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Is The Economic Tide Turning for Mid-market Companies?

Mid-market perspectives blog: Growth enterprise services

Posted December 17, 2013

The following guest blog by Bob Rosone, director, Deloitte Growth Enterprise Services, Deloitte LLP, highlights some of the key findings of our latest survey-based report, Mid-market perspectives: Moving ahead.

If you live near a shoreline, you know how predictable the tide is. Local papers will print the times of low tide and high tide to the minute. This information is important to sailors, surfers and fishermen as it helps them plan their days and figure out where to invest their time.

Unfortunately, predicting the economic tide does not carry the same precision. However, our latest mid-market survey of over 500 executives appears to indicate that the tide seems to have turned, with responses that point to rising economic performance and more optimistic expectations.

This is the sixth time in the past three years we have polled mid-market executives about their expectations, priorities and plans. The themes of previous reports have progressed from cautious optimism to poised for growth to the title of this report, Mid-market perspectives: Moving ahead.

In this report, respondents report improved performance among their respective companies, with marked increases in sales, gross profit margin, profit and productivity compared to our last survey six months ago. They also expect improved performance from the U.S. economy as a whole as well as their respective organizations.

Clearly, obstacles remain; most notably government budget challenges, healthcare costs, consumer confidence and tax rates. While uncertainty remains (with 44% saying it is higher than one year ago), these executives seem to be growing more comfortable operating in this environment and are generally forging ahead with investments to capitalize on opportunities and improve their organizations.

Along with the benchmarking we conduct in each survey, this time we included questions designed to evaluate the performance of mid-market companies against the principles discussed in The Three Rules: How Exceptional Companies Think. This book by two of my Deloitte colleagues, Dr. Michael Raynor and Mumtaz Ahmed, defines “the rules” for becoming an exceptional performer based on the analysis of 25,000 companies covering 45 years. Interestingly, the authors’ insights on responses to our survey questions offer a caution for mid-market companies about placing too much emphasis on volume rather than price.

Is your organization improving its performance? Is it becoming more adept at operating in this new environment of “permanent uncertainty?” Do you expect greater growth over the next 12 months? Is the economic tide truly rising? Let us know.

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