SMALL BUSINESSES IN NEW ZEALAND
June 2017
SMALL BUSINESSES IN NEW ZEALAND
How do they compare with larger firms?
SMALL BUSINESSES* DOMINATE OUR INDUSTRIES
97%
OF ENTERPRISES HAVE FEWER THAN 20 EMPLOYEES (499,944 ENTERPRISES) (CHART 1)
70%
OF ENTERPRISES HAVE ZERO EMPLOYEES (CHART 1)
29%
OF EMPLOYEES IN NEW ZEALAND ARE EMPLOYED BY ENTERPRISES WITH FEWER THAN 20 EMPLOYEES
(614,580) (CHART 2)
28%
OF NEW ZEALAND'S GDP IS ESTIMATED TO BE PRODUCED BY ENTERPRISES WITH FEWER THAN
20 EMPLOYEES (CHART 3)
THE RENTAL, HIRING, AND REAL ESTATE SERVICES INDUSTRY
HAS THE HIGHEST NUMBER OF ENTERPRISES WITH FEWER THAN 20
EMPLOYEES (CHART 4)
96%
OF ENTERPRISES WITH FEWER THAN 20 EMPLOYEES ARE INDEPENDENT
OPERATIONS NOT OWNED BY OTHERS (CHART 5)
*S mall businesses are defined here as those enterprises with fewer than 20 employees. There is no official definition of a small business in New Zealand, however enterprises with fewer than 20 employees has traditionally been used and referred to in some legislation. Australia also uses the same definition which enables comparisons to be made. Internationally there is no universally used definition for a small business: many economies use a limit higher than 20 employees.
Chart 1: Number of Enterprises by Employee Size Group
TOTAL
,
Zero Employees
,
1-5 Employees
,
6-19 Employees
,
20-49 Employees
,
50 Or More Employees
,
Data source: Statistics New Zealand Business Demography, Feb 2016
Chart 2: Number of Employees by Employee Size Group
TOTAL
,,
1-5 Employees
,
6-19 Employees
,
20-49 Employees
,
50 Or More Employees
,,
Data source: Statistics New Zealand Business Demography, Feb 2016
Chart 3: Estimated Contribution to GDP by Employee Size Group
0-19 Employees
,m
TOTAL
,m
20-49 Employees
,m
50 Or More Employees
,m
Excluded Industries / Other Items
,m
Data source: Statistics New Zealand National Accounts Mar 2014
Chart 4: Number and Percentage of Enterprises with 0-19 Employees by Industry
Rental, hiring & real estate
Finance & insurance services
Agriculture, Forestry & Fishing
Other services
Construction Professional, scientific
& technical services Information, media & communications
Arts & recreation services Administrative
& support services Transport, postal &
warehousing
Retail trade
Wholesale trade
Healthcare & social assistance
Utilities
Mining Accommodation
& food services
Manufacturing Public administration
& safety
Education & training
0%
0-19 employees
107,619 35,646 68,415 22,710 55,494 55,566 5,160 9,543 15,252 16,272 26,535 16,710 17,595 1,050
672 18,996 19,374
993 6,336
50%
100%
20 or more employees
Data source: Statistics New Zealand Business Demography, Feb 2016
Chart 5: Percentage of Enterprises with Common Ownership
45%
20% 4%
0-19
20-49
50+
Number of employees
Data source: Statistics New Zealand Business Demography, Feb 2016
MB14227_JUNE17
SMALL BUSINESSES ARE YOUNG AND DYNAMIC
33%
OF FIRMS WITH 1-19 EMPLOYEES HAVE EXISTED FOR FIVE YEARS
OR FEWER. THIS COMPARES TO 19% FOR LARGER FIRMS
(CHART 7)
37%
OF FIRMS WITH ZERO EMPLOYEES BORN IN 2010 SURVIVED IN 2016. FIRMS WITH 1-19 EMPLOYEES HAVE SIMILAR SURVIVAL RATES TO FIRMS WITH 10-99 EMPLOYEES, BUT MUCH LOWER THAN LARGER FIRMS
(CHART 8)
42%
OF ALL JOBS CREATED IN THE YEAR ENDING DECEMBER 2015
WERE IN FIRMS WITH 1-19 EMPLOYEES (CHART 10)
$45,867
