16th March, 2022
A new report on mid-market businesses across Australia and New Zealand reveals the pressure of skills shortages is top of mind among decision makers.
Across the entirety of the business community, the past 12 months have been variable, with ongoing disruptions and border closures causing issues for supply chains and labour markets.
Despite this, many mid-market businesses (those employing 20-500 full-time employees or equivalent) still managed to realise revenue increases in 2021.
Such insights are presented in the new report from MYOB, ‘Bold ambition: Mid-market businesses in 2022’, which derives insights from research conducted on 500 mid-market business leaders and decision makers in Australia and 500 in New Zealand between mid-December 2021 and mid-January 2022.
Representing a small yet significant sector of both economies, the mid-market is not regularly singled out in reporting – especially as it can be difficult to define.
“The mid-market is traditionally a segment of business that is less recognised or talked about than others,” said MYOB’s General Manager of Enterprise, Kim Clarke.
And that may be because mid-market operators can have a relatively small headcount yet still have enormous earning potential.
To give some size to the scale and employing power of this business group, there are an estimated 60,000+ businesses in Australia with a staff greater than 20, which accounts for around a quarter of the total workforce (2.9 million).
By comparison, more than 315,000 people in New Zealand are employed by just over 10,000 businesses with a staff between 20-50, while a further 1.3 million people are employed by mid-market and larger businesses with 50 or more full-time employees.
Meanwhile industry sectors like professional services and property, retail, construction and manufacturing are prime territories for the mid-market, representing a force in the trade of both goods and services.
Taken together, the employers across both regions with a headcount between 20 and 500 are contributing to the livelihoods of hundreds of thousands – if not millions – of employees, as well as making significant contributions to their respective economies overall.
The initial impacts of the pandemic were still being felt strongly across the mid-market at the outset of 2021, yet the report shows the entire period was one of recovery for many.
Revenue growth in 2021 was led by professional services and property related mid-market businesses in both countries, with 68 percent reporting increases in Australia and 83 percent in New Zealand – perhaps an indication of their digital capability and adaptability with the shift to remote work.
Overall, the picture looks broadly the same for the mid-market across both nations: 62 percent of all mid-market respondents said they realised revenue increases (23 percent report a drop, 15 percent saw no change) while in NZ 63 percent increased revenue (24 dropped and 13 percent saw no change).
“But despite coming out of an incredibly solid year and with bold ambitions very much in frame, there’s understandable awareness that it’s not going to be all sunshine and roses in 2022,” said Clarke.
“Local mid-market firms are planning for the challenges that lie ahead.”
With Australia seeing the green shoots of the Omicron wave passing, more than 80 percent of mid-market businesses have reported increasing sales and work in their pipelines.
And although ongoing pandemic challenges continue to impact NZ’s economy, the first quarter of the calendar year is still looking busy, as 46 percent of mid-market respondents indicate they have ‘a lot more’ work lined up (21 percent responded ‘the same’ and 12 percent said ‘less’).
In Australia, just three percent of mid-market decision makers indicated they had less work on for Q1, 2022, which could be a positive indicator for New Zealand’s future as we look to the months ahead.
As Clarke said, that doesn’t mean we’re guaranteed “sunshine and roses” in 2022, and the report cites the ‘spectre of inflation’ impacting commodities as just one example of ongoing challenge. More recently, widespread flooding across Australia’s east coast is also causing previously unforeseen disruption.
At the time the research was conducted, it was skills shortages that were being most keenly felt, with 37 percent of Australian and 49 percent of New Zealand mid-market operators flagging it as a major challenge for the next 12 months.
In Australia, skills shortages was followed by ‘risk of business disruption due to COVID-19 restrictions’ (36 percent), ‘maintaining a steady revenue’ (35 percent) and ‘disruption of supply of goods from overseas’ (31 percent).
By comparison, New Zealand mid-market businesses were more concerned with ‘implementing new technology to manage the business’ (42 percent) and ‘disruption of supply of goods from overseas’ (41 percent).
‘Time and cost of compliance’ came in fifth spot in both Australia and New Zealand, with 31 percent and 36 percent of mid-market respondents listing it as a primary concern.
It’s with these challenges in mind that a significant majority (76 percent of Australian respondents and 84 percent of New Zealanders) are planning to make changes to their operations in 2022.
However, as you’ll see below, these decision makers have some very different priorities when it comes to the changes they intend to make, both between these regions and within them.
“When it comes to digitalisation and the opportunities technology presents for businesses, A/NZ mid-market businesses have made it clear that they’re not about to stop at the changes made over the last two years in response to COVID-19,” said Clarke.
“In fact, with a significant proportion planning to increase their investment in upgrading or implementing new tech in their business, our latest findings demonstrate there is clear recognition of the role digital solutions will play in helping secure their success.’
Gain insight into what’s driving the mid-market in 2022 across Australia and New Zealand from the full ‘Bold ambition’ report. Download it here.