2022 ambitions for mid-market companies revealed | New Zealand business magazine

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Jobs, expansion and tech investment – a new survey has found that mid-sized, often overlooked Kiwi businesses are feeling bold for the year ahead.

Economic confidence, increased work in progress and higher revenues from a year ago are all contributing to buoyant sentiment and fueling the further growth ambitions of mid-market New Zealand businesses, new research finds of the business management platform, MYOB.

The new 2022 Mid-Market Snapshot – which surveyed more than 500 mid-market companies across the country – found stark differences in performance for 2021 and sentiment around 2022 of local companies with between 20 and 500 employees, compared to small businesses.

While 24% of mid-market businesses saw a decline in revenue in 2021, nearly two-thirds (63%) said they saw an increase last year compared to 2020, and this year is looking to build on on this success, with 67% of respondents. indicating that they have more work in progress for the first quarter compared to the same period last year.

MYOB’s go-to-market manager, Jo Tozer, says mid-sized companies are often overlooked when it comes to reporting on local business sentiment and performance.

“There are over 10,000 medium-sized businesses in New Zealand, employing over 300,000 New Zealanders and yet when it comes to assessing the financial health, performance and concerns of local businesses, this group is rarely mentioned,” says Jo.

“What our new insights reinforce is that after a year of revenue growth for many and with a good pipeline of work ahead, we should really recognize and support our middle market businesses more.”

Jobs reshuffles to lead 2022 business shifts

But to capitalize on the opportunities or overcome the challenges ahead, a large majority of mid-market companies — 84% — plan to make changes to their operations in 2022.

Employment changes are expected to be the biggest this year for this group, as companies try to fill the gap resulting from the shortage of skilled workers or, conversely, reassess their business models. Just over a third (34%) plan to hire more staff, while 32% plan to reduce the number of employees in their company.

Other popular actions for those considering making changes to their business include: providing more new goods or services to customers (31%), hiring more contractors (30%), investing in more marketing and advertising (28%) and investing in more technology to better manage their business (27%).

“Last year appears to have been a strong year for the majority of middle market businesses, and the changes many are planning to make to their operations in 2022 will help ensure they are in the best possible position to preserve and leverage building on this success”, explains Jo.

“Whether it’s assessing job structure opportunities, investing in technology to improve business efficiency, or budgeting more for business promotion – the changes ahead don’t just prepare them to adapt and meet the range of challenges they predict, but based on our insights, many will also help propel them towards achieving their ambitions for the year.

An additional change likely to be seen and felt by mid-market business customers at all levels will be rising prices. A whopping 85% of businesses said they planned to raise prices in the first three to six months of 2022. By sector, 93% of construction and trade businesses said they would raise prices, while that 87% in retail and hospitality also said the same.

“It’s no secret that inflationary pressures and supply shortages have taken their toll on the prices of goods and services, and with some wholesale prices continuing to rise with little sign of slowing, it’s safe to say that we should expect companies of all sizes to start raising their price if they haven’t already, as they seek to cover some of the additional costs they are currently incurring,” explains Jo Tozer.

Ambitions of the middle market mix of objectives for the national territory and abroad

With clear goals fueling key business shifts in 2022, the new survey also revealed the top three ambitions of mid-market companies as they seek to build on the momentum gained over the past 12 months.

Increasing revenue was the top goal for most companies (47%) for 2022, followed by bolder ambitions including expanding into overseas markets (38%) and becoming number one in their industry/leapfrogging their competitors (36%).

“New Zealand middle market businesses are hungry for success and from the high ambitions they have expressed in our latest research, it is also clear that they are not here to settle for the status quo. They are eager to make 2022 a year of growth – whether it’s revenue or new customers or both – and even more encouraging, a strong majority (82%) are confident that they will be able to achieve these goals,” says Jo.

Continuing trends seen over the past two years, more than a quarter of mid-market companies said one of their top three goals was to upgrade or implement new technology in their business .

Enterprise resource planning (ERP) solutions are expected to be the most popular, with 60% of this group planning to add or improve their ERP, followed by people and workforce management (54%) and accounting and financial software (41%).

Challenges

Despite high levels of confidence in achieving their ambitions, information from MYOB shows a direct correlation between changes and goals for 2022 and the challenges these companies expect to face this year.

Asked what challenges they expect to face in 2022, almost half of all mid-market businesses in New Zealand said a shortage of skilled employees (49%) would be their biggest challenge, followed by the implementation of new technologies (42%) and the disruption of sourcing goods from abroad (41%).

“While most mid-market companies feel incredibly confident, it is evident that they anticipate that achieving their key objectives will not come without headwinds, thanks to the continued impacts of the COVID-19 pandemic,” says Joe.

“However, the past two years have shown us that technology solutions can play a vital role in helping businesses manage some of these challenges. On the other hand, without the right systems in place, it will become increasingly difficult for growing businesses to capitalize on the changes they anticipate and effectively manage new customers, onboard new entrants or stay ahead of their company’s inventory levels.

“With great ambitions for growth, scale and increased competitiveness, and a keen eye on the challenges ahead, there is no doubt that 2022 could be a bumper year for our local mid-market businesses. And with the right changes in their business – whether it’s job structure or the implementation of new digital solutions to improve business adaptability and increase efficiency – they should be confident that they can achieve their growth goals, and we will support them all the way,” Jo adds.

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