There is much to be learnt from mid-market success stories
There’s no doubt that Britain faces some big challenges: advances in robotics and artificial intelligence, the pervasive challenge of cybercrime, and the political and economic impacts of Brexit to name just a few.
If we are to protect what we value in this country, and continue to turn innovative ideas into global businesses, we all need to play our part, and the role of the core of our economy, the mid-market companies, is crucial.
Despite the many perils they face, these businesses — growth companies with sales of between £10 million and £1 billion — are remarkably resilient.
Our Planning for growth research predicts their expansion will outperform GDP growth between now and 2022. Mid-market companies are uniquely placed to do this because they combine agility with the resources to invest in technology and R&D, and they have scope for further international expansion. We know these companies well — they are our lifeblood.
Private companies form a key part of the mid-market, and there are many different approaches to success among the 250 inspirational companies on this year’s league table. Some are experimenting with different routes to market. Jason Bannister, for example, founder of Oak Furniture Land, has built his business into a bricks-and-mortar stalwart in the UK, employing more than 1,200 people, with sales of £303.5 million and operating profits at £17 million last year. For the past two years, Bannister has been overseeing low-cost, digital-only expansion in the US, with the first year of trading bringing in $4 million of sales.
Strategic acquisitions have been transformative for some, such as commercial printers Walstead and tourism attraction smartcard developer Leisure Pass. They are consolidating their industries, with support from private equity backers, rather than waiting for a foreign competitor to swoop in.
For such decisive moves to be successful, investment in talent is key. With the UK close to full employment, mid-market companies have to work hard to attract, retain and motivate employees, because they are up against much larger companies in the fight for talent. This is an issue our clients tell us is at the top of their agendas, and one that we are helping them tackle. I was impressed by an initiative at Busy Bees, the nurseries operator that increased sales 31% to £327.5 million in 2017. It launched its Talent Exchange scheme in 2016, which over the past two years has seen staff from the company’s UK, Singapore and Malaysia nurseries swap places, working and learning alongside their colleagues in another country. The best international firms do not operate in silos, they encourage staff to collaborate, and work hard to instil a shared sense of purpose and culture.
Other challenges are not as high on the agenda as they should be — such as Brexit and cyber-security. With uncertainty growing by the day over the UK’s departure from the EU, boards should act now to protect what they have worked hard to build. By reviewing their operations to identify risks, they can move swiftly when the terms of our exit are clearer.
Cyber-security is also far too low down the priority list. Many firms believe their existing teams can anticipate and respond to threats, but these threats are changing daily, and the consequence of being hacked is not simply immediate financial loss, it can also cause reputational and operational damage.
In response to this growing threat, we have invested in our team of experts, including former intelligence officer James Arthur, head of our cyber-consulting team. It is a sign of how complacent many businesses have become on this subject that one chief executive remained unconvinced of the need to improve his company’s security — until Arthur pointed out that he could access the boss’s own corporate and personal emails easily using information available on the so-called dark web. Taken aback, the boss has now asked us to help assess how best he can protect his company, and his own personal finances. Arthur adds: “The scale, efficiency and ease with which a cyber-attack can be carried out to paralyse a business is something many CEOs and boards are in denial about but it can be quantified and managed in a pragmatic and proportionate way like any other business risk.”
We can all learn from each other in the face of such threats. As we assess the impact of automation and digital technologies, as well as new trade rules and regulations, companies that take advice, invest in their people, and stay close to their customers and suppliers, will be best placed to prosper.
This article first appeared in the Sunday Times Top Track 250 supplement, published on 7 October.