Small businesses are lagging behind the rest of the region globally when it comes to growth, social media, online sales and new methods of payment.
An annual survey of 11 Asia-Pacific economies by CPA Australia indicates New Zealand was behind in many ways, although the year ahead was looking brighter.
"While the 32.3 percent who said technology investment in 2021 made their business more profitable was low by comparison to the Asia-Pacific, that number was a great improvement on the 17.7 percent recorded in 2020," CPA Australia senior manager Gavin Ord said, adding investment in technology was seen as a lever for growth in other countries.
"Year after year, the survey results show a clear connection between increased investment in technology and digital capability, and business growth," he said.
The survey shows only a third of New Zealand's small businesses grew in 2021, which was the second lowest of 11 Asia-Pacific markets.
"The results are somewhat surprising given New Zealand's success in limiting the impact of Covid-19 last year," Ord said.
He said the economic environment had become more challenging for New Zealand's small businesses recently, with inflation and interest rates rising, oil price shocks from Russia's invasion of Ukraine, and the effects of Omicron still reverberating throughout the economy.
"New Zealand businesses are probably not that well-equipped to respond to the current set of circumstances," he said.
"They're not digitally savvy compared to their Asia-Pacific peers, and many are not seeking advice about how to manage this environment."
The survey also indicates small businesses were significantly less likely to earn revenue from online sales.
"More than 35 percent do not earn any revenue online, compared to just 1.3 percent of businesses in Mainland China," he said.
"In addition, nearly one-third (30 percent) made no investment in technology in 2021, compared to just 5.2 percent of surveyed businesses in Vietnam."
He said more than a third of NZ's small businesses had not adopted new payment technologies such as Apple Pay, Paypal or buy now pay later, compared to 0.1 percent of Mainland Chinese businesses.
Small businesses also lagged behind in social media.
Ord said only a third of businesses that invested in social media saw an improvement in profitability compared with a survey average nearly 54 percent.
"This demonstrates the need to improve the digital skills of our small businesses and for them to seek advice to ensure they adopt the right technology solutions for their business," he said, adding another reason for the lagging investment was New Zealand's demographics.
"New Zealand was the second most likely of the 11 markets surveyed to have respondents aged 50 or over. Only 24.8 percent of respondents were aged under 40, against a survey average of 45.2 percent."
Ord says the survey's results showed the use of business technologies falls for respondents aged 50 or over, and declined sharply for those aged 60 or over, regardless of the market.
However, he said the response to cybersecurity was only slightly behind the region's average.
When it came to revenue and funding for business growth, about 45 percent of NZ small businesses required funds from an external source in 202, compared with a survey average 60 percent.
Ord said New Zealand was the only market in which government grants or funds was the most cited source of funds at 28 percent.
"Only 24.1 percent said a bank was their main source of external finance, compared to the survey average of 34.2 percent," he said.
He said the number of small businesses expecting to increase staff numbers this year was 28 percent, which compared with just 11 percent in 2021.
"This result reflects stronger growth expectations for 2022, but achieving it may prove difficult for many businesses due to labour shortages."