NZ small business need to lift their tech game

This article was current at the time of publication.

If you think it’s good news that Kiwi small businesses experience fewer cyber attacks than their Asia-Pacific counterparts, think again. 

CPA Australia’s Asia-Pacific Small Business Survey 2023-2024 found that New Zealand small businesses were the least likely (12 per cent), to have lost time and money to a cyber security incident in the last 12 months, compared to a survey average of 41 per cent. 

That might seem like a positive, but Rick Jones, CPA Australia’s Regional Head says it’s evidence of relatively poor integration of technology in the SME sector, and this has an ongoing effect on performance, growth and productivity. 

While the survey shows that NZ is where the fewest small businesses expect a cyber attack, it’s also the country where the fewest businesses had reviewed their cyber protection in the last 12 months.

Digital uptake poor

It’s a worrying fact that local small businesses ranked last for technology use in the survey of 11 Asia-Pacific economies, including Australia, mainland China, Hong Kong, India, Malaysia, Singapore, Indonesia and the Philippines.

The survey shows that 34 per cent of Kiwi small businesses generated more than 10 per cent of their sales online compared with the survey average of 62 per cent.

While social media use has risen each year since 2019, almost a third of NZ respondents still don’t use social media for business purposes, the worst result of the markets surveyed.

Only 41 per cent said they received more than 10 per cent of their sales revenues through digital payment options such as PayPal or Google Pay, against a survey average of 71 per cent.

And they were the least likely (19 per cent) to report their technology investments improved profitability in 2023, compared with, for example, 76 per cent of Vietnamese respondents.

“It’s clearly essential that New Zealand’s small businesses incorporate technology into their businesses to a much greater degree than they are at present,” says Jones, adding that it’s concerning fewer than one in five small businesses report their investments in technology improved profitability.

“Policymakers should consider incentivising them to access business advice from their adviser of choice.”

Ageing business cohort

Another question for policymakers, Jones says, is how to encourage more young New Zealanders to start or buy their own small businesses.

The survey’s findings show demographics are a factor in the relative underperformance of the country’s small business sector.

Half of business owners are aged over 50, against a survey average of 28 per cent. New Zealand had the third lowest percentage of respondents under 40.

The survey data shows that overall, business owners aged 50 and over (and especially 60 and over) are much less likely to invest in technology or using technology such as ecommerce in their business. 

Jones says the findings on the relatively older demographics of the sector suggest many business owners will be examining sale or succession options.

“Clearly, maximising productivity through the judicious employment of technology will assist the outcomes.

“Practitioners can play a key role in encouraging businesses to adopt technology.”

Practitioners generally have wide experience of what works for any given business, and what doesn’t, Jones says.

Poor technology uptake may also have been a factor in some surprising responses on cyber security.

Stagnant growth but green shoots

Asked whether they expect revenue from overseas markets to grow strongly, only 7 per cent agreed, with New Zealand coming 10th out of the 11 economies and comparing with a survey average of 18 per cent.

New Zealand ranked last in plans to take on new staff in 2024 (18 per cent, versus a 43 per cent survey average) and bottom in plans to innovate through the launch of a new product, service, or process unique to their market or to the world (7 per cent, against a 29 per cent survey average).

All is not gloomy, however, with New Zealand businesses expecting the economy to grow over the next 12 months – just over 50 per cent, compared with 40 per cent a year earlier.

However, the number expecting their own business to grow eased, to 60 per cent from 65 per cent.

In 2023, only 48 per cent of businesses reported growth, down from 60 per cent in 2022 and third last among surveyed economies.

The percentage declaring themselves “satisfied or very satisfied” with the financial return on their business fell to 51 per cent, from 57 per cent a year earlier and against a survey average of 65 per cent.

The top four negative factors cited as impacting small business in 2023 were increasing costs, a poor overall economic environment, tax, and cash flow difficulties.

The top four positive factors were – in line with previous years – customer loyalty, good staff, improved customer satisfaction, and cost control.