More than 60 per cent of New Zealand's mid-sized companies achieved an increase in revenue last year despite ongoing disruption caused by the pandemic, according to a new business report.
The study, commissioned by business platform provider MYOB, shows 63 per cent of firms reported revenue hikes last year while 47 per cent are expecting more growth this year, 38 per cent are looking to expand overseas and 36 per cent are determined to overtake competitors.
But MYOB's Head of Go-to-Market, Jo Tozer, says despite this optimism, many companies are being held back in their ambitions to grow by a shortage of skilled workers.
"These shortages are mainly being seen in manufacturing, hospitality, construction and retail sectors," she says. "A lack of people coming to New Zealand from overseas over the last two years has been a real challenge.
"But they are also facing the spectre of inflation, high costs of managing compliance and supply chain disruptions. The problem of supply is not going away either and is likely to continue to be an issue for businesses for at least another 12 months.
"Despite coming out of an incredibly solid year and with bold ambitions very much in frame, there's understandable awareness that it's not going to be all sunshine and roses ahead."
Tozer says as a result, 84 per cent of the business leaders surveyed in the report indicated they would be making operational changes in 2022 – whether it's right-sizing their organisation, seeking to better serve customers, or investing more in promotional activities in order to grow.
The MYOB report - Bold Ambition: Mid-market businesses in 2022 - questioned 500 business leaders and decision makers in New Zealand and Australia (500 in each country) between mid-December 2021 and mid-January 2022.
At the time the research was conducted, skills shortages were the most keenly felt issue, with 37 per cent of Australian and 49 per cent of New Zealand operators flagging it as a major challenge for the next 12 months.
New Zealand businesses were also concerned with implementing new technology to manage business (42 per cent) and the disruption of supply of goods from overseas (41 per cent).
The report says revenue growth was led by professional services and property related mid-market businesses in both countries, with 68 per cent reporting increases in Australia and 83 per cent in New Zealand – perhaps an indication of their digital capability and adaptability with the shift to remote work.
Construction operators in Australia appear to have fared better than their New Zealand counterparts, where nearly half reported a fall in revenue year-on-year.
Manufacturers in New Zealand, in contrast, outperformed Australia with 68 per cent reporting increases, compared to 55 per cent in Australia. Time and cost of compliance came in fifth spot in both Australia and New Zealand, with 31 per cent and 36 per cent respectively listing it as a primary concern.
Overall, the picture was broadly the same across both nations: 62 per cent of all Australian mid-market respondents said they realised revenue increases (23 per cent reported a drop, 15 per cent saw no change) while in New Zealand 63 per cent increased revenue (24 per cent dropped and 13 per cent saw no change).
Tozer says one of the key ways firms can mitigate against challenges is to ensure their operational systems - invoicing, payroll, compliance among them - are technology-driven and as efficient as possible.
"Technology can help bridge the gaps between ambitions and challenges," she says. "Investment in technology is critical and there is evidence in the market that companies who digitise grow up to 30 per cent more than those who don't."
She says MYOB's Enterprise software platform, for example, assists firms to streamline and automate many manual tasks, leaving more time to invest in developing skills among employees.
"This makes a job more meaningful and satisfying for staff - and in turn helps a company with retention and recruitment."
But Tozer says some mid-sized companies (those with 20 - 500 employees) have been on a "slow-burn" when it comes to adopting digital systems. The experience through Covid-19 - and now the rising cost of living - should have taught us change is necessary. Whether they are enough to break this inertia remains to be seen."
She says mid-sized businesses are often overlooked but in New Zealand more than 315,000 people are employed by companies with a staff of between 20 -50. A further 1.3 million are employed full-time by firms with over 50 employees.
Tozer says the right technology can help overcome business challenges. Cloud solutions, for example, can support flexible and remote working as well as increasing the ability to recruit people with the desired skills.
"An integrated business management platform helps predict demand, visualise trends and forecast and supports identification of inefficiencies within a business," she says. "This helps to buffer and pivot in the face of disruption.
"Automation tools reduce manual tasks - and the likelihood of errors - and frees up more time to ensure compliance requirements are met.
"An integrated system like MYOB's Enterprise package, acts as a single source of truth in a business by bringing disparate systems together. As the number of third-party apps or solutions increases, so does the risk of security breach or loss of information which in turn can create compliance issues."
For more information visit myob.com