Published on the 31/05/2018 | Written by MYOB
Medium-sized businesses around New Zealand are facing barriers to growth and it could seriously impact our nation’s economy, says MYOB general manager Carolyn Luey…
The New Zealand mid-market is a sector with extraordinary potential for the country. Despite representing only a small number of our country’s enterprises, bigger businesses could transform the future of our economy.
By their nature, these businesses can be more dynamic and highly flexible, able to respond to changing markets while identifying and exploiting new opportunities as they arise. They also have the potential to feed more back into the economy – stimulating job growth, introducing new technologies and reinvesting their profits within New Zealand.
This sector should be where our country’s next big success stories are coming from – particularly on the international stage – as they employ more than a third of our nation’s workers and contribute to around 40 percent of GDP, their success can make a huge impact on our economy.
However, despite the enormous possibilities contained within the sector, at present New Zealand isn’t getting everything it could from the mid-market.
In part, the issue lies within the businesses themselves. As is frequently observed in a country with a lifestyle as enviable as New Zealand, many owners of the country’s bigger businesses are comfortable enjoying the benefits of their enterprise, without taking on the additional risk and stress associated with a growth agenda. Many too – particularly at the larger end of the scale – are satisfied with the level of success they have achieved and focus more on maintaining the position they have achieved in the market rather than pursuing further expansion.
“The issue is less about the attitudes of the business owners and more about the environment in which they operate.”
While a good number are comfortable with a level of growth that will see them dominate their local market or expand throughout the country, only a small proportion of the total number of bigger businesses have ambitions to take on the world.
At the same time, some businesses are likely to be constrained purely by the limits and experience of their owners. With a large proportion of Kiwi enterprises relying on the direction of an individual owner, they are less likely to enjoy the clear benefits of the broader capabilities of an expert management team and the independent experience of a board.
And a surprisingly large number of businesses are unprepared for the levels of disruption we are likely to see through the introduction of new technologies, nor are they willing to invest in the research and development necessary to help transform their own business in the face of rising pressures and a growing skills crisis.
But the issue overall is less about the attitudes of the business owners themselves and more about the environment in which they operate.
If we are truly serious about developing this country into a leading international competitor, underpinned by the growth and development of productive, dynamic and technologically-enabled businesses, succeeding as part of a flourishing knowledge economy, we need to do everything we can to focus on their needs and foster their development.
And this will mean stimulating greater investment in research and development by providing incentives for the businesses that are willing to forego higher profits to focus on developing valuable knowledge and infrastructure.
It will also mean taking serious steps to mitigate the crushing shortage of skilled staff, by investing in training – not just at university but in applied skills – which is responsive and appropriate to the needs of industry. It will also require us to take a nuanced approach to immigration, so we can attract in-demand experience from all over the world, and channel those skilled migrants not just to the major centres but into the areas they are needed most.
But ultimately, it will require us – as a nation – to start recognising the vital importance of the mid-market, benchmarking their success and developing the framework of support they need to go from ambitious entrepreneurs to world-leading powerhouses.
If we can focus on New Zealand’s mid-market not just in terms of the small number of businesses from a broad range of sectors this represents, but instead look at them in terms of the size of their current contribution to the local economy and the potential they embody, we are far more likely to be able to provide them with the resources, support and investment they require to maximise the benefits they can bring for the whole economy.
Top four long-term business goals
Expand to cover the whole country 19 percent
Maintain current market status 17 percent
Growth 16 percent
Provide a comfortable lifestyle for owners/directors 13 percent
The pressures the sector faces
Top five bigger-business pressures
Finding qualified staff 40 percent
Competitive activity 30 percent
Attracting new customers 23 percent
Price margins and profitability 22 percent
Cost of technology 19 percent
Which technologies do you believe will have the greatest impact on your industry in the next 10 years?
Internet connectivity 37 percent
Cloud computing 37 percent
Automation/Robotics 26 percent
Internet-of-things 26 percent
Artificial intelligence 18 percent
Machine-to-machine learning 15 percent
GPS directed automated machinery 14 percent
Business Management Capability
Who’s responsible for making business decisions?
Owner 39 percent
Board of directors 24 percent
Management team 22 percent
CEO 18 percent
General Manager 18 percent
Find out more by downloading a copy of the MYOB Enterprise Insights report here.