Aotearoa’s mid-market: In urgent need of transformation

Published on the 31/05/2018 | Written by MYOB

mid-market business challenges_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.

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