2degrees’ Shaping Business Study reveals increased optimism and investment in innovation and digital skills.
New Zealand’s business sector appears to be turning away from survival mode and towards growth, according to 2degrees’ latest Shaping Business Study.
Commissioned by 2degrees and conducted by research company Perceptive, the survey spoke to more than 700 employing business decision-makers around Aotearoa.
Andrew Fairgray, Chief Business Officer of 2degrees, says the report shows the importance for businesses to adapt in an inflationary, digital-first environment.
“As we review the fifth year of Shaping Business, it is encouraging to see a growing number of businesses not just surviving but beginning to thrive.
“We are seeing that businesses are feeling the rise of operational costs, but instead of sitting still, they are looking to move forward. The businesses managing to thrive are those that are finding innovative ways to increase productivity, rethinking cost savings and investing in digital skills.”
Business optimism incrementally increases
After years of disruption and economic challenges, the percentage of business leaders identifying their businesses as thriving has slightly increased to 18 per cent, up from 17 per cent in 2023.
Business leaders are also feeling increasingly positive about the future, with 34 per cent saying they feel more optimistic than this time last year, up from 32 per cent, and 53 per cent anticipating revenue growth in the next year which is up from 50 per cent in 2023. Continuing a longstanding trend in the study, larger businesses and newer businesses are leading the charge in this positive outlook.
Creative solutions to cost pressures
While inflationary pressures are easing, the vast majority of businesses continue to see operating costs increase and are looking to find savings in creative ways. 80 per cent of business decision makers say their running costs have increased in the past 12 months, below last year’s figure (87%) but still well above the 53 per cent who said so back in 2021.
As costs continue to increase, businesses are seeing their margins squeezed, and less than half (48%) of business decision-makers are planning to increase their prices in the next year.
As a result, 72 per cent are looking for ways to reduce costs in the coming year, and not just by reducing headcount. While some are looking to reduce the size of their staff, the report shows that the biggest way decision makers are looking to reduce costs is through moving to new suppliers (38%).
Digital skills are required to get ahead
Businesses making the best use of technology continue to thrive. Those that aren’t are being left behind, with 23 per cent of business leaders saying they lack the digital skills that need to get ahead, up from 19 per cent last year. The key barriers to acquiring these skills include a lack of time (34%), and difficulties in finding skilled technology help, which has seen a 10 per cent increase from 2023.
The report also shows that effective use of technology continues to correlate to overall business performance, with 68 per cent of “thriving” businesses reporting that digital technology improves their productivity, compared to only 50 per cent of “surviving” businesses.
“Technology should boost what your business is already doing, and improve the results it gets,” says Fairgray. “It’s very easy to pile up lots of shiny tools, but in this environment, it’s never been more important to take a step back and make sure that they are delivering.”
For more information on the Shaping Business Study, and to register to get the full report, visit the 2degrees website https://www.2degrees.nz/business/shaping-business-study
