The ‘received wisdom’ about the Kiwi business landscape is that we’re mostly small companies, with a few big guys at the top end of town (Fonterra, Spark, Datacom, that sort of thing). And those are the unsurprising facts as exposed by business software vendor MYOB in its ‘Transforming the Mid-Market’ report.
But what about the middle? What role do these companies play? How many of them are there? And what can be done to make these companies more efficient and more effective, so they can enjoy a shot at becoming tomorrow’s giant corporation and big export earner?
It’s questions like these and plenty more that MYOB provides answers to and insights into with its Transforming the Mid-Market report. And this is what makes the report fascinating.
That’s because the mid-market doesn’t really get much of the sunshine from the press. Instead, the preoccupation tends to be with startups (perhaps overwhelmingly) and on the moves and shakes of the big fellas. And that’s absolutely OK, because as we by now all know, New Zealand’s business landscape is overwhelmingly made up of those entry level companies (the report notes that 70 percent of the country’s 528,000 enterprises don’t employ anyone; just 1 percent have more than 100 staff.)
So, first what MYOB has done is to quantify the mid-market. Around 6 percent of Kiwi companies fall into this bracket, which is defined as more than 20 staff and a turnover above $5-million.
Six percent. Chances are, before reading this, you were completely unaware of a) what constitutes what we call mid-market in this country and b) that there are in fact so few of them, percentage wise.
But that 6 percent nevertheless equates to nearly 32,000 companies. Suddenly, it seems like a lot.
These organisations need decent technology to enable them to take their rightful place in the economy – that is, contributing to GDP, providing employment (if each employs the minimum number to qualify as a ‘mid-market company’, you’re looking at 640,000 jobs) and earning foreign exchange. Some of them have it. A lot of them don’t, and are operating with an inefficient combination of spreadsheets, an accounting package and potentially several other discrete applications.
That’s a problem because it inhibits productivity (as a nation, we often come under scrutiny for having low productivity) and limits growth. Companies simply cannot scale if they don’t have good business systems.
It’s often said that you can’t manage what you can’t measure, and this is among the reasons MYOB’s report is so valuable. It raises the curtain on the mid-market, contextualising it in terms of the overall economy (and noting substantial revenue growth and positive sentiments for these businesses), and examines the pressures faced by and opportunities presented to the sector.
The report also considers business management, growth opportunities, innovation and technology – including if mid-market companies are ready for so-called ‘digital transformation’. It is arguably these chapters which are most interesting, as they outline the status quo and arguably make the case for how mid-market companies can boost their performance and set the scene for expansion and growth.
We’ll take a closer look at those chapters in the next few updates. But for now, we at Verde encourage you to download and read the report. You won’t regret it.