IN COLLABORATION WITH DELOITTE
Leaders of middle market companies are not only more optimistic about the near-term economy but are taking key steps to leverage growth opportunities that come their way.
A year ago, concerns about the weak housing market and the European debt crisis weighed heavily on executives’ minds. But in the latest Mid-Market Perspectives: 2013 Report on America’s Economic Engine from Deloitte, those worries have begun to fade (see chart below). They are, however, being replaced by other concerns, most notably continuing budget battles in Washington, high corporate tax rates, and the cost of health care.
Meanwhile, companies have shored up their balance sheets, plan to invest in worker training and technology, and say that access to capital is posing only a modest challenge compared to 2010–2012. The net result is that almost half expect revenue to increase in 2013, and nearly 40 percent predict increased profits. About one-third expect to increase capital investment this year. In short, middle market companies are poised for growth.
“This year more companies feel better about their prospects,” says Tom McGee, national managing partner of Deloitte Growth Enterprise Services. “Despite ongoing challenges, they are focused on growth and taking measured steps to improve their respective positions.”
The challenges McGee cites won’t resolve overnight. It’s no surprise, then, that 44 percent of the 525 executives surveyed said that their uncertainty level is higher or much higher than it was a year ago.
Perhaps for that reason, companies are taking steps to control what they can by adopting a back-to-basics strategy. Sales easily takes the top spot when executives were asked where they will devote their time this year. Organic growth (focused largely on domestic markets), workforce training, and investments in technology are also seen as top priorities.
“As 2013 unfolds, I expect to see leaders of middle market companies gain further confidence as they begin to see the actions and investments they’ve focused on over the past few years begin to produce results,” says McGee. “They recognize that uncertainty is a new constant and have developed strategies to cope with it effectively.”