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NZ mid-size businesses battle productivity & growth stagnation

Tue, 17th Sep 2019
FYI, this story is more than a year old

New Zealand's mid-size businesses aren't quite up to scratch compared to their counterparts overseas, with productivity and profit growth both letting them down.

Research from Grant Thornton New Zealand analysed New Zealand businesses with revenues between $5 million and $30 million and employ between 20 and 99 people.

It found that in New Zealand there are 10,698 mid-size businesses (MSBs), 471,021 small enterprises and 2460 large enterprises.

Those MSBs have supported New Zealand's economy to the tune of $35 billion in 2017. They also supported New Zealand's remuneration with more than $21.7 billion.

More than half (65%) of New Zealand's MSBs have been operating for 11 years or more. More than half are also in the wholesale trade, construction, retail, trade, or manufacturing sectors.

The study also found that MSBs outperform other business types in terms of employment growth, productivity, profit growth and capital investment fall behind.

Approximately 27% of mid-sized businesses exported products or services in 2018, and only 1.9% reported having international operations.  Internationally, 46% of German, 29% of UK and approximately 33% of Australian mid-sized businesses have international operations.

“The mid-market is an important part of our economy, but it's often overlooked as we focus on getting small businesses off the ground and celebrating the success of larger ones,” says Grant Thornton New Zealand business advisory services partner Stacey Davies.

“If mid-sized businesses' view of the world is not articulated in New Zealand's business and economic conversations, their needs won't be met and opportunities for not only those businesses, but a significant portion of the population, will be missed.

Research also shows that 76% of mid-sized businesses requesting financing in 2018 favoured debt financing; and 9% of all mid-sized businesses requested equity financing.

“Having put the hard yards in to build their businesses, owners are reluctant to give up a share of ownership to an investor, however, in many cases it's necessary to achieve meaningful growth,” says Davies.

According to the report, mid-sized businesses need to develop a voice of their own, beginning with the Government determining an official New Zealand-based definition for a mid-sized business.

Once defined, it could help identify why the best mid-sized businesses succeed, and it could also help to develop programmes stimulate or accelerate mid-sized business growth.

These statistics are from Grant Thornton's The power and potential of the mid-size business: New Zealand mid-market report 2019.

All report data has been taken from Statistics New Zealand's Annual Enterprise Survey 2018; Business Operations Survey 2018; and Business Demography data 2018.

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