Business confidence within small-to-medium (SME) enterprises surrounding their futures is the highest it has ever been since 2019, according to the latest Prospa survey
The survey of around 500 SME entrepreneurs revealed insights on the challenges and outlook on the small business landscape in New Zealand.
It found over 53 percent of SMEs have high confidence about their future within the next year, an increase of 4 percent compared to last year.
This is the highest level of optimism the industry has seen since 2019, when 57 percent of respondents expressed confidence, before the pandemic restrictions caused havoc in the SME landscape.
Adrienne Begbie, Managing Director at Prospa NZ, says this is the beginning of an upward trend of confidence.
“We’re pleased to see that small business owners are feeling more optimistic about their future, after what’s been an extremely stressful time for some,” she says.
The survey revealed that confidence is the highest within larger businesses, with 64 percent expressing confidence. This figure is the same for consumer service-oriented businesses.
However, Begbie says that business owners should remain vigilant in the coming months and year, as the recessionary environment is “likely to make a dent”.
“Even though we have officially entered a recession, this shows how resilient we are as a country,” she adds.
For SMEs, the cost of doing business is the biggest challenge.
Twenty-eight percent of SMEs are most worried about economic and regulatory factors, compared to seventeen percent who are concerned about business demand and cashflow. A further 13 percent see staffing as their biggest challenge.
In the past year, three in five business say they have experienced increased supply chain costs and increased labour costs. Over half say they will invest in the business to generate cash flow.
Looking into the next year, SMEs report that labour costs will be the biggest challenge, followed by increases in the Official Cash Rate and supply chain disruptions.
“While optimism is up, it’s not going to be an easy road ahead for many small businesses as they face cost and recessionary pressures,” Begbie adds.
“Small businesses continue to be the lifeblood of our economy and I would encourage everyone to support local small businesses whenever they can.”