The question of ” How many businesses in NZ ” is one we get a lot. In New Zealand, there is a common misconception that there are 450-500,000 businesses nationwide. This is the number often quoted in news and media outlets. Today I’m going to be breaking down why that number is a lie when it comes to using this number for business calculations.
500,000 businesses, where does this number come from? This comes from the number of companies registered in the Company Office Registrar. The first thing you need to know is not every company needs to register with the registrar, they only have to be registered if they want to be a limited liability company or if they want to have a GST number.
Any small business that doesn’t have $60,000 in turnover, does not need to register for GST. This is going to be your small at-home businesses, they might just not want a GST number or they might not want to be registered as a limited liability company.
Breaking Down 500,000 Businesses
The first thing you should know is that 500,000 businesses doesn’t even capture all the businesses in New Zealand. The second thing you need to know is that these 500,000 businesses include a lot, and I mean a lot, of property and family trusts. I think it’s something on the order of 200,000, maybe 150-200,000 businesses. These are either a family trust or a property trust. And yes, they are technically a registered business. But, they’re not going to be buying from you.
When you talk about that number, you really have to cut it down by 40% to give you a more exact figure of about 300,000 businesses that are likely to actually be existing. The next thing you have to consider is that there are businesses which don’t have any staff which again is kind of a bit strange. Surely they can’t buy from you if they don’t have any staff.
Mysterious 0-Staff Businesses
How does that happen? Well, Harry has a business and he registers three companies for that business. For whatever reason. Maybe he has three divisions and he wants to run things separately. And so, you have three businesses registered, but it’s really just one Harry with his one business. So you have one proper business and then you have two businesses with zero staff. It’s roughly about 100,000 businesses like that.
So, How Many Businesses In NZ?
After a bit of math, you’re left with about 200,000-250,000 businesses that are actually operating, actually have staff, and can actually buy your product or service. This is the number you should use for any business forecasts or decisions.
What Does Large Mean?
You might be wondering, well, what percentage of these businesses are actually large? And what does large really mean in the context of a small country like New Zealand? Below are a few rough counts to give you an idea of how many ‘large’ companies there are in NZ.
After a bit of maths, you’re left with about 200,000-ish, maybe a bit more than 200,000 businesses that are actually operating, actually have staff, and can actually buy your product or service.
100 or more staff in New Zealand = 2,500.
50-100 staff in New Zealand = 3,500.
20-50 staff in New Zealand = 10-12,000.
So when you consider that you want to target large companies, you want to target corporates and you’re thinking “I’m going to go out and there’s so many of them”. But in reality, there are 2,500 companies with 100 plus employees. If you go to 1,000 plus employees it shrinks further.
New Zealand really is a country of small businesses and that’s the key thing you have to understand. If you are coming into the market with grand expectations of selling your product to hundreds or potentially thousands of large companies, then prepare for disappointment. This is a very common mistake people make when thinking about the size of the NZ market.
Those large companies, yes you can sell to them. But they’re more likely to have 20 plus staff, not 100 plus staff.
Hopefully, this give you a better understanding of the breakdown of New Zealand businesses and the true size of the NZ market. When they say New Zealand is a country of small businesses, they really mean, it’s a country of small businesses.
What do you do with this small market of large companies? You come to us. We tell you how many companies are actually in your target market, which might be a very small number. Usually, it’s about 1,000-2,000 businesses. We really try to expand this as much as we can, especially when it comes to the number of staff. A lot of people say “Give me 100 plus”, which might be 20 companies. Can you afford to limit yourself to 20?
When you’re ready to find out the size of your target market, fill out the form below. Or give us a call on 04 977 7877.