NZ Mid-market: Urgent need of a growth mindset
11 May 2018
New Zealand’s mid-sized businesses are not geared for growth and it could seriously impact our nation’s economy, reveals a new report by MYOB.
The tech business surveyed 185 bigger businesses across the country for the new MYOB Enterprise Insights Report - Transforming the Mid-Market. The report focused on the performance, management structures, plans for growth and investment in innovation and technology of businesses ranging in size from mid-sized operations with 20 staff to large-scale enterprises with more than 1,000 employees.
A CRUCIAL SECTOR
MYOB general manager of enterprise and New Zealand Carolyn Luey says the mid-market is crucial for New Zealand’s long-term growth prospects.
“This sector should be where our country’s next big success stories are coming from – particularly on the international stage,” says Luey. “As they employ more than a third of our nation’s workers and contribute to around 40 per cent of GDP, their success can make a huge impact on our economy.
“However, they appear to be falling well short of their capability – constrained by limited support, a significant skills shortage, poorly developed internal structures and, in some cases, a lack of ambition to truly reach their considerable potential.”
Ms Luey says despite seeing strong returns in 2017, New Zealand is not getting all it could from the mid-market.
According to the MYOB Enterprise Insights Report, 43 per cent of New Zealand’s mid-market operators said their revenues had grown in the last year and more than half (54 per cent) forecast that their revenue will increase over the next 12 months.
GEARING FOR GROWTH
“While they’ve been successful, most enterprises aren’t geared for growth or thinking about the future,” she says.
The report shows just 16 per cent of local mid-sized businesses are looking to expand this year, while 17 per cent said their long-term business goal was to maintain their current market share. A further 13 per cent said their goal is to provide a comfortable lifestyle for owners and directors.
“Many owners of our country’s bigger businesses are comfortable enjoying the benefits of their enterprise, without taking on the additional risk and pressures with a growth agenda,” Luey points out. “At the same time, many businesses are likely to be constrained by the limits and experiences of their owners.”
Almost two-fifths (39 per cent) of mid-sized businesses rely on their owner to make decisions and implement strategy, while just a quarter (24 per cent) utilise a board of directors.
“Relying on the direction of an individual owner means a larger operation is missing the benefits of an expert management team and the independent experience of a board,” she says.
In terms of pressures facing the New Zealand mid-market, the report finds 40 per cent of businesses are having difficulty finding qualified staff, 30 per cent cite competitive activity, 23 per cent say attracting new customers, 22 per cent say price margins and profitability and 19 per cent highlight the cost of technology.
“There’s clearly a lot more our mid-market sector can do to realise their potential – from introducing technology, investing in research and development, to streamlining operations and leveraging the benefits of expert, independent advice to address the pressures they are facing.
“But they can’t do it all on their own,” she says.
“If our community – from government, to investors and business commentators – can focus more on the needs of New Zealand’s mid-market, we are far more likely to be able to provide them with the resources, support and investment required to maximise the benefits they can bring to the whole economy.”
EMBRACING DIGITAL TRANSFORMATION
Luey says the threat of disruption from emerging technologies and new business models is marching through each industry sector.
“Mid-market businesses should be investing in digital transformation and self-disruption to constantly adapt to changing market conditions and ensure their future sustainability,” she says. “Transformational technology and the expertise to lead business through change has never been more accessible and is no longer the exclusive domain of large enterprises.
“The biggest barrier is mindset and risk aversion,” says Luey.
“We’re working with business leaders in the mid-market to help ensure the whole economy is geared for growth, and to help foster our next wave of business superstars.”
To download a full copy of the MYOB Enterprise Insights Report - Transforming the Mid-Market, click here.
For further comment or other information please contact:
Luke Chivers, MYOB NZ Public Relations Consultant
M: +64 27 569 8907 / E: firstname.lastname@example.org
About the MYOB Enterprise Insights Report
For the MYOB Enterprise Insights Report, MYOB interviewed 185 bigger businesses from across the country in the latter half of 2017. The businesses range in size from mid-sized operations of under 20 employees to large scale enterprises. Forty-five per cent of the respondents employ more than 50 people and six per cent have a staff count of more than 1,000. They represent a wide range of sectors, from manufacturing (23 per cent) and construction (11 per cent), to professional services (11 per cent), healthcare (6 per cent) and agribusiness (5 per cent). A quarter of the respondents report an annual turnover of less than $10 million, while 4 per cent reported earnings of more than $100 million. While half are based in the Auckland region, reflecting the preponderance of bigger businesses in the country’s super city, they are spread across the country – from Northland to Southland and Otago.
MYOB (ASX: MYO) is a leading cloud-based business management solutions provider. It makes business life easier for approximately 1.2 million businesses across Australia and New Zealand by simplifying accounting, payroll, tax, practice management, CRM, websites, job costing, inventory and more. MYOB provides ongoing support via many client service channels including a network of over 40,000 accountants, bookkeepers and other consultants. It is committed to ongoing innovation, particularly in cloud computing solutions, and in 2015 was awarded the BRW award for the most innovative large company for 500+ employees and placed 2nd in BRW’s Most Innovative Companies Award list across all categories nationally. For more information, visit myob.co.nz or follow @MYOB on Twitter.