The Middle Market in 2020: Achieving Growth Despite an Uncertain Future

With 2020 already two months behind us, the middle market sits at an interesting crossroads regarding its immediate future, particularly given all the uncertainty surrounding the impact of the coronavirus. Citing a recent LBMC Middle Market Business Executive Survey, conducted prior to concerns about the coronavirus, the Nashville Business Journal (NBJ) points to an uncertain future for middle-market business in 2020 and beyond, referencing an “upcoming slow down” among other broad market predictions.

That said, the survey, which was comprised of input from 750 polled middle-market executives, also projected periods of growth in this same timeframe. NBJ points to numerous focal points middle-market companies should embrace to capitalize on this growth and enhance their respective operations. I recently touched on several of these points in a previous blog. Here now are a few more ways to adopt new middle-market trends, embrace key ideological shifts, and ultimately fine-tune your company for a potentially nebulous future, something you need to do irrespective of your concerns about the coronavirus. 

Improving financial performance via efficiency

Your company’s financial performance is likely at the center of many crucial 2020 goals, making this area an already relevant and inevitable facet of overall growth. Specifically, however, NBJ cites “improving margins and increasing revenue through productivity/efficiency” as primary focal points within financial improvement; this reflected nearly 50 percent of polled leaders. 

To dissect the latter point further, many leaders are shifting focus from broad technology spends to investments in the fine-tuning of existing systems, with 27 percent of companies outsourcing technology support and services to supplement internal operations. That said, it is important to remember that most of the technology spend in 2020 will also continue to emphasize business intelligence, analytics, and cloud strategy.” 

Therefore, effective middle-market strategy in 2020 will hinge on a three-way balance of re-allocated spending, revisited existing infrastructure, and constant consideration for evolving data-driven solutions; this promotes both financial stability and continued efficiency amidst an ever-changing technological backdrop. 

Increasing business value

Business value goes hand-in-hand with growth, as your business’s present viability serves as the best indicator of its potential future performance. The best leaders understand that to enhance company value and keep themselves poised for success, they must always focus on how to capitalize on what is on the horizon, and, given the aforementioned uncertainty of this horizon in the middle market, value-based goal setting has become not only a moving target, but a partially veiled one. 

Finding and retaining top talent

A timelessly important variable, talent acquisition and management remain at the top of many middle-market goal lists in 2020. Your business’s value hinges on quality talent, and courting such workers is dependent on variables ranging from workplace culture and diversity to key changes in technology. Making these changes will be imperative throughout the year, as 2020 is already being identified by some as “the year of talent” in terms of middle-market staffing.

In 2020, middle-market companies must continue to follow a spectrum of talent acquisition and retention strategies — many of them time-tested. Among these factors is increased compensation, which, despite being lower in popularity and frequency from 2019 reports, remains a consistently relevant retention approach for many businesses. Conversely, employee training and workplace flexibility have skyrocketed in popularity, with many workplaces dedicating increased time to new, creative training opportunities and flexible options like remote working. To help achieve long-term growth in 2020 and beyond, middle-market businesses must accept these changes as new norms for the workplace of the future.

Tracking and preparing for M&A-related changes

As many middle-market commentators will attest, mergers and acquisitions (M&A) embody much of the collective market’s uncertain, but inherently optimistic future. Many industry leaders forecast a nebulous 2020 for M&A activity, pointing to factors like the impact of the coronavirus and the 2020 presidential election as historically significant influences on market growth (in this case, past elections have proven to cause “immense disruption,” as the market is not keen on the uncertainty they can create, and this has led current projections in a cautious direction — at least for now).

However, like the market at large, M&A is also equally poised for healthy disruption and subsequent advancement thanks to factors like “digital transformation, activist activity, availability of capital, and low-interest rates –” all of which are expected to drive growth for business services, healthcare, and technology (among other sectors).