Business School

Growth aspirations

Information about future plans such as business aspirations to grow, innovate, export or downsize and effects on profitability.


Anecdotal evidence attributes low SME growth performance in New Zealand to the "3B" (bach, boat, BMW) syndrome, or a lack of ambition. One way of exploring this is through growth aspirations. Overall, 4% wanted to become smaller over the next three years, 19% wanted to stay the same size, 57% wanted to grow moderately and 20% wanted to grow substantially. Many with fast turnover growth also wanted to grow substantially, and many with no growth wanted to stay the same size or shrink (see Figure 2). High growth aspirants were prevalent in medium-sized businesses, fast-growers, exporters, industry-level innovators, high-tech manufacturers and newer businesses.


Those wanting to shrink or stay the same size, on the other hand, were prevalent in micro businesses, non-growers, non-exporters, non-innovators and (to some extent) business services. By size, 80% of those wishing to become smaller were micro businesses, 84% had no exports, and 30% had no competitors, compared with just 7% of those wishing to grow substantially.


Nonetheless, profitability of those wishing to become smaller or remain the same size was conspicuously higher, and profitability of those wishing to grow substantially was conspicuously lower than the other groups.

Figure 2: Level of turnover growth by growth aspiration



Business objectives differed substantially between the groups. Those wishing to grow substantially rated the following as significant or crucial (in descending order): maximising current and future returns, contributing to the wellbeing of stakeholders, freedom, increasing the value of the business, and creating something new and distinctive. Those wishing to downsize or stay the same size, on the other hand, rated "other" and freedom, as well as having fun and increasing personal or family wealth as most important.


Thus a group of CEOs – perhaps 20-25% of the total – have few aspirations to grow, innovate or export, and are in sheltered sectors of the economy, but their businesses are making substantial profits. The "3B" appellation may apply to them, but hardly to the businesses at the other extreme – also perhaps 20-25% of the total – who do aspire to grow substantially and are growing, innovating, exporting and investing, but at the expense of today’s profits. The latter appear to have borne the brunt of the global financial crisis, but their profitability has been recovering; many experienced fast profit growth between 2007 and 2010, albeit from a low base. Those wishing to grow modestly fit in between these two polar extremes.