Highly productive mid-market businesses overlooked as economic driver

BUSINESSDESK: Mid-market businesses – with annual revenues of $2 million to $50 million – are being overlooked as economic drivers despite producing a third of the nation's business revenue and one in three full-time jobs, a new study shows.

They contributed $61.4 billion to the economy and 417,000 full-time-equivalent jobs yet accounted for only 5% of the nation's total enterprise in 2011, research by GE Capital reveals.

"The mid-market punches significantly above its weight and is the cornerstone of the New Zealand economy, contributing strongly to jobs and business revenues," managing director at GE Capital Aaron Baxter says. 

"If we are to evolve as an economy, we must put our resources and expertise into assisting the mid-market to overcome its barriers to growth – both in helping understand the sector better and in providing greater access to capital."

Mid-market growth has been overshadowed by the fall-out from the global financial crisis, on-going uncertainty about Europe's debt-crisis and the Christchurch earthquakes, Mr Baxter says.

That has dried up funding for mid-market businesses as banks favour more conservative lending practices.

The middle segment of firms doesn’t get access to the government assistance typically available to small companies or start-ups, yet doesn’t have the size to influence policy in the way that big firms can, leaving it “lost in the middle and often misunderstood”, he says.

Mid-market businesses cover a range of industries. The largest concentration was in the retail trade and accommodation sectors, which make up 17% of mid-market firms.

That was followed by wholesale trade on 15.2%, manufacturing on 12.3% and professional, scientific, technical services and administrative and support services on 11.4%.

The mid-market’s fastest-growing areas were agriculture, forestry and fishing, increasing 41.4% from 2007-10. The biggest declines were in the rental, hiring and real estate services, down 19.6%.

Nelson and Marlborough have the greatest number of mid-market businesses, while Northland has the fewest.

As at June 30 there were 20,536 mid-market businesses in New Zealand.