Always look on the bright side of life… and business. For the first time in five years, MYOB’s Business Monitor sees optimism lead small and medium-sized enterprises’ (SMEs) economic outlook for the year ahead.
The 2025 Business Monitor shows SMEs expecting the economy to improve over the next 12 months with optimisim at its highest since 2016, MYOB chief executive, Paul Robson, confirms.
“It’s clear SMEs are ready to build on the gradual improvements of the last year and accelerate this positive momentum,” he says. “Key to this will be a focus on business fundamentals – such as cashflow, stock management and profitability – balanced with seizing opportunities to innovate operations to improve productivity and boost sales as conditions improve.”
In its 16th year, the annual survey of more than 1000 SME owners and operators indicates 46 per cent expect the economy to improve over the next 12 months, while 32% forecast a decline and slightly almost a quarter (21%) believe economic conditions will remain the same. This is in stark contrast to the same time last year when 40% expected the economy to decline and only 37% believed conditions would improve.
“The confidence and performance of SMEs has turned a corner. Over the next couple of years, increasing revenue and growing their business are the top goals for owners,” Robson explains.
“To help realise growth ambitions, we need an economy that is firing and an environment in which Kiwi businesses can innovate, leverage a skilled workforce and remain competitive without the burden and additional cost of unnecessary red tape.”
The lift in confidence is reinforced by steady improvements in business performance, the Business Monitor contends. Twenty-eight percent of respondents reported revenue increases – a slight rise on 2024 (at 25%) – and 43% say revenue has stayed the same. The proportion reporting a decline has fallen slightly from a third in 2024 to 29%.
Some sectors noted particularly strong performances. Year-on-year revenue increased for agribusinesses (41%), transport and logistics businesses (35%) and manufacturing and wholesale (32%).
Almost twice as many SME operators (35%) are expecting income to increase on current levels, compared to those expecting revenue to be down (18%), by this time next year.
SME owners are ready for a positive change as the economy moves in the right, Robson contends.
“As the economy starts to show some signs of recovery, it’s encouraging to see more reporting growth and feeling more stable when it comes to their overall financial position,” he says. “For many businesses, we’re beginning to see a reprieve from falling interest rates and lower inflation can’t come soon enough.”
Positive outlook clouded
Despite growing optimism, business owners noted some continuing concerns. Respondents indicated the threat of inflation (63%), consumer confidence and spending (46%) and rising utility costs (42%) as troubling. One in five said they are ‘very concerned’ about rising energy prices.
Threats of higher costs and their impact on sales comes as SMEs continue to feel the pinch from inflation. Owners surveyed reported costs have increased by an average of around $1600 per month over the past 12 months.
Meeting compliance costs is also worrying owners – estimates of regulatory and compliance costs increased by an average of more than $1100 since this time last year.
Growth agenda
SMEs have been clear about initiatives and policy they believe would help them succeed, MYOB’s Business Monitor reveals.
In Budget 2025, SME decision makers want reduced compliance and red tape (45%), reduction of the company tax rate to 25% (44%) and increased investment in skills and training programmes (29%).
Balancing costs with needs for more capital to help fuel growth, changing the low asset write off to become an instant asset write off of up to $10,000 also proved popular – more than a quarter of SMEs (28%) said they’d like to see this in the budget.
Considering which tax and compliance policies would be the most beneficial for businesses, a reduction in ACC levies for small business was the top response, selected by 54% of those surveyed. This was followed by a reduction in the company tax rate (41%) and a permanent increase to the provisional tax threshold (29%).
“We hope [SMEs] receive the support they deserve in the budget. It’s important their needs and potential are recognised and targeted as the government moves in pursuit of its growth agenda,” Robson adds.
“Ensuring efforts to maximise business productivity will be critical to paving the way for the economy to succeed long term.”
