New Zealand’s mid-market in urgent need of transformation - MYOB
The New Zealand mid-market is a sector with high potential for the country.
Despite representing only a small number of New Zealand’s enterprises, bigger businesses could transform the future of the economy, MYOB's Enterprise Insights Report has found.
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 the country’s next big success stories are coming from – particularly on the international stage – as they employ more than a third of the nation’s workers and contribute to around 40% of GDP.
Their success can make a huge impact on the economy.
However, despite the 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’s, 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.
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.
A surprisingly large number of businesses are unprepared for the levels of disruption coming 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 facing 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 New Zealanders 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, more needs to be done to focus on their needs and foster their development.
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 New Zealanders to take a nuanced approach to immigration to 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 New Zealand 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 the focus can be 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, then it’s far more likely to be able to provide them with the resources, support and investment they require to maximise the benefits they can bring to the whole economy.
Top three long-term business goals
Expand to cover the whole country 19%
Maintain current market status 17%
Provide a comfortable lifestyle for owners/directors 13%
THE PRESSURES THE SECTOR FACES
Top five bigger-business pressures
Finding qualified staff 40%
Competitive activity 30%
Attracting new customers 23%
Price margins and profitability 22%
Cost of technology 19%
Which technologies do you believe will have the greatest impact on your industry in the next 10 years?
Internet connectivity 37%
Cloud computing 37%
Artificial intelligence 18%
Machine-to-machine learning 15%
GPS directed automated machinery 14%
BUSINESS MANAGEMENT CAPABILITY
Who’s responsible for making business decisions?
Board of directors 24%
Management team 22%
General Manager 18%