Smallest SMEs have the highest average profits per staffer

Small-business numbers grew by 10 per cent last year, the sector's latest census has found.

A review of small to medium enterprises (SMEs) by the Ministry of Economic Development released this week found their numbers rose by 324,293 or 10 per cent in 2004 on the previous year.

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

A total of 96.3 per cent of the country's businesses are SMEs, which the ministry defines as employing 19 or fewer people.

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, but thin on the ground in the Government and education sectors.

People employed by SMEs account for about 40 per cent of New Zealand workers. An SME is also more likely to employ workers part-time than a larger enterprise.

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

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

Wigglesworth said SMEs were often 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 to Australia and Britain.

SMEs accounted for 93 per cent of the "entries and exits" from business recorded by Statistics New Zealand, but 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.

- additional reporting: NZPA