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Competition for Customers Hotting Up Among SMEs

Competition for Customers Hotting Up Among SMEs—New Research Report Just Released

Competition for business is hotting up among New Zealand’s small to medium sized enterprises (SMEs) reports research commissioned by independent chartered accounting group, NZ CA Limited.

NZ CA chairman Merv Gyde says, “Fifty nine percent of businesses surveyed are forecasting revenue growth for the year ahead. Much of this growth is expected to come from acquiring new customers, so it looks as though all SMEs will need to work extra hard to retain their current clients and customers. We believe there will be a very competitive business climate for the next few years.”

The research report, GrowthGuide 2011, was compiled by VantagePoint and surveyed 969 SMEs nationwide in June. It was commissioned to help NZ CA’s member firms assist SMEs (businesses with less than 20 staff) to build their businesses in the country’s economic recovery. In 2010, 97.2% of enterprises in New Zealand employed 19 or fewer people, and 30.6% of the total workforce is employed by SMEs.

Merv Gyde says, “The findings from the GrowthGuide report will give our members’ clients an edge as they position themselves for the next few years of business growth.

“What we found interesting from the report is that although 91% of SMEs surveyed believed that understanding their customers’ needs was very important to business success, only 22% believed they do an excellent job of understanding their customers. Worryingly, the research shows that the older a company gets, the less likely it is to make this a priority – that’s opening the door to hungry start-ups looking to grab market share. So there’s clearly quite a bit of work for New Zealand’s SMEs to work more closely with their customers.”

Cash flow monitoring is considered to be a key element of business success with 80% of SMEs monitoring this regularly. The retail, construction, import-distribution and tourism sectors come out on top in this area.

“We can’t emphasise how important it is to monitor regularly your business’s cashflows, gross margins, sales revenue and profitability,” says Merv Gyde. “But as the research highlighted, you need to do it regularly, or you may as well not bother at all.”

In driving improved business performance, SMEs said that their customers, staff and their suppliers had the most impact. “The research is clear that businesses can’t do it all on their own, they need to consult and collaborate with outsiders to help grow their businesses. However, it’s disappointing that significantly less value is gained from government, industry or local business associations. Perhaps these organisations need to focus more on what SMEs truly value by way of advice, assistance, tools and the connections required to improve business performance,” says Merv Gyde.

Fiscal caution by business comes through very strongly in the GrowthGuide research. Whilst 59% of SMEs expect their fortunes to improve in the coming year, only 14% of businesses expect to increase bank borrowings in the next 12 months. Clearly businesses are continuing to re-build their balance sheets after several years of stress.

Merv Gyde says most SMEs have emerged from the recession well-positioned to take advantage of the recovery. “Whilst the recession hasn’t been good for business, it has made many SMEs go back to basics so they monitor and measure their finances more rigorously than before, then regularly analyse the results. This has paid off handsomely and many businesses are positioned well to make the most of the recovery.

“The GrowthGuide 2011 research has given NZ CA members significant insights into how they can work with their clients to help them prosper. We want them to be a part of that recovery, and we’re keen to help them make the most of the opportunities.”

NZ CA member firms continue to present the findings of the GrowthGuide 2011 at seminars around the country during August and September.

ENDS

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