WAS THE AVERAGE SALARY OF EMPLOYEES IN ENTERPRISES WITH 1-19 EMPLOYEES (CHART 9)
Number of employees Number of employees
Chart 6: Type of Enterprise by Employee Size Group (%)
Chart 7: Age of Enterprise by Employee Size Group (%)
0
21
1-5 9 9
6-19 5
20-49 2
50-99
100+
14
46
1 16 1
74
3 32
82
42 5
78
4 1 14
75
3 1 20
70
31 25
1-19 7 26
23
25
19
20-49 3 18
18
26
35
50+ 12 12
24
50
Individual Proprietorship Partnership Registered Limited Liability Company
Societies and Associations Trusts/Estates All Other Entities
< 1 year
1-5 years 11-20 years
6-10 years 21+ years
Data source: Statistics New Zealand Business Demography, Feb 2016
Chart 8: Survival Rates of Enterprises Born in 2010
Data source: Statistics New Zealand Business Demography, Feb 2016
Chart 9: Average Salaries and Wages per Employee (RME)
0 1-5 6-9 10-19 20-49 50-99 100+
37% 52% 59% 54% 55% 67% 80%
63% 48% 41% 46% 45% 33% 20%
Survived in 2016
Ceased by 2016
Data source: Statistics New Zealand Business Demography, Feb 2016
43,693 44,725 45,867
50,823 51,182 52,398
1-19
20+
Number of employees
2013
2014
2015
Data source: Statistics New Zealand Annual Enterprise Survey, 2016
Number of employees Number of enterprises
Chart 10: Annual Job Creation by Employee Size Group
115,340 115,360 104,920
122,950 103,280
96,960
29,610 34,410 33,600
1-19
20-49
50+
Number of employees
2013
2014
2015
Data source: Statistics New Zealand Linked Employer-Employee Data, Dec 2013-2015
Chart 12: Percentage of Businesses Undertaking R&D
14%
14%
12% 13% 13%
11%
11%
Chart 11: Births and Deaths of Employing Small Business
10,000 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000
0
2007 2008 2009 2010
2011 2012
2013
2014 2015 2016
Births
Deaths
Data source: Statistics New Zealand Business Demography, Feb 2016
Chart 13: Percentage of Businesses Exporting
25%
23% 23% 21%
23%
28% 29% 30% 30% 28% 26%
22%
7% 7% 7%
7%
6%
6%
6%
15% 12%
2010 2011 2012 2013 2014 2015 2016 6-19 employees
2010 2011 2013 2013 2014 2015 2016 20+ employees
Data source: Statistics New Zealand Business Operations Survey, 2016
2010 2011 2012 2013 2014 2015 2016 6-19 employees
2010 2011 2012 2013 2014 2015 2016 20+ employees
Data source: Statistics New Zealand Business Operations Survey, 2016
ZERO-EMPLOYING FIRMS GENERATE VALUE
$204,066
WAS THE AVERAGE REVENUE PER ENTERPRISE FOR FIRMS WITH ZERO EMPLOYEES IN 2015. THIS COMPARES WITH AN AVERAGE REVENUE OF $846,574 FOR FIRMS WITH 1-19 EMPLOYEES (ANNUAL ENTERPRISE SURVEY,
AUG 2016)
Chart 14: Zero-Employing Firms by Industry
TOTAL
,
Rental, hiring & real estate
,
Agriculture, forestry & fishing
,
28%
OF FIRMS WITH ZERO EMPLOYEES ARE IN THE RENTAL, HIRING AND REAL ESTATE INDUSTRY (CHART 14)
Professional, scientific & technical services
,
Data source: Statistics New Zealand Business Demography, Feb 2016
Construction
,
Finance and insurance services
,
All others
,
SELF-EMPLOYED ARE ALSO SMALL BUSINESS
45%
OF SELF-EMPLOYED ARE OVER THE AGE OF 50. MOST OF THE GROWTH IN SELF-EMPLOYMENT
OVER THE PAST DECADE CAME FROM THOSE OVER 50,
WHILE SELF-EMPLOYMENT OF YOUNGER AGE GROUPS
HAS FALLEN (CHART 15)
17%
OF THE SELF-EMPLOYED WORK IN THE CONSTRUCTION
INDUSTRY (CHART 16)
10%
OF MORI RUN THEIR OWN BUSINESS, BEING EITHER
SELF-EMPLOYED, OR EMPLOYING OTHERS (CHART 17)
Chart 15: Self-Employed by Age and Sex
TOTAL
,
15-19
,
20-29
,
30-39
