December 27, 2017      3 min read

Small and Medium Sized Enterprises (SMEs) play a major role in the development of the New Zealand economy. SMEs dominate New Zealand industries, generate employment and contribute to the country’s GDP.

This article examines the key trends for SMEs in New Zealand as well as prospects for the future. The article also addresses challenges that remain for SMEs in the country, for example, managing an online website. We suggest that SMEs download inventory software to help free up time so that they can work on improving their online presence in the digital age.

At a Glance

According to recent research from Statistics New Zealand, SMEs account for a whopping 97% of New Zealand businesses. The research demonstrates that the same percentage of businesses have fewer than 20 employees. Further, a significant 70 percent of these businesses have zero employees. These SMEs also make a significant contribution to the New Zealand economy. Statistics New Zealand estimates that 26 percent of the country’s GDP is brought in through businesses with less than 20 employees. Additionally, 29% of New Zealander’s are employed by SMEs.

SMEs are Young and Dynamic

The recent research from Statistics New Zealand also illustrated that a significant proportion of SMEs in New Zealand are relatively young. In fact, research shows that 30 percent of SMEs with less than 20 employees have existed for five years or fewer, compared to 17% for larger firms. SMEs in New Zealand also tend to have a relatively short life span. For example, Statistics New Zealand data demonstrates that 42 percent of businesses with zero employees born in 2010 ceased to exist by 2015.

Firms with 1-19 employees share similar life spans with businesses with 10-99 employees, but these are significantly shorter than larger firms. The same businesses contribute significantly to employment rates in New Zealand with Statistics New Zealand highlighting that, in the year ending December 2014, 47 percent of all jobs created were from businesses with less than 20 employees.

Profitability

Some SMEs are doing well in terms of generating wealth. For example, Statistics New Zealand found that zero-employing firms tend to generate the most value. To illustrate, research found that zero-employing firms generated about $200,800 annually, while firms with 1-19 employees generated approximately $178,000 annually by the end of 2014.

Challenges Remain

While SMEs play such a pivotal role in New Zealand, they are still facing some unique challenges. For example, data from Statistics New Zealand suggests that SMEs foster the creation of considerably less innovation than larger firms. Specifically, only 17 percent of businesses with 6-19 employees produced innovative goods or services in 2015, compared to 23 percent for firms with 20 or more employees.

While 95 percent of businesses with 6-19 employees use the internet for business purposes, and a significant 66 percent have their own website, only 44 percent have internet sales. As Steve Adams, the chief executive of digital marketing agency Socialize suggests, a common complaint from business owners is that they do not have the time to manage an online presence.

For SMEs struggling to free up time for managing such an online website, it may be a good idea to download inventory software. Downloading inventory software can really improve efficiency and reduce the overall workload for SMEs, and this can help to free up time so that managers can look at improving their online presence.

The outlook for New Zealand SMEs appears to be mixed. While SMEs in the country dominate New Zealand businesses, some are still struggling with making their presence known online. Some SMEs are also struggling with innovation, and SMEs overall contribution to the country’s GDP is relatively small given the sheer number of SMEs in New Zealand.

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