Business optimism in New Zealand is down and small businesses in particular are having the rockiest time, a new report has found.
The latest Shaping Business Study conducted for telecommunications company 2degrees, shows that just 36 per cent of business leaders are feeling more optimistic about their business compared to a year ago - a drop of four per cent on 2021.
For small businesses (those with 20 or less employees) the outlook is even more uncertain with less than a third - 31 per cent - reporting they are more optimistic in 2022.
"Kiwi businesses are facing an incredibly challenging environment, but the effects aren't being felt equally," says Andrew Fairgray, chief business officer at 2degrees. "Costs are rising across-the-board, businesses are crying out for skilled staff and Covid continues to present problems."
He says large businesses are weathering the storm in a way smaller businesses aren't, with the study showing that despite the overall drop in optimism, 43 per cent of medium-size businesses (21-50 employees) and 57 per cent of large businesses (51 or more employees) are more optimistic than last year.
The report, which was conducted by research company Perceptive in a survey of more than 700 employing business decision makers around Aotearoa, identified more employment benefits and flexible work as key drivers for success.
Having better skilled staff was considered by three out of 10 businesses to be a top priority to help businesses thrive, with a majority looking for ways to attract and keep great people. Having more staff was considered key by 29 per cent (cashflow was also cited by 29 per cent).
"Attracting and retaining talent is crucial," Fairgray says. "We've heard from many of our own customers that it's all about people, people and the research backs this up.
"Over half (52 per cent) of businesses are prioritising productivity planning to invest in employing more highly skilled people in the next 12 months - and sweetening the deal by introducing perks such as leave and training options, increasing salaries (48 per cent) and introducing flexible working."
The study shows almost half - 48 per cent - of businesses are addressing their challenges by adapting their ways of working. Of these, 64 per cent have implemented hybrid working (working from home some of the time) while 47 per cent have adopted remote working.
The report shows that these adaptations are more common in medium and large businesses and that it has paid off with better business outcomes. Businesses who changed their working model were much more likely to say that productivity (38 per cent of businesses) and their ability to innovate (50 per cent) has increased since the pandemic than businesses who had not changed.
"We often talk about flexible work as a way to support our people, but these numbers show that it's also a good business decision," Fairgray says. "We've seen that ourselves at 2degrees and the research shows that businesses of all sizes looking to improve productivity and innovation should investigate new ways of working to unlock new opportunities, even in a difficult environment."
Other key findings from the report include:
# Increased running costs in the past year were reported by 90 per cent of businesses. While these were across-the-board, the most common were labour costs (53 per cent), utilities, insurance and leases (51 per cent) and raw materials (43 per cent).
# Up to 61 per cent plan on increasing prices in the next year - up 10 per cent since 2021 - while 75 per cent are looking for ways to reduce cost.
# The biggest challenge facing small businesses was increasing costs (identified by 21 per cent), for medium businesses it was labour constraints (21 per cent) while 20 per cent of large businesses said staff away sick was their biggest challenge.
# The percentage of businesses who think they have the digital skills to help them get ahead dropped 11 per cent from 2021 to 62 per cent, but 64 per cent believe digital technologies improve their ability to operate.
# Almost a quarter of small businesses - 24 per cent - say they don't have the digital skills to help them get ahead.
2degrees, which offers broadband and mobile services, a nationwide fibre network, modern technology platforms and energy services, operates the 2degrees, Slingshot and Orcon brands.
The 2degrees Shaping Business Study was carried out in July and August 2022 based on a representative sample of 702 employing business decision makers.
To find out more about the report go to: Shaping Business Study | 2degrees