2 Apr 2024

Older owners limiting potential of small businesses to grow, exploit technology - expert

8:53 pm on 2 April 2024
small business, people and service concept - man or bartender serving customer at coffee shop

File pic Photo: 123rf

Smaller businesses are face a challenging 2024 with few expecting to see growth amid an economic downturn and higher costs.

CPA Australia's Asia-Pacific Small Business Survey indicates just under half of small businesses in the region saw some growth last year, with New Zealand in third place of the 11 economies included in the survey.

CPA Australia's regional head Rick Jones said New Zealand had the second highest percentage of small business owners aged over 50, at just over 50 percent, against a survey average of 28 percent.

He said demographics had some influence on the survey as older business owners were much less likely than their younger counterparts to run a growing business, and were also more risk averse.

"Older business owners are also less likely to use technology such as e-commerce or social media in their businesses, both of which are characteristics of growing businesses," he said.

Jones said the age factor contributed to a raft of survey-bottom rankings for New Zealand's small businesses in the areas of technology use, innovation and exports.

Only seven percent expected to introduce a new product or service, to improve export revenue or to seek external funds in 2024 - all at or near the bottom of the survey.

The country's small businesses were the least likely to expect a cyberattack this year, and the least likely to have reviewed their cyber protection in the last six months.

Only 12 percent said they had lost time or money to a cybersecurity incident in the last 12 months, compared with a survey average of 41 percent.

"This might seem like a positive, but it's actually evidence of our relatively poor integration of technology," Jones said.

"It's important for the future health of our small business sector that policymakers consider how we can encourage more young New Zealanders to start or buy their own businesses."

The survey found New Zealand businesses earned just 10 percent of revenue from online sales, used social media in their businesses, or received more than 10 percent of sales through digital payment options such as PayPal or Google Pay.

The number of respondents expecting to take on staff this year fell to 18 percent, from 34 percent a year earlier.

Increasing costs, poor overall economic environment, tax and cash flow difficulties were the top four barriers to growth among New Zealand's small businesses.

However, there was still an increase in the number optimistic about their growth outlook, with an increase to just over 50 percent from 40 percent the previous year, while the regional survey saw optimism fall to 60 percent from 66 percent in 2023.

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