computerised accounting system 21% Don't track cash flows so well Rely on monthly P & L statement Accountant monitors for me 11% 10% 10% Contract bookkeeper monitors Other single mentions 4% 1% 36

37 Time it is taking to get paid by customers or clients Mind Your Own Business. Smarter. The majority of business owners are still being paid in the same time as they were six months ago Just over a quarter of business owners are waiting longer to get paid than they were six months ago, only a few are getting paid faster than they were six months ago 60% of business owners in this survey report that they are getting paid in about the same time as they were paid six months ago. 29% say that it is taking a little or a lot more time. While only 5% say that they are getting paid a little or a lot faster than they were six months ago. (See Figure 13) Owners of small and medium sized businesses are waiting longer to get paid 39% of small business owners and 34% of medium sized business owners are waiting longer to get paid than they were six months ago, whereas 28% of sole traders and 31% of micro business owners say that they are waiting longer to get paid than they were six months ago. Business owners in rural New Zealand are waiting less time to get paid Only 19% of business owners are waiting longer to get paid in rural New Zealand, where 68% of business owners say that they are getting paid in the same time as they were 6 months ago. Business owners in Manufacturing & Wholesale and Construction & Trades industries waiting longer 41% of business owners in the Manufacturing & Wholesale industry and 40% of business owners in the Construction & Trades industry are waiting longer to get paid than they were six months ago. Base: Business owners and directors (n = 1,001) Q. Compared with 6 months ago is it taking more time to get paid by your customers or clients, less time to get paid, or is it taking about the same amount of time? (Please select one only) Figure 13: Time taken to get paid compared with 6 months ago: Total Sample (% of n= 1,001) 6% 5% 1% 4% Nov 09 Jul 09 A lot less A little less About the same A little more A lot more Don't know 1% 1% 4% 2% 23% 60% 68% 23% 20% 6% 3% 60% 5% 6% 37

38 How often credit checks are done before a project or contract is accepted The majority of business owners in New Zealand rarely or never run credit checks on their clients or other businesses before accepting a contract or project 60% of business owners surveyed rarely or never credit check their clients or customers before accepting projects or contracts 25% of business owners surveyed report that they rarely do credit checks, while 35% admit that they never do credit checks before accepting contracts or projects. Only 10% say that they quite often do credit checks, and only 7% say that they very often do credit checks. (See Figure 14) Only medium sized business owners credit check quite or very often 44% of medium sized business owners credit check quite or very often, compared with 26% of small business owners and only 15% of micro business owners or sole traders. The most frequent and likely credit checkers are business owners in the Manufacturing & Wholesale industry (33%), the least frequent and most unlikely are business owners in the Agriculture, Forestry & Fishing indsutry (8%). Base: Business owners and directors (n = 1,001) Q. How often do you do credit checks on customers or other businesses before you enter into a project or contract with them? Figure 14: Whether credit checks conducted on customers or other businesses before accepting project or contract: Total Sample (% of n= 1,001) Credit Check 7% 7% 10% 35% 16% Very Often Quite Often Occasionally Rarely Never Don't Know 25% 38

39 Personal banking or financial services used in the business Mind Your Own Business. Smarter. Half of business owners surveyed use their personal credit or charge card for business purposes, and almost half use their personal savings to start or maintain their business. A personal credit card or charge card is used in the business by 52% of all business owners surveyed, has nothing to do with the age of the business, and is not likely to be replaced by a specific purpose business credit or charge card This survey indicates that the age of the business has no effect on the use of personal credit or charge cards in a business, which are used by 50% of start up business owners, 53% of establishing and of maturing (5 10 years) business owners, and 61% of mature (more than 10 years) business owners. Personal cards are also used by 58% of business owners in the Professional & Business Services industry and by 50% of business owners in the in the Agriculture, Forestry & Fishing indsutry, and by 57% of all business owners surveyed in Auckland. Personal savings are more likely to be used in or for the business by start up business owners, and by sole traders 56% of owners of start up businesses are still using their personal savings in the business, as are 46% of all sole traders surveyed. Base: Business owners and directors (n = 1,001) Q. Which if any of the following personal banking or financial services do you currently use in this business? Figure 15: Whether and which personal banking or financial services used in the business: Total Sample (% of n= 1,001) Personal credit or charge card 52% Personal Savings 42% Personal Property Loan, Home Mortgage 24% Personal Overdraft 14% Personal Loan 12% No personal FS used for business 30% 39

