Mid-Market Executives are Very Confident about 2017

Mid-market executives are confident about the economy and their company’s performance in 2017, and many expect revenue growth in excess of 5%. Yet while executives are upbeat, they’re also expressing concerns about increased regulatory compliance, rising healthcare costs, and the challenges of keeping up with the pace of technology.

Deloitte’s 2017 report on mid-market business and economic trends found that 83% of the 525 executives surveyed after the November election were confident that the economy would improve over the next two years. Nearly 40 percent said they expected the economy to grow in excess of 3.5% over the next 12 months. Executives were also optimistic about their company’s success with more than three-fourths anticipating growth of more than 5%.

Bob Rosone, managing director of Deloitte Growth Enterprise Services, said while executives in the survey cited certain economic and geopolitical issues, they “appear hopeful that these challenges might be addressed with policy changes by the new administration.”

Other surveys have also indicated strong mid-market confidence about the coming year. According to Chief Executive’s latest CEO Confidence Index, mid-market business leaders continue to have a strong outlook, with a rating of 7.2 (on a scale of 1 to 10 with 10 being the highest), compared to just 6.6 for their larger counterparts, and 6.8 for leaders of small businesses.

Executives in the Deloitte survey said the top three obstacles to their company’s growth were increased regulatory compliance, keeping up with the pace of technology, and rising health care costs.

The survey also underlined the importance of the global economy as more mid-market companies are looking to overseas expansion to develop new products and services, and boost efficiencies. More than half of those surveyed said they expect to increase their revenues outside of the U.S. with more than a quarter predicting revenue increases between 26% 40% over the next year. As the skills gap grows, more than half of companies said they expect to have 11% or more of their workforce outside of the U.S.

Roger Nanney, vice chairman, Deloitte LLP, and national managing partner of Deloitte Growth Enterprise Services, said as companies expand, new policies and regulations around trade could also have a significant impact on global economic activities. “The good news is that companies in this segment are confident and looking for opportunities to improve their business in an ever-changing landscape,” said Nanney.

Executives also said technology has remained a key investment priority for most organizations. Respondents said they were particularly interested in cloud computing, data analytics, and customer relationship management to drive business process improvement, employee productivity and customer engagement.

Workforce challenges remained a key issue with nearly three-fourths of survey respondents indicating they have difficulty finding new employees with the right skills and education. As a result, many companies said they were increasing training, full-time employment and compensation. Robert Morison, author of “Workforce Crisis: How to Beat the Coming Shortage of Skills and Talent,” told the National Center for the Middle Market that with an “unprecedented” number of people reaching retirement age, mid-market companies need an effective strategy to reduce brain drain and retain the workforces they need.

“The bottom line is that America, and other industrialized countries, have an unprecedented number of people at or approaching retirement age. That can threaten the knowledge and skills base, the continuity, and the performance of businesses,” said Morrison.