SMEs contributed $153b to industry sales last year but many lack confidence in the economy

More than 40 per cent of SMEs expect the economy to decline in next 12 months. Photo / 123RF

Small businesses are concerned about what their future holds despite many reporting an increase in revenue over the past 12 months.

Research from accountancy software firm MYOB's latest Business Monitor Employer's Snapshot which surveyed more than 300 local small and medium-sized businesses shows many business operators still lack confidence in the economy.

More than 40 per cent of small businesses surveyed said they expected the economy to decline over the next 12 months in the survey. Only 25 per cent expect it to improve.

Thirty per cent of firms said their revenue had increased since June last year, while 28 per cent said it had decreased. Close to 40 per cent of businesses said their revenue was about the same from this time last year.

A third of firms said they expected their revenue to be up in the next 12 months, 22 per cent said they expected it to be down.

Small businesses contributed $153 billion, or 25 per cent, to the country's total industry sales in the 2018 financial year, figures released today by Stats NZ show.

Firms with no employees, including those who were self-employed, accounted for 63.7 per cent of all businesses in New Zealand and 13.6 per cent of all sales last year.

Stats NZ figures show small businesses were the largest contributors to sales in agriculture, forestry, and the fishing industry last year.

Medium-sized businesses contributed 19.3 per cent to total sales last year.

MYOB country manager Ingrid Cronin-Knight said the short-term outlook for small businesses was "solid" and earnings for many small businesses were on track to grow over the next 12 months.

A third of businesses surveyed said they had more work in the pipeline for the third quarter if the year while a quarter said they had less work than usual in the next three months.

Cronin-Knight said issues outside businesses control, such as increasing competition and compliance, had led to consistently low levels of confidence.

"There's increasing speculation about how much underlying strength remains in the current growth cycle."

Zac deSilva, founder of Business Changing. Photo / Supplied

In March, small business confidence continued to slide as international uncertainty around threats to security, the US-China trade war and Brexit set in. At that time almost half of businesses surveyed said they expected the New Zealand economy to decline in the next 12 months, while 19 per cent expected it to improve.

Zac deSilva, founder of small business consultancy Business Changing, said there was more uncertainty in the market than there was 12 months ago.

"Our clients are definitely finding it harder to find quality staff and are having to focus more and more on being an employer of choice so that people want to join them due to their positive culture," deSilva said.

"The minimum wage increases are certainly biting plenty of businesses and we are hearing more and more talk of price increases over the next 12 to 24 months to offset these wage cost rises."

There had been a slowdown in the cars, construction and luxury product industries this year compared to previous peaks, deSilva said.

"Our advice to SMEs is to be more focused on growing their business, get closer to your customers and focus on better leadership to remain in the tranche of SMEs that will continue to grow even if times do get a bit harder."