40 Business banking or financial services used in the business Mind Your Own Business. Smarter. Nearly half of the business owners surveyed use their business savings or profits in their business, and a third use a business credit or charge card for business purposes 44% use business savings or profits in the business and 32% use a business credit or charge card Business owners in the Construction & Trades, Manufacturing & Wholesale and Transport industries are most likely (all 49%) to use their business savings or profits to fund the continuation or growth of their business. While 52% of business owners surveyed used a personal credit or charge card in the business, 32% use a business credit or charge card in the business 56% of owners of medium sized businesses use a business credit or charge card in the business, compared with only 30% of sole traders and micro business owners who do so. Small and medium sized business owners much more likely to use a business overdraft 50% of small business owners and 51% of medium business owners use a business overdraft facility, compared with 41% of micro business owners and only 20% of sole traders. Base: Business owners and directors (n = 1,001) Q. Which if any of the following business banking or financial services do you currently use in this business? Figure 16: Business banking or financial services used in the business: Total Sample (% of n= 1,001) Business credit or charge card 32% Business savings or profits 44% Business Property Loan, Home Mortgage 13% Business Overdraft 28% Business Loan 17% No business FS used for business 23% 40

41 What they do to manage their business finances and how often they do it More than three quarters of the business owners surveyed claim to conduct each of the nominated activities to manage their business finances; but many less can confirm how often they do it, or say that the task is not relevant to their business; and very few conduct any of the activities more often than bi monthly. Notes: In Figure 17, we show the total who claim to conduct the nominated business activity in Figure 17.1, we show the total real net of activities, after deducting those who don t know how often the activity is conducted or say that it is not relevant to their business In Figure we show the total who claim to conduct the activity at least bi monthly 92% of business owners surveyed claim to review their business profit and loss (See Figure 17) but excluding those who can t say how often they do this, the business owners reviewing P&L net out to 82% of the total sample (See Figure 17.1) and the business owners who conduct this activity at least bimonthly represent only 29% of the total sample (See Figure 17.2) Similarly, the business owners claiming to discuss their business with their Accountant is 90%, but only 79% can say how often they do this, and only 15% do it at least bi monthly. Likewise, 86% of business owners surveyed have followed up on debtor late payments, 60% know how often they do this, and 24% do it at least bi monthly. While 85% of business owners claim to review their projected cash flow, 71% say how often they do it, and 27% do it at least bi monthly. 82% of business owners surveyed report that they have reviewed their business funding and finance, 60% know how often, and only 17% have done it at least bi monthly. 76% of business owners report that they have reviewed their business plan with targets and budgets, 57% indicate how often, but only 11% have done it at least bi monthly. Those business owners that use accounting software are much more likely to indicate how often they review their P&L (91%) than those who do not use accounting software (74%) are. Similarly, 81% of business owners surveyed that use accounting software are able to say how often they review and project their cash flow, compared with 64% of those who do not use accounting software. Base: Business owners and directors (n = 1,001) Q. Thinking about managing the business finances, how often was each of the following activities done in the business in the last 12 months? 41

42 Figure 17: How they manage their business finances and how often they do it: Total Sample who conduct activity (% of n=1,001) Reviewed business profit & loss Discussed business with Accountant Followed up late debtor payments Reviewed projected cash flow Reviewed business funding & finance 92% 90% 86% 85% 82% Reviewed physical business plan with targets 76% Figure 17.1: How they manage their business finances and how often they do it: Total Sample who conduct activity, less those who don t know how often they do it, or consider it not relevant to their business (% of n=1,001) Reviewed business profit & loss Discussed business with Accountant 79% 82% Followed up late debtor payments 60% Reviewed projected cash flow Reviewed business funding & finance Reviewed physical business plan with targets 57% 60% 71% Total without DK or Not Relevant Figure 17.2: How they manage their business finances and how often they do it: Total Sample who conduct activity, at least bi monthly (% of n=1,001) Reviewed business profit & loss Discussed business with Accountant Followed up late debtor payments Reviewed projected cash flow 15% 24% 29% 27% Total Bi monthly Reviewed business funding & finance Reviewed physical business plan with targets 11% 17% 42

