Entrepreneurial spirit maintains optimism as firms look past slowdown and plan for growth
Business leaders across the globe began this year with a sense of caution. According to data from the International Business Report (IBR), Grant Thornton’s global survey of mid-market companies, optimism among business leaders had fallen to 59%, down from a recent high of 70% at the end of 2021. Despite this fall, optimism was still above historic averages, suggesting that mid-market firms had confidence that conditions will improve even when faced with some significant challenges. As fears of impending slowdown recede in many markets, business leaders can plan ahead with increased assurance that conditions look set to improve.
Although there are signs of an improving global economic outlook, mid-market firms are under no illusions about the difficulties ahead. Economic uncertainty and energy costs remain the top concerns globally with 60% of mid-market businesses citing them as a constraint to growing their business. Other top concerns include the availability of skilled workers (57%) and labour costs (55%). Firms need to have a strategy for responding to this business environment and the ongoing uncertainty.
“Mid-market businesses do have the right to feel optimistic. Sure, their optimism has been tested but, over the last few years, mid-market firms have shown real resilience,” says David Munton, global leader at Grant Thornton International “No matter what challenge gets thrown in front of the mid-market, they do seem to navigate those difficulties really well. They’re agile, they're flexible, but they're also sensible in how they deal with those challenges so that they emerge stronger at the end of the day. Mid-market businesses are right to have the confidence that they will continue to grow internationally, that they will continue to grow their customer base, to develop their talent, and diversify and protect their supply chain.”
Our latest research shows how mid-market businesses are adapting in some key ways as they prepare for an expected upswing in wider economic conditions.
Many firms are taking the time to re-evaluate their supply chains. One of our key insights from the most recent data is that many business leaders are focussed on working out whether they can deliver more value by shifting their trade routes, or if there are markets in which they can grow. The nature of the mid-market means businesses are more likely to be adaptable and able to make decisions quickly and decisively.
The adaptability of mid-market businesses allows leaders to be constantly looking for opportunities even as they face some very real threats. The research shows that the prime issues weighing on leaders’ minds are economic uncertainty, inflation and the risk of cyberattack. However, they are also very aware that current economic turbulence may lead to other new threats.
In order to respond to these threats effectively, firms will need the right teams in place but, as our third key insight demonstrates, hiring and retaining the right talent remains a challenge amid a widescale skills shortage and with inflation adding to firms’ labour costs.
Finally, the fourth key insight from the data looks at how business leaders are working to increase productivity. Identifying the areas for investment that will be most effective for bringing about growth and allowing them to stay one step ahead of their competitors.