Case study: Leading from the middle

There’s a whole sector of Kiwi businesses quietly keeping our economy ticking over while the limelight focuses squarely on SMEs and multinationals. With all the value mid-market business adds to the country, it’s about time we started paying a little more attention.

There’s a whole sector of Kiwi businesses quietly keeping our economy ticking over while the limelight focuses squarely on SMEs and multinationals. With all the value mid-market business adds to the country, it’s about time we started paying a little more attention.

You could be forgiven for thinking the New Zealand business landscape is made up entirely of small businesses and startups at one end and big multinationals on the other, with little of value – or worth talking about – in between. Neither media nor government seems to focus much on anything else.

But in fact, while the ‘in- between’ section is relatively small, the mid-market provides a huge amount of value to the economy. More, perhaps, than even those within the mid-market ever realise.

GE Capital defines the New Zealand mid-market as businesses with annual turnover of between $2 and $50 million, or those that employ between 20 and 99 staff. For an idea of just how valuable these businesses are, consider this: mid-market businesses account for only 4.6 percent of all Kiwi companies but employ a third of all workers and turnover 31 percent of all revenue. Where, on average, a New Zealand business contributes $1.24 million to GDP, the average mid-market business contributes $8 million.

mitch booth ge capitalGE Capital general manager commercial Mitch Booth says the mid-market is underrepresented in terms of size, but it punches above its weight in terms of what it contributes to the New Zealand economy.

GE Capital’s been putting a lot of thought into the sector over the past couple of years. It has undertaken research, compiled into its annual Mid-Market Report, offered up tools and expertise as a resource to mid-market business owners and is convening a series of roundtables around the country to discuss the issues with business leaders.

“We want to raise their profile, and we feel a responsibility to help the mid-market grow,” says Booth. “Certainly, the more successful it is, the more successful the New Zealand economy will be.”

​The mid-market is diverse; there is no typical Kiwi mid- market business. It’s also a resilient group of businesses, having weathered the recession and bounced back to experience strong growth as early as 2010. But in spite of the diversity of industry and geography in the make-up of the mid-market, there are some common challenges facing them. Two particular issues stand out: attracting and retaining talent, and access to the right kind of capital.

Through its Access GE programme, mid-market businesses can tap right into GE’s wealth of expertise in industry and leadership, including its talent management and recruitment knowledge.

“We ask clients what their biggest business problem at the moment is,” says Booth.

“Once we understand the issue, we find – in almost all cases – that we’ve faced the same challenge at some point within GE, whether in New Zealand or overseas.”

The success of Access GE with mid-market participants has highlighted that the mid-market may not have received the same tailored support that other business sectors have enjoyed to date. GE Capital has been liaising with government, business, and its own client base to understand those needs better.

“One of the key bits of feedback we’ve had is that people are quite surprised at how much the mid-market does contribute to the New Zealand economy,” says Booth.

“Businesses are coming out of a zero- or low-growth period, and are now seeing opportunities for expansion. But in many cases they don’t have access to capital, or they have the wrong kind of capital structure in place,” says Booth.

This is where GE’s expertise kicks in helping to identify the appropriate funding solution, whether that’s a loan, lease or working capital. With deep knowledge of a number of industries – including forestry, manufacturing and transportation – GE is well aware of the cycles and idiosyncrasies of those industries.

“We are a specialist financier, not a bank,” says Booth. “We have lots of experience in the industries we work in. It’s this expertise we offer to customers to help them find the funding structure that works for them.” 

IN BRIEF

Mid-market businesses in New Zealand punch above their weight when it comes to their contributions to the economy, yet they’re an overlooked and underrepresented segment. GE Capital has been investing resources to support the segment and raise its profile.

CONTACT

To talk with GE Capital about the opportunities for your business, contact Mitch Booth on 021 966 091 or visit www.gecapital.co.nz