Stuck in the Mud? Avoid Middle Market Stagnancy with 3 Simple Strategies

Posted on: November 7th, 2016

middle market stagnancy In the previous decade, from 2000 to 2010, the U.S. experienced a rapid growth in the private sector with the middle market taking the largest slice of the pie at 79%. However, statistics show that only 1 out the 10 of the above mentioned companies, will ever grow larger than 100 employees.

What is even more dismal is that 7 out the 10 of the companies will eventually shut shop. This is because most middle market companies eventually reach a stage of stagnancy where their growth slows or stops due to one or more of the following reasons.

It could be anything from an exhaustion of its market; the inability of the management to take the company to the next level; a lack of the right business model; and a lack of capital to fund further growth.

Not everything is bleak or hopeless though. By adopting and implementing a few timely strategies, companies can move past stagnancy and achieve the growth they expect. Here are three simple strategies to get out when stuck in the mud.

  1. Implement a new growth strategyMost middle markets start out well with great products that sell well. Nevertheless, down the years, they fail to innovate and find out (often too late) that a competitor has slowly but surely taken over the market. Combat this stagnancy by adopting new growth strategies.Explore new markets. It could be either geographical markets or targeting new customers.  Consider possible extensions around your core product or service.Investigate other new possibilities that could take you out of the stagnancy. It could be anything from alliances, and partnerships, to mergers or acquisitions, or even franchising your product or service.
  2. Adopt a market driven business modelThe success of a business lies in its market. Avoid stagnancy by adopting a market-driven business model. Battle the loss of clients or the perception of bad service by getting all teams within the company to focus on a customer driven approach.Make a thorough investigation into the company’s position and prospects in its market. Identify any flaws and make rectifications that shift the focus on the customer.
  3. Consider new ways to finance your businessTraditionally, the main sources of growth capital for middle market companies have been internal capital generation from profits and bank lines of credit. However, when a company faces stagnancy, companies will have to seek out other capital sources.Options include asset-based lending, SBA loans, receivables financing, sale/leaseback, mezzanine financing, fixed-term debt, and even crowdsourcing financing. Each type of finance comes with its own set of costs, restrictions and availability that can suit the varied financial needs of the company.By putting into practice these simple business strategies, you can take your company out of stagnancy and into its next growth phase. Nevertheless, it is important to remember that strategic planning is not a onetime deal, but rather a continuous process that has to happen all year around.