More than a third of New Zealand small and medium-sized enterprises (SMEs) feel their business has improved and the economy is moving ahead, but they are still reluctant to invest in or grow their business.
The 2015 Westpac Grow New Zealand Survey asked nearly 1200 SMEs ranging in size from $250,000 to $5 million in turnover about the economy, future plans for their business and their use of digital technology.
More than 30% had experienced positive growth, up 12% on 2011 the last time the survey was carried out.
Those who were experiencing tough times had dropped 6% to 20%.
The improved economic position did not change investment intentions and there was little to no change in expanding businesses, maintaining the size of the business, or seeking to sell.
Although 42% of SMEs intended to invest in their business, fewer SMEs than four years ago were seeking to invest in their business over the next three years by developing new products, increasing sales, increasing marketing or hiring staff.
Westpac chief executive David McLean said the lifestyle mentality many SME owners had towards their business was a key driver behind the lack of enthusiasm for work.
Underlying that, 31% said the biggest block to growth was their desire to maintain a work/life balance or retire - a 10% increase on 2011.
''The economy is going better than 2011 and prospects are good. But for many SMEs the improved conditions are the cream on the lifestyle cake rather than looking to grow or expand.
''Trying to encourage our SME owners to invest for growth and to be bold is important to the country given their role in our economy.''
BNZ chief economist Tony Alexander said the survey was a good one because it highlighted ways in which the SME sector was not looking like it was at world-class level.
It also went some way to identifying why that might be the case.
''The message one can derive in comparing this divergence between good operating environment growth and desire to coast or get out is that Kiwi SMEs aren't really in it for the money, in many instances.
"The triple Bs of boat, bach and BMW may be all that people seek. Our culture helps explain why this is the case,'' Mr Alexander said.
Mr McLean said SMEs had adopted digital technologies but few appeared to have restructured their business to suit the new world.
They were asked about the impact of digital technology on their business over the past five years and in the short-term future.
The lack of impact over the past five years was surprising while they were also not confident about securing the right staff to capitalise on it, he said.
About 38% had bought new hardware or software in the past five years and 36% intended doing so in future but less than a third had used that new technology to change their marketing approach or online processes and 10% and under had changed their logistic and distribution processes, organisational structure, or suppliers as a result.
About 10% had hired new staff as a result of the new technology and a further 13% expected to do so in the next five years while 3% had laid off staff as a result.
Westpac chief economist Dominick Stephens said the lack of impact from digital technology was surprising.
''In the US, productivity gains have been made by altering business structures to suit the new technological reality. There doesn't seem to be as much pressure for New Zealand firms to adapting quite as quickly."
The Productivity Commission's report into New Zealand's productivity, which had improved of late but remained low by OECD averages, said that was due to weak international connections and companies underinvesting in knowledge-based capital.
''There's no point just buying a computer, having a website or buying a smartphone, you have to also look at technology and what opportunities are presented by this stuff and completely re-engineer your business,'' commission chairman Murray Sherwin said.
A report last year by the Innovation Partnership, a group of private and public sector individuals facilitated by Google wanting to drive greater innovation in New Zealand through the internet, said the capacity and capability of the Internet, particularly with the ultra-fast broadband roll-out, could be at the centre of New Zealand's drive for economic growth.
Businesses should be making effective use of the internet to add billions of dollars of productivity and export gains to the economy, it said.
It pointed to businesses that make substantial online sales are up to 25% more productive than the average firm in their industry, yet only 12% of businesses are taking online payments through their website.
The Westpac survey also showed only 56% of respondents had a website, 60% were using social media, and 82% had a smartphone.
Only 15% had dedicated apps for their industry and a similar number used other cloud-based products or services.
Digital technology SMEs
• 10% of firms have hired new staff
• 14% have invested in education and training
• 11% have changed supplier
• 6% have changed a distribution process
• 8% have changed organisational structure
• 3% have laid off staff because of new technology
