NZ businesses shift from survival to growth, says 2degrees study

New Zealand's business sector is reportedly starting to shift from survival mode towards growth, according to the latest Shaping Business Study commissioned by 2degrees. Conducted by research firm Perceptive, the study surveyed over 700 business decision-makers across New Zealand and depicted a cautiously optimistic outlook despite ongoing challenges.

Andrew Fairgray, Chief Business Officer of 2degrees, commented on the findings: "In order for New Zealand's business sector to reach its potential, we need to learn from the success of others over time, which is why we’re so proud to support and share this research. 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."

The study noted a slight increase in the number of businesses declaring they are thriving, rising from 17% in 2023 to 18% this year. Optimism about the future also rose, with 34% of business leaders feeling more positive compared to 32% last year. Furthermore, 53% of businesses now anticipate revenue growth in the coming year, up from 50% in 2023. Notably, larger and newer businesses exhibited higher levels of optimism.

Despite a minor relief from inflationary pressures, the majority of businesses still face increased operational costs. Eighty per cent of respondents indicated their running expenses had risen over the past 12 months, down from 87% in the previous year but significantly higher than the 53% reported in 2021. Less than half of the businesses (48%) plan to increase their prices in the next year, prompting 72% of decision-makers to seek cost-reducing strategies. The most popular method to cut costs is switching to new suppliers, cited by 38% of participants.

The study highlighted diverging opinions on the impact of hybrid working models on productivity. Among businesses adopting hybrid work arrangements, 51% believe it enhances productivity, while 49% feel it either hampers productivity or has no significant effect. Nevertheless, flexible working remains a pivotal factor for attracting and retaining talent, with 37% of business leaders having implemented flexible working options for this purpose. Despite some frustrations linked to hybrid working, only 17% of businesses with such models have increased office working hours, whereas 39% have reduced them.

The research also underscores the crucial role of digital skills in business performance. A growing number of business leaders, now 23% compared to 19% last year, identified a lack of digital skills as a significant barrier. The primary obstacles to acquiring these skills are a lack of time (34%) and difficulties in finding skilled technology professionals, which has seen a 10% increase from last year. Effective use of technology continues to correlate strongly with business success; 68% of thriving businesses reported that digital technology enhances their productivity, compared to just 50% of businesses merely surviving.

Fairgray emphasised the importance of technology in business strategy: "Technology should boost what your business is already doing and improve the results it gets. 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."