Small businesses on the up and up

Businesses that employ fewer than 20 people grew by 10 per cent in 2004, and account for an increasingly important part of the economy, an Economic Development Ministry report says.

The 2005 review of small to medium enterprises found there were 324,293 SMEs, 10 per cent more in 2004 than the previous year.

"New Zealand small and medium enterprises continue to punch well above their weight in contributing to our economy," Roger Wigglesworth, director of SMEs with the Economic Development ministry, said.

A total of 96.3 per cent of the countries businesses are defined as SMEs, having fewer than 20 employees. This has moved down by half a per cent from the previous year.

Of these 86.8 per cent employ fewer than six people. But these smallest firms have the highest average profits per head, the report found.

SMEs are most predominant in the business and property sectors, with the least number in the government and education sectors.

People employed by SMEs account for about 40 per cent of Kiwi workers. Also a SME is more likely to employ workers part time, than a larger enterprise.

While there are more SMEs in the main metropolitan centres, the importance of SMEs is greater in the regions, with areas like Tasman, Northland and the West Coast having the greatest number of workers employed in SMEs.

Between 2000 and 2004, SMEs accounted for 60 per cent of the new jobs created in New Zealand.

Mr Wigglesworth said SMEs in many cases are well placed to weather any economic slowdown "being more nimble and fleet of foot than say the giant supertankers out there".

The report showed New Zealand has a similar proportion of SMEs when compared to the numbers in Australia and Britain.

SMEs accounted for 93 per cent of the "entries and exits" from the Statistics New Zealand database, but Mr Wigglesworth said this did not mean they were "dropping like flies", rather they could be changing structure or reporting requirements.

However there were still more start-ups than departures.

- nzpa