SME Exporters Enjoy Golden Growth Period

SME Exporters Enjoy Golden Growth Period

Export businesses plan to increase jobs and wages

New Zealand’s SME export sector has enjoyed a period of major growth over the last year, with many planning to invest in increasing staff and wages in expectation of another solid year ahead.

According to the September MYOB Business Monitor survey of over 1,000 business owners and operators from around the country, conducted by Colmar Brunton, revenue growth in exporting SMEs far outstripped the national average. Around 15% of the businesses surveyed export goods or services.

In the latest survey, the proportion of SME export businesses reporting revenue growth has risen from 35% in March to 48% in September. The national average for SME revenue growth in the September Monitor was 39% – the highest in 5 years. Only 17% of SME exporters saw revenue fall in the last 12 months, compared to 19% overall.

MYOB NZ General Manager – Accounting Division Adam Ferguson says despite a high dollar and some uncertainty in international markets, SME exporters have performed extremely well over the last year.

“While much of the story of the recovery has focused on the Auckland market and the Christchurch rebuild, our local export sector has been quietly getting on with business – and making a major mark in terms of their performance,” says Adam Ferguson.

“The growth of SMEs in this sector also highlights that you don’t have to be large to take on international markets, especially in the internet age.”

Growth set to continue

Although SME exporters believe growth has peaked in 2014, with fewer business operators (40%) predicting continued revenue increases in the 12 months to September 2015, the majority are still confident of an improved or similar performance in the next year.

Their attitude is likely buoyed by strong expectations for the coming quarter, with 39% of SME exporters reporting more sales or work in the pipeline, compared to 36% for all SMEs. Fewer (13%) have seen a decline in work in the next three months as well, compared to the overall average (15%).

“There is some rising uncertainty about how the next 12 months will pan out, though,” says Adam Ferguson. “Some 13% of SME exporters are unsure how their revenues will look in 2015 – somewhat higher than the 8% average for all SMEs.”

Planning investment
With still solid levels of growth forecast for 2015, more SME exporters are planning to invest in people over the coming year. A fifth (20%) of SME export business operators plan to hire more full time employees in the next year, compared to just 10% overall. 16% also plan to increase the number of part time roles in their business (13% for all SMEs).

A full third (33%) of SME exporters plan to increase the amount they pay in wages and salaries in 2015 – substantially higher than the SME average (20%).

Exchange rates remain a major pressure

The high value of the New Zealand dollar will continue to put SME exporters under pressure over the coming 12 months, with business operators also concerned about cashflow and margins.

2015 pressures on SME exporters:
1. Exchange rate – 38% (14% all SMEs)
2. Cash flow – 27% (19%)
3. Price margins – 26% (17%)
4. Interest rates – 24% (21%)
5. Fuel prices – 21% (26%)

“Overall, SME exporters expect to see a greater impact from most key pressures than other SME businesses, reflecting the highly competitive nature of the market, where businesses face pressures from a wide range of external conditions,” says Adam Ferguson.

“However, despite feeling real pressure from exchange rates, few SME exporters want the Government to regulate the value of the New Zealand dollar, with only 29% indicating a preference for intervention in the currency.”

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ENDS

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