Most middle-market businesses predict they will grow in 2022, building on 2021 gains. Collectively, middle market companies posted their highest ever year-over year revenue and employment growth rates, according to the Middle Market Indicator Report from the National Center for the Mid-Market (NCMM).
“Building on the strong performance reported last summer, the middle market continues on a path of significant growth,” said NCMM Managing Director Doug Farren. “The good news is this continuation of recovery appears to be more universal, as a majority of middle market companies are saying they are back to pre-pandemic levels of performance. In addition, optimism about the future remains strong.”
Most (67%) believe their companies are in a better position today than before the pandemic began. The report shares that approximately three-quarters (73%) of companies say business has improved compared to one year ago, with innovation fueling this growth – 58% report they introduced a new product or service in 2021, up from 38% at year-end 2020. Additionally, 39% percent report they are expanding into new markets.
Two-thirds of companies anticipate revenue will continue to grow in 2022, but project the pace will slow slightly, to 9.9%. Supply chains remain a concern with 47% of middle market firms impacted by supply chain constraints in the second half of 2021.
Middle market executives report that finding the right resources to keep up with growth remains a challenge. Across all industries, almost every middle-market company (96%) report they are having some difficulty finding and hiring the right people with the right skills for open positions. Half of the companies report these challenges are significant. Healthcare and construction have the biggest talent gaps – with half of all healthcare companies reporting they do not currently have enough staff.
Although technology can help overcome some of the resource woes, 40% of companies report a digital skills gap; 66% say their resource shortfalls impact business performance by slowing growth or curtailing the opportunity for improvements.
Those who are investing are seeing the benefits. Farren spoke with Clark Twiddy, president of Twiddy & Company, a hospitality firm that manages hundreds of rental properties in Duck, North Carolina on a recent podcast. When the industry shuttered in 2020, they explored new ways to engage with customers, prospects, and their employees.
At the start of the pandemic, the bridges to the Outer Banks were closed to non-residents. Revenue went to zero, instantly. And then, when bridges opened, Twiddy explained they saw a demand spike they could not have predicted and that the demand has continued to the present day. Twiddy also explained, “we saw demand for digital engagement…in ways we simply didn’t think possible, or if we did think possible…perhaps a decade down the road. I’m sure you’ve heard people say that they evolved more in 90 days than then probably would have in 10 years barring the pandemic, and that was certainly true for us.”
Twiddy recognized the need for rapid digital innovation. “Our ability to rapidly shift our physical location but still be connective and effective was a huge driver of effectiveness and resilience.” The team ensured the backbone was strong, and then looked at core areas for investment – from the phone system, to CRM, to data analytics. Data analytics is empowering the team to understand many areas of the business – from the highly variable and dynamic pricing in their industry, to the right customer engagement channel (text/phone/email) and cadence. Twiddy says the company’s biggest and most collaborative weekly meeting across the company focuses on the data and how to empower the frontlines with data.
Twiddy learned that the employees who can make best use of the data people at the front counter, in the maintenance trucks, and their individual owners as they make investment decisions. So, “we made a big commitment, to get data out there and get it into the frontline.”
The results have been impressive, driving historic growth and occupancy. When asked about the next five years and what the company may or may not be doing to help continue to deliver a great customer experience and growth, Twiddy said there are two priorities. “Number one is technology. Clearly I don’t’ think a revolution goes backwards. So, I think this new way of what we call digitizing southern hospitality, will not go back to the way it was before the pandemic…”
Twiddy says they are focused on ease of digital interactions with their guests, and on data analytics, which he calls “the hub of our most collaborative efforts around the company, because data doesn’t lie and doesn’t have biases. It’s not subject to error. If we ask the right questions, it will lead us in the right direction.”
“And, at the same time, we will still have to make sure that what is the single most important word in our business – and that word is trust – we will still as an organization have to focus on human behaviors that build trust every day. And I think a lot about how we reconcile technology and the transaction of technology on the foundations of personal trust, credibility, capability, capacity, and those types of things…I think it’s really exciting to think about where we’ll be five years from now, essentially reconciling a hybrid model that is very much technologically focused but will always be on a foundation of interpersonal credibility and trust.”
Across the mid-market, teams are exploring opportunities to grow and empower staff. Sixty percent of middle market leaders say they would put an extra dollar to work in their businesses immediately; with talent and technology the highest priorities.