43 What they do to generally manage their business, and how often they do it The general business management activities that business owners report that they do and do most often are to actively review or research the latest industry or market trends; and to network and meet up with other business owners. Notes: In Figure 18, we show the total who claim to conduct the nominated business activity in Figure 18.1, we show the total real net of activities, after deducting those who don t know how often the activity is conducted or say that it is not relevant to their business In Figure we show the total who claim to conduct the activity at least bi monthly On this basis, 81% of business owners surveyed have actively reviewed or researched industry or market trends, 63% report how often they have undertaken this, and 27% have carried out the activity at least bi monthly. 66% of business owners surveyed indicate how often they have networked and met up with other business owners, and 22% have done this at least bi monthly. 54% of business owners report how often they have actively reviewed or researched competitive activity, and 16% have done this at least bi monthly (as have 16% surveyed their clients or customers for feedback). Business owners that have a business website are more likely to conduct business reviews of this kind. For example, 39% of those with a business website will have reviewed or researched the latest industry and market trends in the last 2 months, compared with only 23% of those who do not have a business website. The difference is even greater between business owners who have a business website and have reviewed competitive activity in the last 2 months (30%), and those who do not have a business website who have done the same (12%). Base: Business owners and directors (n = 1,001) Q. Thinking about general business management, how often was each of the following activities done in the business in the last 12 months? 43

44 Figure 18: How they manage their business and how often they do it: Total Sample who conduct activity (% of n=1,001) Attended business management skills course, seminar 63% Networked, met with other business owners 84% Discussed business with business mentor or adviser Actively reviewed or researched latest industry, market trends Actively reviewed or researched competitive activity 72% 81% 78% Total activity Surveyed clients, customers for feedback 71% Reviewed staff performance in person 80% Reviewed sales & marketing plan 72% Figure 18.1: How they manage their business and how often they do it: Total Sample who conduct activity, less those who don t know how often they do it, or consider it not relevant to their business (% of n=1,001) Attended business management skills course, seminar 45% Networked, met with other business owners 66% Discussed business with business mentor or adviser 41% Actively reviewed or researched latest industry, market trends 63% Actively reviewed or researched competitive activity Surveyed clients, customers for feedback 49% 54% Total without DK or Not Relevant Reviewed staff performance in person 30% Reviewed sales & marketing plan 45% 44

45 Figure 18.2: How they manage their business finances and how often they do it: Total Sample who conduct activity, at least bi monthly (% of n=1,001) Attended business management skills course, seminar 6% Networked, met with other business owners 22% Discussed business with business mentor or adviser 9% Actively reviewed or researched latest industry, market trends Actively reviewed or researched competitive activity 16% 27% Bi monthly Surveyed clients, customers for feedback 16% Reviewed staff performance in person 6% Reviewed sales & marketing plan 10% 45

46 GOVERNMENT ISSUES SECTION Mind Your Own Business. Smarter. Present satisfaction with the Government s support of New Zealand business Over a third (34%) of New Zealand businesses are currently dissatisfied with the Government s level of support for businesses like theirs, compared to only 21% that are satisfied with their support While 41% of business owners surveyed are neutral about the Government s support for businesses like theirs, 34% are dissatisfied and only 21% are satisfied with the Government s level of support at this time. (See Figure 19) Owners of micro businesses are most dissatisfied and least satisfied with the Government s support. 38% of micro business owners are dissatisfied with the Government s performance, and only 18% are satisfied with the Government s level of support. Medium sized business owners are nearly as satisfied (30%) with the Government as they are dissatisfied (34%). The satisfaction and dissatisfaction ratings of the Government by small business owners (33%/21%) and sole traders (32%/21%) are in line with the averages recorded amongst all business owners in this survey (34%/21%). ((See Figure 19.1) Business owners in Wellington more dissatisfied than business owners in other locations. Only 14% of Wellington based business owners are satisfied with the government s support, while 36% are dissatisfied. The satisfaction gap is narrowest in the rest of New Zealand where 24% of business owners are satisfied and 34% of business owners are dissatisfied with the Government. (See Figure 19.2) Business owners in Construction, Trades and Transport industries are most dissatisfied (40%) and least satisfied (19%) with the Government s support of businesses like theirs. (See Figure 19.3) Base: Business owners and directors (n = 1,001) Q: How satisfied are you with the Government s level of support for businesses like yours at this time? 46

