Ant or Grasshopper?
Looking at the CPA Australia AsiaPac SME survey
The Ant and the Grasshopper is one of Aesop’s lesser known fables. The ant focused itself during the warm summer by gathering food supplies (with all his ant buddies) so they could survive the coming winter and the scarcity of food they knew they would face. Whilst the grasshopper, much larger and self-sufficient, enjoyed the warmth and abundance of summer and couldn’t even imagine a winter with scarcity and risk. It didn’t end well for the grasshopper…and whilst there are a number of analogies that can be drawn from this story the main one has tremendous bearing on the following and that concerns complacency.
The Problem
Recently the CPA Australia small business survey for Asia Pac was released and reveals a concerning picture about the NZ SME space.
The full report is available here and if you can’t face the full report the NZ synopsis is recommend reading.
In essence the report shows that NZ SME’s thought 2017 was positive but just under 40% state that they don’t expect the wider economy to grow this year (down from 62% last year). Whilst the change in Government may have accounted for this heightened concern, the fact that only ? of businesses increased headcount in 2017 and less than 1/5th expect to add to numbers this year means this lack of confidence has real effects in the economy.
Compared to the other seven markets studied, NZ came out bottom or second bottom in many areas; these including being active in innovation, the adoption of technology, the use of e-commerce (52.6% don’t earn any revenue online), using social media (nearly 41% of business don’t use it) and exporting growth. The top four factors that had a negative impact on NZ business in 2017 were Increasing costs, Increasing competition, Tax and Cash flow difficulties.
Some of the most worrying aspects though are around growth. Although 62% of businesses expect to grow (5th out of 8th in survey) only 9% expect to add a new product or service, as just noted only 18% expect to add to employees, only 8% expect revenue to grow overseas and only 10% expect to access external funding. This raises an interesting paradox !!! How do they intend to grow ??
Whilst nearly 30% expect to find access to external funding easy clearly not many of them intend to do it and since cash flow difficulties are cited as a negative impact, there will be limited, if any, internal funding for growth. No products, no increased manpower, not much innovation or digital transformations, no new assets! No growth.
Here’s another scary bit; Over half of respondents (54.9 per cent) were aged 50 or over and a 1/3rd aged 60 or over, in addition nearly 1/3rd do not have a succession plan or exit strategy. The one thing that is startling however is that a whopping 75% of SME’s are satisfied being a small business owner.
This is great, but it points to being cosy by the fire, asleep at the wheel, being the frog in slowly boiling water. Choose your own analogy but this ultimately points to one thing...complacency. At the very least it points to wanting to grow but not sure where or how. Overall it is not a good thing !!!
I’m not big on predictions…often being on the wrong side of the curve on many occasions…but I’m going to be brave here…The satisfaction levels are going to plummet over the coming years and the actual growth will stall. The future is not rosy as too many factors are pointing to sluggish behaviour which creates inertia and strategic implementation blindness.
Solution
Whilst statistics can be interpreted in many ways and there is never a single answer, it is not a big leap to draw a worrying conclusion. NZ SME’s are Grasshoppers… oblivious to the coming winter!!! And not to get all Game of Thrones but Winter is coming…however with foresight, adaptability and the right kind of strategic implementation the situation can be changed, businesses can become Ants.
However, action is required now. Initiatives for growth need to be undertaken, a global view needs to be considered; new markets, products and services need to be explored. Different ways of selling and leveraging assets need to be initiated, ideas refreshed, exit strategies and succession plans started. There's not much time and action is required now.