The CBI’s Future Champions report showed us just how critical the UK’s mid-sized organisations are to the economy.
They deliver over a quarter of all UK revenues and provide one in five British jobs. As a result of market conditions, mid-sized businesses are built for speed and manoeuvrability. They have the potential to alter the course of the UK economy, with the right controls at the helm.
But with the government now putting extra effort behind giving the mid-market a boost, the question is what ramifications this will have on these fast moving and agile organisations? Will they be able to handle growth?
Importantly, the definition of “mid-sized” should be more about the stage of lifecycle a business is in rather than its size. These companies are in the middle of their development, riding the big waves of defining business developments. With support we are likely to see this tumultuous part of the British economy going through even more change, in terms of growth, globalisation, and management structure. They must retain what I call “the art of control” while they are negotiating these waters.
Their heritage stands them in good stead. Government rhetoric about the sector’s untapped potential is a little misleading. As a procurement specialist, we see many high-growth organisations taking resounding decisions to improve their purchasing controls and cash visibility as their spend gets larger.
But as mid-sized companies grow they must be wary of relying on outgrown processes. They have some growing up to do, too; perhaps from impetuous young adult to responsible parent. This is an essential part of making the leap in business scale and growth.
The CBI’s report echoes this need to adapt. It forecasts that with the right nurturing and encouragement, mid-sized organisations could add up to £50bn to the UK economy by 2020, but its research showed that the building up of these organisations” capabilities is critical. As Neil Bentley, the CBI’s deputy director general commented, ?Even with the right level of ambition firms will struggle to grow if they lack the right capabilities internally.
If mid-sized organisations don’t tool up for growth their potential could be hampered by cash flow issues, supply chain inefficiencies, and a lack of business visibility. This is a critical time in their development and they can’t afford to lose focus.
If one thing is a certainty for the UK’s mid-sized organisations, then that is change. But change is also far from alien to them – they are proficient masters of agility and redirection.
Nonetheless, it must be underpinned by increasingly watertight processes and visibility in order to chart an effective financial course that puts the UK economy on its best future footing.
Daniel Ball is director at Wax Digital Ltd.