47 Figure 19: Dissatisfaction & Satisfaction with the Government s support of business in New Zealand: By Total Sample (% of n=1,001) 2% Quite/Very Satisfied 29% Neither Satisfied Nor Dissatisfied 34% Quite/Very Dissatisfied Don't know 41% Figure 19.1: Satisfaction & dissatisfaction with the Government s support of business in New Zealand: by Business Size/Number of Employees (% of n=1,001) ALL (0 199) 21% 34% SOLE (0) 21% 32% MICRO (1 4) 18% 38% SMALL (5 19) 21% 33% MEDIUM (20 199) 30% 34% Satisfied Dissatisfied 47

48 Figure 19.2: Satisfaction & dissatisfaction with the Government s support of business: by Location (% of n = 1,001) TOTAL NZ 21% 34% AUCKLAND 21% 34% WELLINGTON 14% 36% CHRISTCHURCH 16% 33% REST OF NZ 24% 27% Satisfied Dissatisfied Figure 19.3: Satisfaction & dissatisfaction with the Government s support of business: by Industry (% of n = 1,001) Agriculture, Manufacturing & Wholesale Construction, Trades & Transport 19% 24% 33% 40% Finance & Insurance 25% 33% Professional & Business Services 22% 32% Retail & Hospitality 20% 34% Satisfaction Dissatisfaction 48

49 Whether the Government s support is better or worse versus a year ago However, businesses believe Government support is improving, with more businesses (27%) reporting the Government s level of support for businesses like theirs is better than a year ago While 44% of business owners surveyed are neutral on this subject, 27% indicate that the Government s support is better than a year ago, and 20% say that it is worse (the political affilaition of each respondent is not known). (See Figure 20) Owners of medium sized businesses are much more positive and most likely (45%) to think that the Government s support has improved (only 14% say support is worse). The feelings of business owners in sole, micro and small businesses are broadly in line with the averages recorded amongst all business owners in this survey (29%/20%). ((See Figure 20.1) Business owners located in Wellington are more likely (28%) to think the Government s support is worse than a year ago than they are likely (26%) to say that it is better than a year ago Business owners in Christchurch are split, with 19% thinking the Government s support is better and 19% reporting that it is worse than a year ago. Auckland business owners are more positive (27%) than negative (17%), as are business owners in the rest of New Zealand (32%/20%). (See Figure 20.2) Business owners in Transport industries are almost as negative (34% say worse ) as they are positive (25% say better ), whereas Finance & Insurance business owners are positive about the Government s support versus a year ago (40% say better and 13% say worse ) Business owners in the Professional & Business Services and Agriculture, Manufacturing & Wholesale industries are more positive than negative on the question, whereas business owners in the Retail & Hospitality industry are equally divided (20%/20%) on the point. (See Figure 20.3) Base: Business owners and directors (n = 1,001) Q: Overall, do you feel that the Government s support for small businesses is better or worse versus a year ago? 49

50 Figure 20: Whether the Government s support of business in New Zealand better or worse versus a year ago: By Total Sample (% of n=1,001) 9% Lot/Little Better Neither Better or Worse Lot/Little Worse 20% 27% Don't know 44% Figure 20.1: Whether the Government s support of business in New Zealand better or worse versus a year ago: by Business Size/Number of Employees (% of n=1,001) ALL (0 199) 27% 20% SOLE (0) 27% 21% MICRO (1 4) 28% 18% SMALL (5 19) 27% 20% MEDIUM (20 199) 45% 14% Better Worse 50

51 Figure 20.2: Whether the Government s support of business in New Zealand better or worse versus a year ago: by Location (% of n = 1,001) TOTAL NZ 27% 20% AUCKLAND 27% 17% WELLINGTON 26% 28% CHRISTCHURCH 19% 19% REST OF NZ 32% 20% Better Worse Figure 20.3: Whether the Government s support of business in New Zealand better or worse versus a year ago: by Industry (% of n = 1,001) Agriculture, Manufacturing & Wholesale 31% 21% Construction, Trades & Transport 25% 24% Finance & Insurance 40% 13% Professional & Business Services 33% 17% Retail & Hospitality 20% 20% Better Worse 51