,
40-49
,
50-59
,
60-65
,
65+
,
Data source: Statistics New Zealand Linked Employee-Employer Data, 2016
Chart 16: Self-Employed by Industry
Female
156,369
Male
253,740
TOTAL
,
Construction
,
Rental, hiring & real estate
,
Professional, scientific & technical services
,
Agriculture, forestry & fishing
,
Retail trade
,
All others
,
Data source: Statistics New Zealand Linked Employee-Employer Data, 2016
Chart 17: Self-Employed by Ethnicity
*In this factsheet, data on numbers in self-employment comes from linked employee?employer data. A person is self-employed if they derive the majority of their income in one tax year from self employment. A person can be self-employed and also work as an employee in another business. A person who is self-employed at multiple businesses is only counted once.
Pacific Peoples
Mori
Data source: Household Labour Force Survey 2017
Total
Self-employed Rest of employed
SMALL FIRMS FACE UNIQUE CHALLENGES
EMPLOYMENT
24%
OF EMPLOYEES AT ECONOMICALLY-SIGNIFICANT FIRMS WITH 6-19 EMPLOYEES
WERE PART-TIME. THIS COMPARES WITH 22% FOR FIRMS WITH 20-49 AND 24% FOR 50+ EMPLOYEES.
(CHART 18)
INNOVATION
17%
OF FIRMS WITH 6-19 EMPLOYEES INTRODUCED
INNOVATIVE GOODS OR SERVICES IN 2015. THIS COMPARES TO 23% FOR FIRMS WITH 20 OR MORE EMPLOYEES
Chart 18: Full-time/Part-time Employment by Employee Size Group
585,000
Full-time jobs Part-time jobs
226,000 73,000
165,000 47,000
183,000
6-19
20-49
50+
Number of employees
Data source: Statistics New Zealand Business Operations Survey, 2016
Chart 19: Percentage of firms introducing new or significantly improved products by employee size group
16%
15%
17%
24% 21%
23%
2011 2013 2015
ACCESS TO ICT
FOR BUSINESSES WITH 6-19 EMPLOYEES:
96%
USE INTERNET
20%
ARE CONNECTED VIA FIBER COMPARED TO 12% IN 2014
69%
HAVE A WEBSITE
72%
HAVE INTERNET SALES
ACCESS TO FINANCE
94%
OF FIRMS WITH 6-19 EMPLOYEES WHO REQUESTED DEBT FINANCE COULD ACCESS IT ON ACCEPTABLE TERMS
(CHART 20)
88%
WHO REQUESTED EQUITY FINANCE COULD ACCESS ON ACCEPTABLE TERMS (CHART 21)
DEBT FINANCE IS SOUGHT BY MORE BUSINESSES THAN
EQUITY FINANCE
6-19
20+
Number of employees
Data source: Statistics New Zealand Business Operations Survey, 2015
*Data source: Statistics New Zealand Business Operations Survey, 2016
Chart 20: Percentage of Firms Accessing Debt Financing on Acceptable Terms
88%
87%
94%
95%
92%
95%
2014 2015 2016
6-19
20-49
Number of employees
Data source: Statistics New Zealand Business Operations Survey, 2016
Chart 21: Percentage of Firms Accessing Equity Financing on Acceptable Terms
88%
85%
89%
94%
2014 2015 2016
77%
78%
6-19 Number of employees
Data source: Statistics New Zealand Business Operations Survey, 2016
20-49
CONDITIONS
DEFINITIONS
This work is based on/includes Statistics New Zealand's data which are licensed by Statistics New Zealand for re-use under the Creative Commons Attribution-Noncommercial 3.0 New Zealand license. Please refer to the following data quality statements outlining the coverage and limitations of each data source:
>> Enterprise: is an institutional unit and generally corresponds to legal entities operating in New Zealand. It can be a company, partnership, trust, estate, incorporated society, producer board, local or central government organisation, voluntary organisation, or self-employed individual.
