Unveiling Key Challenges Facing New Zealand's Medium-Sized Businesses
The Six Common Barriers to Scale
This is an introductory blog that will be supported by a subsequent 6 blogs. We have recently unveiled insightful analysis from a comprehensive study of 75 medium-sized businesses (MSBs) in New Zealand. These businesses, defined by their staff numbers ranging from 20 to 150+ employees and annual revenues of $5m to $30m, play a pivotal role in the nation's economy.
Medium-sized businesses are a cornerstone of the New Zealand economy, especially prevalent in sectors like manufacturing, construction, wholesale, technology, and retail trade. Despite comprising only 0.4% of all businesses, they contribute a staggering 42% or $253 billion to total industry sales.
The study, which involved the analysis of anonymised and desensitised data collected over the last eight years using advanced Generative AI tools like ChatGPT 3.5, identified six common barriers that impede growth across various sectors. These findings were synthesised from a comprehensive evaluation of the businesses' strengths, weaknesses, and opportunities.
Key findings reveal that leaders of medium-sized New Zealand businesses struggle with forecasting future workloads and establishing systems to recruit or develop adequately skilled staff. The predominant challenge identified across all sectors is the absence of a three-year strategic plan for pinpointing essential capabilities, including leadership, necessary for future scaling. This challenge is exacerbated by a global shortfall in talent identification and recruitment as businesses enter growth phases.
Additionally, 46% of the businesses surveyed reported a lack of in-house expertise and staff capacity to manage workloads during periods of growth as their primary obstacle. Challenges in recruiting skilled personnel and providing sufficient training or growth opportunities to enhance the skills of existing staff were also significant concerns.
Communication and collaboration were identified as key barriers by nearly half (42%) of the businesses, followed closely by issues in Marketing Focus and Branding (39%), Leadership and Accountability (38%), Operational Efficiency & Process Improvement (33%), and Strategy Execution & Alignment (30%).
A separate survey by Pivot & Pace involving over 800 business leaders found that 61% lacked a clear strategy for business growth, underscoring the critical need for strategic planning.
Supporting the growth of New Zealand's medium-sized businesses into larger, global entities is crucial for job creation, increasing export earnings, and fostering a high-wage economy. Over the coming months, we will release a series of blogs providing in-depth insights into essential areas such as Leadership and Accountability, Strategy Execution & Alignment, Human Resource & Capacity Management, Communication & Collaboration, Marketing Focus and Brand, and Operational Process and Measurement. These blogs aim to equip business leaders with the knowledge and tools needed to navigate and surmount these challenges.
Written by Greg Allnutt MNZM, Partner.