Improving outlook for local SMEs

Nearly a third of New Zealand’s small and medium-sized businesses (SMEs) entered 2025 with growing sales pipelines for the first quarter of the calendar year, according to MYOB.

In a nationwide survey of 500+ SME owners and decision-makers, 30% of those polled reported having more work lined up for January to March than they would usually expect. The survey also found that 41% have the same level of work or sales in the pipeline as normal. Just over a quarter (27%) say they have less work lined up for their first quarter, compared to expectations.

This follows a challenging end to 2024, with most (43%) local SMEs reporting lower sales than expected for the final quarter. In comparison, over a third (37%) said sales were as expected, while just 18% of those surveyed said sales from the start of October to the end of December exceeded their expectations. MYOB Chief Customer Officer Dean Chadwick (pictured), says the positivity emerging in SMEs’ sales outlook is an encouraging start to 2025.

“Inflation and the cost of living continue to influence SME confidence coming into 2025, as well as factors like transport costs, the country’s economic performance, and interest rates. Many will also be keeping a close eye on international markets with more change likely over the next 12 months,” explains Dean.

SIZE DEPENDENT
“Reinvigorated demand for their goods and services as consumer confidence increases will help to ease some of the pressures many business owners have been feeling over the past few years. While it’s certainly still early days, it’s heartening to see local SMEs are beginning the year with more momentum than many will have seen in some time.”

He says the prospect of new sales growth also increases with business size. Medium-sized businesses with 50-99 employees are reporting a particularly robust start to the year, with 57% of this group reporting they have more work or sales lined up for the first quarter of 2025 than expected, after 33% logged higher-than-forecast sales for October to December 2024. Many SMEs are planning business investment to fuel growth, turning their attention to improving their operations for 2025. Nearly a quarter (24%) of business operators surveyed plan to increase spend on improving their business operations this year, while half (50%) intend to keep their investment the same as previous years. Just over one-in-five businesses are looking to cut additional costs, with 21% planning to reduce spend on improving their operations.

MARKETING & SALES
With a focus on growing demand and securing a steady flow of customers, a third (33%) plan to put most of their spend toward marketing and sales, followed by 28% looking to put most of this budget toward technology and digital transformation.

Rounding out the top five areas likely to see more investment from SMEs this year are equipment and machinery upgrades (25%), team training and development (24%), and improving
the customer experience (19%). “As local business owners look to stimulate growth this year, it’s all about the customer – driving foot traffic and attracting new custom by homing in on their marketing and sales activities. Then, it’s about doing what they can with their teams to keep these customers returning and improving the customer experience,” says Dean.

“Additionally, SMEs’ continued appetite to invest in technology and digital tools and likewise make technology a key element of their business strategy, will help them to maximise these potential gains,” he concludes.