Medium enterprises are found in all sectors of the economy and share the specific problems with their peers in their industry. However, some of their challenges are common across the economy, and are attributable to the scale and sophistication of their operation. These issues are particularly important to keep track of in any discussion regarding medium enterprise.
Key challenges
The key challenges facing business leaders of such enterprises are:
Finding and developing executive talent to match changing business processes, and to
build competitive organisational structures appropriate to those processes. 88% of medium businesses believe that their success is contingent on the quality of the leadership / management, in the context of which it is interesting that the development of both staff and management is seen to be the single most important success factor for a medium organisation.
Understanding growth strategies, particularly in the context of regional leadership and diversification of the customer base. Medium organisations have the same significance at regional level as the largest 300 organisations have on a national scale. Also, 46% of medium organisations have less than a fifth of their annual turnover from their top five customers, compared with 23% for small businesses. Many medium business leaders feel that growth is their key challenge – if they are not growing, they are probably slipping backwards.
Employing suitable financing strategies and instruments to facilitate diversification of
the owner base and to enable the attainment of the organisation’s chosen growth strategy. While there are more funding options open to medium enterprise than there are to small business, there are certain circumstances where medium enterprise finds that funding opportunities are very limited.
Exploiting technologies, innovation and intellectual property that support and enhance the working of a modern business. Most medium enterprises recognise that technology and innovation play a key role in two ways. The first important issue is managing diverse technologies in the interactions with customers, suppliers and partners. Secondly, it is the introduction of new innovations in products and processes that enable an organisation to derive competitive advantage.
Getting relevant outside professional help in areas covering innovation, brand management, market research, creative input, growth strategy, process management, tax and non-executive input.
Regulatory compliance – this area is possibly hardest for medium enterprise, compared to the other size cohorts, though the received wisdom is that it is small businesses that bear the burden of regulation. Small businesses either fail to meet red-tape thresholds or use outside services from accountants, etc to provide coverage in regulatory areas; large businesses usually employ professionals to cover every regulatory area themselves; medium businesses struggle to cope with the burden of regulation and compliance, as they usually cross every threshold, and have to deal
with these issues themselves.
Globalisation is changing the dynamics of competition within national economies and across the globe. This is a relatively new area for leaders of medium enterprise to deal with. There are three related issues that they report. First, a number of medium enterprises are already global leaders in the niche that they operate in – these organisations worry about the changing economics in their market as a result of new entrants from competitive low-cost economies. Second, many medium enterprises which had no opportunity to play on a global stage can now do so, by the use of technology and innovative processes to integrate into global supply chains and logistics operations. Third, medium enterprises face being outsourced out of their current customers who seek lower costs and newer technologies from overseas providers.
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