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New Zealand mid-size business report

What does New Zealand’s mid-market look like? How is it performing and why is this important?

Our mid-size businesses (MSBs) are the unsung heroes of New Zealand’s economy. They are a powerhouse of employment, growth and revenue, but are often overlooked as we focus on growing small businesses and celebrating the success of larger ones. This report explores MSBs’ contribution, their performance, their challenges and the opportunities available to contribute even more to the economy.

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The power of MSBs …

MSBs make up just 2.2% of businesses, yet they are a business sector that makes a significant contribution to the economy, strongly underpinning employment and household income.

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MSBs have a low mortality rate; 65% are 11 years or older, and 38% are 21 years or older.

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Employment growth and stability
MSBs provide 21% of employment in New Zealand. Employment growth was strongest in the MSB sector over the five years to 2018 (24%), outperforming growth in small (8.9%) and large businesses (13.9%).

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Growing salaries and wages
The MSB sector injects an estimated $22b into Kiwi households through salaries and wages. Spending on salaries and wages increased by 38% between 2014 and 2018; during the same period, small and large businesses increased their wage bills by 25% and 26% respectively.

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Growth in numbers
The number of MSBs is growing at a faster rate than small or large entities. From 2014 to 2018, the number of mid-size businesses grew 33% compared to 24% for large and 11% for small businesses.

… and the potential

The sector is vibrant and dynamic, but overall it is underperforming on profitable income growth, productivity and capital investment which means some big opportunities are being missed.

• Although the total income of the MSB sector grew strongly from 2014 to 2018, average income per enterprise has not increased. MSBs’ profits have not risen as quickly as their small and large counterparts
• Productivity - as measured by income per employee - is a barrier to growth
• MSBs’ capital investment is also low. This is part of the wider issue of low productivity throughout New Zealand’s economy and demonstrates the support that the mid-size business sector needs to accelerate growth

Unlocking the potential for growth in Kiwi mid-sized businesses

At Grant Thornton, we know that there is power and potential for Kiwi mid-size businesses to accelerate their growth, but this can only be achieved through Government initiatives and a range of improvements by the businesses themselves.

This report also includes recommendations to both Government and MSBs that should have a positive impact on NZ Inc’s bottom line; for these and more insights, download your copy of The power and potential of the mid-size business.