In a mixed and uncertain business environment, some companies are more aggressively seeking new pathways to growth.
These days, when it comes to growing your company, it can be both the best of times and the worst of times. A treasurer at a manufacturing company sums up the dilemma many mid-sized businesses are facing, when he says that his firm's biggest challenge now is that "[We have] more opportunities than we have capital."
The good news-they have the opportunities. The bad news-they may not have the capital.
This is one of the takeaways from a survey sponsored by the commercial financing firm CIT and conducted by CFO Research. We asked finance and other senior executives from mid-sized companies (between $25 million and $1 billion in revenues) about their companies' growth plans and the biggest challenges they were facing.
For many companies, finding the right path to growth-or rather, to profitable growth-is itself the challenge. About three-quarters of executives in the survey (77%) agreed that their companies needed to invest more for growth- but almost as many (69%) said they also needed to cut costs to improve profitability.
In fact, 45% of the survey respondents said they were only planning on "moderate" growth, and another 36% believed their companies would be even more conservative (30%), or even would shrink (6%).
These somewhat modest ambitions are reflected in the growth paths finance executives said that they expect their companies to pursue. When asked to pick their top strategies for growth, executives were primarily looking to gain share in their existing businesses (selected by 57% of the survey respondents). Considerably fewer respondents expected to rely on higher-risk strategies, such as developing new products or services (40%), moving into new or adjacent markets (26%), or expanding internationally (16%).
A subset of respondents, however, showed greater ambition. Nearly one in five (19%) characterized their companies' growth plans as "aggressive."
And in many cases, being able to put together a diversified plan to bankroll their ambitions can be what separates the go-getters from the laggards. As the CFO of a company in the wholesale/retail industry noted, "We need to obtain more financing and invest in PP&E [property, plant and equipment] and increase staffing to meet growing demand"-in other words, finding ways to put your money where your ambitions lie.
Middle market companies account for one-third of private sector GDP and employ 25% of the total labor force.
While less visible than both small and large caps and vastly undersupported, middle-market companies are a signi