Alfred Adler, a contemporary of Sigmund Freud's, was one of the first theorists to suggest that the order in which a child is born into a family affected their personality traits; leading to the middle child syndrome notion being born (excuse the pun). If we accept the notion as valid, can comparisons of this be drawn with the UK’s medium-sized businesses in 2014, in terms of how they are treated and their own behaviour?
Medium-sized businesses are the unsung heroes of the UK’s economy; they account for just 1% of firms, but generate 22% of revenue and 16% of employment. Despite this strong performance, very few make it to the FTSE and even fewer go on to dominate on a world stage. Do they suffer from their own form of middle child syndrome? Just look at the symptoms:
- Lack of attention – there are numerous funding schemes to help small businesses grow, but not much for medium-sized firms
- Overpowered by the elder sibling – they can struggle to compete on the same scale as their FTSE-sized cousins
- No recognition - Large enterprises are seen as the industry leaders, and small businesses are perceived as innovators with much promise, leaving medium-sized firms’ actions often overlooked
But mid-sized businesses are undoubtedly doing some fantastic work in helping grow the UK economy: if their potential was fully harnessed these businesses could contribute as much as £50bn to the economy by 2020. So to help realise this potential, and make the big step up in terms of size and stature, what barriers do they need to overcome?
When medium-sized firms look to grow, there are choices to be made around funding the process. While there is arguably a gap in the supply of long-term finance, a lack of skills and awareness of the right finance strategy to stimulate growth can often act as an inhibitor too.
This knowledge deficit means many rely too heavily on what they know works best; often meaning they play it safe in terms of their financial strategy. This is evident in a recent CBI survey which found 63% of firms don’t plan to broaden the range of funding they use over the next five years.
Attracting and retaining talent
As medium-sized businesses grow, ensuring employees are retained, and that the right calibre of talent can be attracted to join the business, is key. Their talent resources are often lost to both larger and smaller businesses, with employees either using them as a stepping-stone to move to the former, or developing their skills before going it alone as the latter.
For MSBs to grow, innovation and management talent is fundamental. Having a strong leadership team in place means the business stays focused in terms of vision, despite growth, which will continue to happen so long as innovators are retained.
Having bold ambitions
Maybe a product of the ‘middle-child’ treatment they receive, but owners of medium-sized firms often face a psychological block when it comes to taking the next step.
Given today’s volatile economy, erring on the side of caution is understandable, but firms need an element of boldness to push past that £100m mark – naturally, only if it is grounded in a sound business plan and driven with strong financial expertise.
While these barriers exist – and understandably so in many cases – they are by no means insurmountable. The temptation may be strong to assume that any change has to come solely from within – and to feel restricted by what that might require. In reality, growth comes not only from amplifying what you already have but also from smart partnerships. Whether this is financial expertise, external advice on management or understanding how best to utilise technology, pulling on a partner network to fill in the gaps is essential. Medium-sized firms can’t grow alone – but with the right support ecosystem in place, there’s no reason why they should have to.
- Richard Roberts is managing director, UK partner and commercial sales at Cisco