Confidence lowest for Auckland businesses

A new survey has found small and medium business are the most optimistic. Photo / Greg Bowker

Most small to medium-sized companies are optimistic about the future although confidence in Auckland remains lower than in the rest of the country, a survey by KPMG has found.

The Mood of the Market survey, which questioned 189 businesses throughout the country, found 85 per cent believed activity would either stay the same or pick up in the next year.

Businesses were also more confident about staff levels with 16 per cent expecting to employ more people, 73 per cent maintaining levels and just 11 per cent planning to reduce staff numbers.

Mark Kippenberger, national managing partner of KPMG's business advisory division, said job websites were picking up and there appeared to be concerns about finding staff again.

"Small-to-medium businesses may be reluctant to let staff go after recently experiencing one of New Zealand's tightest labour markets."

Smaller companies were also less likely to make staff redundant (3.70 per cent) than larger companies (15.25 per cent). In a regional split, more redundancies were likely in Auckland with 16.6 per cent of businesses expecting to reduce staff numbers compared with only 4.5 per cent in Wellington and Christchurch.

Kippenberger said it appeared the recession had meant employees were putting a greater focus on their own individual performance in order to retain their positions.

"From the employers' perspective, there is a big change in the culture of their business with companies more focused on outcomes and everyone having to consciously contribute to the businesses."

The survey also showed that only 67 per cent of businesses prepare a formal business plan.

When split between larger and smaller businesses, 80 per cent of larger clients with a $10 million or more turnover measured their business plan against their performance on a monthly basis with only 40 per cent of smaller clients (those with $1 million turnover or less) doing the same.

"Smaller companies need to be more vigilant about preparing and adjusting their business plans if business conditions improve only marginally in the next six to 12 months," Kippenberger said.

"This is particularly the case when 42 per cent of small businesses say their major concern is managing their business cash flow and liquidity. Having access to cash is vital in an environment where debtors are reluctant to pay their bills but yours keep coming."

In terms of Government performance, only 5.82 per cent of respondents said they were dissatisfied with the outcomes of the May Budget.

However, compliance tax remains an issue for the smaller companies who would like this addressed by the National Government and 40 per cent of large turnover companies say a major focus for the Government should be to bring back incentives for investment and innovation.