52 Whether the regulatory environment is better or worse versus a year ago 22% of Kiwi business owners feel the regulatory environment has gotten worse over the past year While 47% of business owners surveyed are neutral on the question, 21% say that the regulatory environment is better than a year ago, and 22% say that it is worse. (See Figure 21) Owners of medium sized businesses are the only ones more likely to think the regulatory environment is better (34%) than it is worse (20%). The feelings of sole traders are divided, 21% better and 21% worse. Micro business owners are divided 19% better and 25% worse, and small business owners are divided 21% better and 28% worse. ((See Figure 21.1) Business owners in Christchurch are the most negative, with 17% saying that the regualtory environment is better and 26% saying that it is worse. Wellington business owners are also likely more negative with 14% saying the environment is better and 19% saying it is worse. Business owners in Auckland (21%/20% better/worse) and Rest of New Zealand (22% better/23% worse) are more evenly divided in the debate. (See Figure 21.2) Business owners in Construction, Trades and Transport industry are much more likely to be negative (25% say worse ) than they are positive (16% say better ), and Finance & Insurance business owners agree with them on this question (22% better/28% worse). Business owners in the Professional & Business Services industry are the only ones more positive (24%) than negative (18%) on the question. (See Figure 21.3) Base: Business owners and directors (n = 1,001) Q: And how would you describe the regulatory environment for businesses versus a year ago? 52

53 Figure 21: Whether the regulatory environment better or worse versus a year ago: By Total Sample (% of n=1,001) Lot/Little Better 10% 21% Neither Better or Worse 22% Lot/Little Worse Don't know 47% Figure 21.1: Whether the regulatory environment better or worse versus a year ago: by Business Size/Number of Employees (% of n=1,001) ALL (0 199) 21% 22% SOLE (0) 21% 21% MICRO (1 4) 19% 25% SMALL (5 19) 21% 28% MEDIUM (20 199) 34% 20% Better Worse 53

54 Figure 21.2: Whether the regulatory environment better or worse versus a year ago: by Location (% of n = 1,001) TOTAL NZ 21% 22% AUCKLAND 21% 20% WELLINGTON 14% 19% CHRISTCHURCH 17% 26% REST OF NZ 22% 23% Better Worse Figure 21.3: Whether the regulatory environment better or worse versus a year ago: by Industry (% of n = 1,001) Agriculture, Manufacturing & Wholesale 23% 23% Construction, Trades & Transport 16% 25% Finance & Insurance 22% 28% Professional & Business Services 24% 18% Retail & Hospitality 20% 22% Better Worse 54

55 The helpfulness to business of nine Government changes and initiatives Improved access to information such as and other online business tools are seen as the most helpful of the Government changes and initiatives measured in this survey. Businesses have had a very negative response to the ACC changes, with 40% of all business owners surveyed seeing them as unhelpful and only 9% supporting the changes. Climate change initiatives and exchange rate changes are both seen as more unhelpful than they have been helpful. While around one quarter of the business owners surveyed are neutral about the changes, between 23% (ACC changes) and 63% (Export Development Support) are unaware of the changes or initiatives, or say that they are not relevant to them (which may mean the same thing). Base: Business owners and directors (n = 1,001) Q: From what you know about them, which of these government changes and initiatives have been helpful to businesses like yours? EXCHANGE RATE 13% 18% 45% ACCESS TO BUSINESS FINANCE 10% 7% 51% EXPORT DEVELOPMENT SUPPORT 9% 5% 63% IMPROVED ACCESS TO INFO 21% 6% 40% Helpful ONLINE BUSINESS TOOLS 17% 5% 53% Unhelpful Unaware/Irrelevant CLIMATE CHANGE INITIATIVES 7% 21% 49% RESOURCE MGT & BUILDING ACT 12% 15% 47% ACC CHANGES 9% 40% 23% EMPLOYMENT/HOLIDAY ACT 10% 15% 50% 55