Mid-market businesses are front-footing 2022, soldiering on with growth plans despite ongoing Covid-19 uncertainty, according to MYOB’s upbeat Mid-Market Snapshot, entitled 'Bold Ambition'.
MYOB defines the mid-market as businesses employing between 20-500 Full Time Equivalent (FTE) employees and it polled 500 Kiwi businesses to gauge their sentiment for the year ahead.
After the initial Covid-19 shock of 2020, most of the businesses bounced back for a solid year in 2021 despite continued supply chain and personnel disruptions.
Most (63%) saw an increase in revenue in 2021 (compared to 2020), while just 24% saw a decrease, giving rise to some confident new year resolutions.
Increasing revenue was the top goal for most businesses (47%), followed by bolder ambitions including expanding to overseas markets (38%) and becoming number one in their sector/leaping their competitors (36%), said MYOB.
Starting as they plan to continue, 67% of those polled already had more work in the pipeline for the first quarter of 2022, compared with Q1 2021.
Jo Tozer, head of go-to-market at MYOB, said medium businesses are often overlooked when it comes to reporting sentiment and performance of local enterprises.
“There are more than 10,000 mid-market businesses in New Zealand, employing over 300,000 New Zealanders and yet when it comes to gauging the financial health, performance and concerns of local businesses, this group rarely gets a mention,” she said.
Small businesses (less than 20 employees) have been more visible through the 'shop local' message and their knife-edge struggles with less resources to weather staffing disruptions or gaps in trading.
The ability to adapt to new ways of working has been a measure of success for the mid-market, but more change is on the way: 84% plan to make operational changes in 2022.
"Employment changes are set to be the most prevalent this year for this group, as businesses try to mend the gap resulting from the skilled worker shortage or in contrast, reevaluate their business models. Just over a third (34%) plan to hire more staff, while a similar 32% plan to decrease the number of staff in their business..
Most "are hopeful, excited, and confident about what the year may bring," said MYOB.
Some of this confidence will come at the expense of the consumer however, with 85% of the businesses planning to increase their prices before mid-year.
“It’s no secret that inflationary pressures and supply shortages have played havoc with the prices of goods and services, and with some wholesale prices continuing to rise with little sign of slowing," said Tozer.
As a mid-market sub-sector, construction and trades struggled more than most during 2021, with nearly half of these businesses experiencing revenue decreases compared to 2020.
Plagued by supply issues, consent backlogs, lockdown restrictions and tighter budgets, 93% of this sub-sector said they would increase their prices in 2022 and 23% expected less work in the first quarter of 2022.
Though the pressures may ease later in the year, the shortage of skilled employees and supply chain disruptions are a couple of the biggest challenges the sector as a whole expects to keep muddling through, for now.
“While most mid-market businesses are feeling incredibly confident, it’s evident that they’re anticipating achieving their key goals won’t be without any headwinds, thanks to the ongoing impacts of the Covid-19 pandemic,” said Tozer.
Investing in technological products and services was flagged by more than a quarter as a priority for staying nimble in the face of future disruptions with staffing, supply chain or Government restrictions.
"Without the right systems in place, it will become increasingly difficult for growing firms to capitalise on the changes they’re planning and efficiently manage new customers, onboard new starters, or keep ahead of stock levels in their business.
"With the right changes in their business – whether it’s employment structure or implementing new digital solutions to improve business adaptability and increase efficiencies – they should feel confident they can achieve their goals of growth,” said Tozer.
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