U.S. middle market companies have a rosy outlook on both their business prospects and the economy, according to the American Express Survey of Mid-sized Companies, which interviewed companies with revenues of $10 million to $1 billion annually. Nearly three-quarters of financial decision makers (73%) in the U.S. middle market expect the economy to grow over the next twelve months and a similar number (75%) expect the economy will have a positive impact on their company’s business prospects.
This positive outlook is likely to have a significant impact on business plans. Nearly nine-in-ten (88%) enterprises plan to hire staff over the next twelve months, with most planning to hire full-time employees. Sixty percent say they currently have more employees than they did one year ago.
“Middle market companies have an optimistic view on the economy and their business prospects,” said Tom Tierney, Senior Vice President, U.S. Middle Market, American Express Global Corporate Payments. “We can already see this having an impact in terms of job numbers, with current employment numbers up and robust plans for future hiring.”
Hiring Driven by Increasing Business Volume
As companies gear up for growth, hiring appears to be in full swing at middle market companies. Among those who plan to add staff over the next twelve months, the greatest number plan to add full-timers:
- 52% plan to hire only full-time employees
- 19% plan to hire only part-time employees
- 18% plan to hire both full and part-time staff
The main reason companies plan to add staff is to support business volume (49%). Additional reasons for hiring include:
- The company has finally found the right candidate for positions they have been trying to fill for some time (36%)
- A new business venture (34%)
- The need for seasonal help or organizational restructuring (each, 30%)
Funding for Growth Already in Place but Cash Flow is a Concern
A nearly unanimous group of financial decision-makers surveyed (99%) say their companies are planning to grow their business, and of those, nearly one third (31%) say growth is their top priority over the next 12 months. For a number of enterprises, funding for growth is already in place. More than seven-in-ten (72%) say their company has successfully secured capital to support business growth over the last twelve months.
However, even though many enterprises have already secured capital, more than nine-in-ten (91%) expect cash flow concerns to arise over the next twelve months. Their greatest concern is the ability to invest in infrastructure (24%).
Middle Market Companies Pursue Variety of Growth Strategies
As U.S. middle market companies examine their best path to growth, strategies vary. While it’s no surprise that financial decision makers believe acquiring new customers (31%) will most help their companies grow, nearly as beneficial is the ability to make investments in infrastructure, including technology and operations (27%). Other strategies that would help middle market companies grow include:
- Retaining/growing existing customer relationships (15%)
- Accessing more cash flow / capital (14%)
- Attracting and retaining top talent (12%)
Mid-sized companies will use a variety of tactics to acquire new customers and retain current clients, including expanding into new customer segments (24%) as well as increasing investments in sales and marketing and introducing new products or services (each, 23%).
Traveling for business has proven to be a growth investment with strong return. While travel budgets are often one of the first casualties when the economy is anemic, nearly all of the companies surveyed (97%) say that business travel has been effective in helping their companies acquire new clients.
Achieving growth is not without challenges. The greatest challenge companies face as they grow is increasing competition (14%), followed closely by managing the rising costs of doing business (13%), an uncertain economic environment and data security (each, 12%). Additional challenges include:
- Retaining/growing existing customer relationships (11%)
- Acquiring new customers (10%)
- Accessing cash flow/capital (8%)
- Government regulations (7%)
- Attracting and retaining top talent (7%)
- Tracking expenses (6%)
Data Security Investments Growing
Mid-sized enterprises are putting more of a focus on data security. More than three-quarters (78%) say they plan to increase investments in data security over the next twelve months. A similar number (75%) require data-security training for employees. The amount of respondents planning to increase spending may be influenced by the fact that more than one-third (34%) report having had a data security breach at their company. More than four-in-ten (44%) say they have attempted a “friendly hack” and hired someone to try to hack into their systems from the outside in order to test their own security systems.
“As U. S. middle market companies grow, so does the risk of their data becoming compromised,” said Tom Tierney. “Findings in our research show that data security is becoming as vital to business as cash flow management.”
Additional survey results, including U.S. findings by revenue, are available by contacting Alex Della Rocca at 212-539-3203 or firstname.lastname@example.org.
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About the American Express Survey of Mid-sized Companies
The American Express® Survey of Mid-sized Companies was conducted in the U.S. and two other countries. Research was completed online among a sample of 501 financial decision makers from U.S. middle market companies, defined as having revenues of $10 million to $1 billion annually. Interviewing was conducted by Ebiquity between June 29-July 7, 2015. Overall, the results have a margin of error of +/- 4.4% at the 95 percent level of confidence. A separate survey was conducted in Canada and Mexico.