It will come as no surprise to many how reliant Otago small and medium-sized enterprises are on the rural sector. Business editor Dene Mackenzie drills down into data released this week and finds some other interesting facts about the SME sector.
Kiwibank and business management solutions company MYOB have taken an interest in the issues being faced by Otago small and medium-sized enterprises (SMEs) with both providing some good and some bad news for the region.
Kiwibank group manager business markets Mark Stephen said the bank had been doing a lot of analysis of SMEs to help streamline its services for small businesses in Otago.
''We've found the recession has meant SMEs have to work harder to stay ahead.
''Owner-operators are saying that in this recession, time is the thing they are most short of. It's frustrating for about a quarter of them their growth is restricted by customers not paying their bills.''
However, Otago SMEs were ahead on the payment statistics as, overall, about one-third of New Zealand small businesses were hampered by customers not paying their bills, he said in an interview.
The time issue was important because most owner-operators or owner-managers were providing backroom administration, duties larger corporations had several managers for, Mr Stephen said.
The consistent factor coming through the survey of 600 businesses around New Zealand was the area of anxiety they felt most was about growing their business by getting paid on time.
''They need to avoid becoming the bank for others in business. This is what keeps them awake at night. If they don't get paid, they cannot pay their staff or suppliers, and without doing that, they don't have a business.''
MYOB New Zealand business division general manager James Scollay said SMEs in Otago and Southland had been ''slightly off the pace'' of the rest of the country in the past year, with a larger proportion of business owners reporting revenue falling in the past 12 months (32%) compared with the whole SME group (24%). Those with improving revenue had tracked the rest of the country at 30%.
''The gap is tightening though, with only slightly fewer businesses in the region expecting revenue to improve in the next 12 months - 41% compared to 43% overall - and a little more expecting a fall, 15% compared to 10%. In fact, the Otago-Southland region is having a stronger quarter than the whole SME group.''
Nearly 40% of Otago-Southland SMEs reported more work in the pipeline between August and October than usual, compared to 36% for all SMEs. Only 14% reported less, compared to 17% for all.
Local employers were also more likely to be increasing wage rates over the next 12 months, with 28% saying they intended to increase pay over the next 12 months compared with just 19% of all small enterprises, he said.
Those additional costs might be borne by consumers in the region as 30% of Otago-Southland businesses said they intended putting their prices up, significantly higher than the 25% of all SMEs who would do the same.
Despite rising prices, margins still remained a key pressure for local businesses, Mr Scollay said.
''The rising cost of fuel, a key pressure for around a third of all SMEs in New Zealand, will be felt even more acutely in the South, with 46% of operators expecting the cost of fuel to put pressure on their business in the next 12 months compared to 35% overall.''
Despite the general positive air in the economy, the survey highlighted weaknesses in key sectors, he said.
''Trading has become tighter for the retail and hospitality sector, which slipped further into negative territory. Twenty-seven percent reported revenue growth, down on 29% in March, and revenue falls remained high at 38%.
But the sector is expecting to turn the corner next year, with almost half of local hospitality and retail businesses expecting revenue to grow and few expecting falls.
''It is here, in particular, we would encourage business operators to consider increasing their investment in an online presence and e-commerce tools. This will enable them to take advantage of improved efficiencies and wider audience reach - and enjoy the resulting revenue improvements.''
Mr Stephen said Kiwibank had also invested into technology to provide customers with more options. Mobile payments from smartphones, e-commerce for payments over the internet and e-invoices at the time of sale all helped with keeping cash flowing.
The billing was seen as the least attractive part of business for a small enterprise, and if that ''behind the scenes'' activity could be reduced, more time and energy could be put into growing the business.
Otago Chamber of Commerce chief executive John Christie said there was a real mix of feelings in the Otago small enterprise sector.
While some retailers were doing well, others were struggling.
''It is unpredictable, with no patterns. Year-on-year and month-on-month sales might be matching. You just don't know when those sales will happen. It is an unsettled time with different patterns emerging in the economy.''
Although trading had been tough for the region's small enterprises, there were signs of improvement, he said.
The hospitality sector was improving, a record cruise ship season was forecast, the educational sector was doing well and the rural sector was buoyant.
Prime Minister John Key commented last week Dunedin and Otago were above the national average on several key indicators, Mr Christie said.
''That doesn't mean we don't want things to be better. There still needs to be work done but, looking back, we can see we did well on some fronts.''
Business and consumer confidence in the region was fragile and it did not take much to knock it down, he said. Mr Christie was heartened the region's enterprises were getting paid faster than some other parts of the country.
''Cash is king. You can't buy beer on credit.''
