Kiwi business is a game of two halves
2degrees report reveals big business is thriving as SMBs struggle to keep up, while increasing costs are the leading issue for all businesses
- Business optimism in New Zealand is down; leaders of small businesses are least optimistic
- Large businesses are bucking the trend - anticipating revenue growth and increased business investment in the next 12 months
- Better skilled staff the top priority to help businesses thrive, majority of businesses looking for ways to attract and keep great people
- Adapting ways of working leads to better productivity and innovation
Business leaders are facing significant challenges across the board, but small businesses are having the rockiest ride in 2022, according to 2degrees’ latest Shaping Business Study.
The report, conducted by Perceptive on more than 700 employing business decision makers around Aotearoa, found that different-sized businesses have had a significantly different experience over the past year, and identified more work benefits and flexible work as the key drivers of success in the current environment.
“Kiwi businesses are facing an incredibly challenging environment, but the effects aren’t being felt equally,” says Andrew Fairgray, Chief Business Officer at 2degrees. “Costs are rising across the board, businesses are crying out for skilled staff, and Covid continues to present problems, but large businesses are weathering the storm in a way that smaller businesses aren’t.”
Outlook shifts according to business size
Only 36 per cent of business leaders are feeling more optimistic about their business compared to a year ago, a drop of four percentage points from 2021. In contrast, 31 per cent were feeling less optimistic, and 33 per cent were feeling about the same.
Larger businesses are much more likely to feel optimistic about their prospects; only 31 per cent of business leaders in small businesses (1-20 employees) reported being more optimistic, increasing to 43 per cent of leaders of medium businesses (21-50 employees) and 57 per cent in large businesses (51+ employees).
Medium and large businesses were also more likely to anticipate revenue growth in the next 12 months, and to plan to increase investment in their business in the next year.
People are now the key to business success
In the past 12 months, there has been a major shift in what businesses are looking for to thrive. The 2021 2degrees Shaping Business Study revealed the top thing business leaders needed to help their business thrive was cashflow as they navigated their way through pandemic-related disruptions. In 2022, the top solution was better skilled staff, with 3 in 10 business leaders saying it would help their business thrive, while cashflow (29%) and more staff (29%) are still on their minds.
Successful businesses are addressing their challenges by adapting their ways of working, with hybrid work dominating. Nearly half (48%) of business leaders said they had adapted their working model since the pandemic to include adjustments like hybrid and remote working, and greater online collaboration with internal and external parties.
“Attracting and retaining talent is crucial in the current business environment. We’ve heard from many of our own customers that it’s all about people, people, people and the research backs this up. With over half (52%) of businesses prioritising productivity planning to invest in employing more highly skilled people in the next 12 months and sweetening the deal by introducing perks such as leave and training options,” adds Andrew.
Flexible means productive
Medium and large businesses were more likely than small businesses to have adapted their working model, and the research showed that decision paying off in better business outcomes. Businesses who had changed their working model were much more likely to say that productivity (38%) and their ability to innovate (50%) has increased since the pandemic than businesses who had not changed.
“We often talk about flexible work as a way to support our people, but these numbers show that it’s also a good business decision, and we’ve seen that ourselves at 2degrees,” says Andrew. “This research goes to show that businesses of all sizes looking to improve their productivity and innovation should investigate new ways of working to unlock new opportunities, even in a difficult environment.”