>> The Annual Enterprise Survey provides annual information on financial performance and financial position for industry and sector groups operating within New Zealand. The target population of the survey are economically significant enterprises operating in New Zealand, whose main activity is not superannuation funds, residential property operation, foreign government representation, religious services, or private households employing staff and undifferentiated goods-and service-producing activities of households for own use. business_finance/annual-enterprise-survey-info-releases.aspx
>> Business Demography statistics provide an annual snapshot (as at February) of the structure and characteristics of New Zealand businesses. The series covers all economically significant enterprises engaged in the production of goods and services in New Zealand. business_characteristics/nz-business-demography-statisticsinfo-releases.aspx
>> The Business Operations Survey is an annual modular survey providing statistics on business practices and behaviours that may have some impact on New Zealand business performance. The target population for the survey are economically significant enterprises with six or more employees operating for one year or more. business_growth_and_innovation/business-operations-surveyinfo-releases.aspx
>> Enterprise birth: a new enterprise starting operation, with the restriction that no other national businesses are involved. These do not include entries into the population due to reactivations, mergers, break-ups, split-offs, or other restructuring of a group of businesses linked by ownership or control. It also excludes entries into a population resulting from changes to characteristics of existing businesses.
>> Enterprise death: an enterprise ceasing operation, with the restriction that no other domestic businesses are involved in the event. This does not include exits from the population due to temporary inactivity, mergers, takeovers, break-ups, or other restructuring of a group of businesses linked by ownership or control. It also excludes exits from a population resulting from changes to characteristics of businesses which remain active.
>> Enterprise group: a set of enterprise units linked by common ownership. Statistics New Zealand only records links of over 50% shareholding between enterprises. Enterprise groups include all resident groups, foreign controlled enterprise groups and domestically controlled enterprise groups.
For more information on the definitions of Business Demography sourced data see:
>> business_characteristics/BusinessDemographyStatistics_ HOTPFeb16.aspx
>> Linked Employer-Employee Data provides a quarterly insight into the operation of New Zealand's labour market. The data covers all individuals who receive income from which tax is deducted at source: employment_and_unemployment/linked-employer-employeedata-info-releases.aspx
>> The National Accounts (Industry Benchmarks) provide comprehensive industry data on production, investment, and capital stock. This data was analysed in a supply-use balancing framework to reconcile the production, expenditure, and income measures of gross domestic product (GDP). It focuses on industry data and the benchmarks for the level of economic activity, which update and maintain the quality of quarterly GDP statistics. http:// t.nz/browse_for_stats/economic_indicators/ NationalAccounts.aspx
>> Jobs created: The net number of jobs created by a business, since the previous reference date.
>> Full-time jobs: jobs where the employee works for 30 hours or more per week.
>> Part-time jobs: jobs where the employee works for less than 30 hours per week.
>> RME (Rolling Mean Employment) is a 12-month moving average of the monthly employee count for an enterprise.
>> The Quarterly Employment Survey measures the number of jobs (technically referred to as filled jobs), earnings, and paid hours for a sample of economically significant businesses. . govt.nz/browse_for_stats/income-and-work/employment_and_ unemployment/labour-market-statistics-information-releases. aspx
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