"If the confidence plays out, 2017 will be an excellent year for small businesses with a net 34 per cent expecting a lift in activity for their business over the next 12 months," he said.
Composite growth lifted across all five regions of the country, with Wellington and the South Island taking the lead.
Growth prospects in the regional North island and Canterbury started to gain more momentum, while Auckland continued to gradually climb.
Lack of skilled staff, competition and regulation are seen as top barriers to business growth, the survey found.
"While overall sentiment and growth prospects are positive, concern about finding skilled staff continues to create a potential wedge between growth prospects and actual growth," Webster said. "Competition and regulation are also seen as obstacles to businesses realising their growth potential in 2017."
Growth prospects for four of the five sectors improved in December.
Business confidence in Wellington rose to +32 per cent and the South Island outside of Canterbury +31 per cent, followed closely by Auckland and Canterbury.
Construction and the services sectors lead the way in business growth prospects, with an increase to +30 per cent and +27 per cent. Manufacturing rose to +24 per cent and retail to +14 per cent.
The agriculture sector reversed its September slide, increasing to +1.4 per cent.
