Mid-market companies are some of the worst hit during this global credit crunch, especially in the US and Canada. These businesses represent a significant portion of the employees in the economy but have not been receiving attention in the media or with government. It is particularly noticeable in the challenges these mid-market companies are having in refinancing their businesses and securing additional credit to cope with the significant changes. These mid-market companies also find it tougher to make changes than the smaller or large companies.
by StuartMorley
Mid-market companies are some of the worst hit during this global credit crunch, especially in the US and Canada. These businesses represent a significant portion of the employees in the economy but have not been receiving attention in the media or with government. It is particularly noticeable in the challenges these mid-market companies are having in refinancing their businesses and securing additional credit to cope with the significant changes. These mid-market companies also find it tougher to make changes than the smaller or large companies.
"Mid-market leaders must cover a much wider front and cope with much greater uncertainty" according to a white paper on Mid-size Organizations produced by IBM in February 2009. This white paper went on to state that 'mid-market companies must 'master complexity'... for everything is important and change can come from anywhere."
We find the biggest challenge to rapid change is bringing together the information you need in one place at one time with the key people so you can decide what are the most important issues to focus on. A study by Deloitte Consulting in 2006 of 350 private companies in Canada found that most leaders thought the top three strategies that would increase the value of their companies were: increasing the volume of business; improving the quality of their management team; and product innovation. In times of significant change, especially adverse change it is often very difficult for mid-market organizations to make progress in these three areas. In contrast we have found that in tough times the strategies that are often more effective include: reformatting the pricing/product and service offerings; improving asset utilization; and decreasing overhead costs to ensuring the survival of the business. However these strategies require more planning and detailed costing information than is readily available in many mid-market organizations.
In the good times, doing nothing can often be the best solution. Management of mid-market organizations hate to make changes - especially when the changes are controversial. Therefore delaying a decision pending more information or delegating so an employee can solve the problem on their own works well in the good times. In the tough times it is a different situation. Now the company needs to focus on what will change and when and by how much will they change. In the tough times the challenges come by the bucket load rather than one at a time and they are seldom the challenges you expect!
Should the leader of a mid-market organization refuse to make a decision and risk the survival of the business or make a decision knowing it is really just a leap of faith? Mid-market organizations seldom have the information, management depth or expertise to be able to know if the key strategic decisions they are faced with will work. Tough times usually signal that it is the time for the leader to take cover until the storm passes. However the successful businesses in the tough times are the ones that try to dance in the rain rather than run for shelter.
Leaders of mid-market companies often worry more about the general state of the economy or industry trends than focusing on keeping key customers happy. Losing a key customer is often the worst thing that can happen to a mid-market company as many of these companies are dependent on a few large customers for most of their revenues and profits. As mid-market companies are often caught by surprise at losing a key customer, they are slow to adapt that they do not have the financial resources to turn things around in time.
The reason stakeholders support a leader of a business is because they believe the leader has a vision of where to take the business and that vision is going to be profitable for all concerned. However as soon as a leader is lost and does not know where to take the business, the risk is the leader starts to lose interest in the business. The other extreme is the leader is so focused on the short term they don't know if it is time for the business to change direction. For either of these situations the leader should get help to set a new direction or step aside so someone else with vision can lead the business. However many leaders of mid-market organizations do not have strong governance models to remove them and their ego is such they do not want to step aside.
The failure rate amongst mid-market companies is very high during the tough times unless the leader is willing to recognize they are in unfamiliar territory and seek help to cope with a work load that often more than doubles during these times.
About the Author:
Stuart Morley MBA is a world renown expert to mid-market companies during their turnaround phase. Find more information on his website turnaround Middle Market Companies which includes video clips, articles and order his recently co-authored book. Get a totally unique version of this article from our article submission service
|
Business 
