Mid-Market Execs Expect Volatility To Play a Role In Growth

Middle market executives are exploring strategies and tactics to help their businesses grow amid increasing volatility.


This article was published on Forbes.com in March 2021. 

What actions are executives taking today that will transform their companies and position them for growth?

Forbes Insights conducted a survey on behalf of Capital One in late 2020 that explored how 1,001 U.S. mid-market executives view transformational drivers for their businesses.

More than half (52%) cited their ongoing response to Covid-19 as critical to their company’s survival and growth. Beyond the pandemic, business leaders are considering other disruptive forces that may impact recovery and growth.

 

Uncertainty Along Several Vectors

The survey showed that a top concern for business leaders is a fear of unforeseeable volatility. Specifically, they’re thinking about balancing their capital expenditures and cash flows (42%), while also determining how to respond to shifting economic conditions (41%). 

Leaders in certain industries have greater concerns than others. Many more executives in manufacturing (59%) and retail (56%), for example, are likely to be concerned with economic conditions than executives in the public sector (37%) and professional services (27%). 

Of course, volatility doesn’t always bring negative impacts. On the contrary, some view uncertainty—and their company’s ability to manage it—as a competitive advantage.

“For any business, being able to deal with volatility and be nimble is a differentiator,” says Chirag Kulkarni, CMO of Medly Pharmacy. “It ultimately comes down to the team and their ability to execute—and execution is everything. Being a small company that’s growing very rapidly, relative to larger players, you want to be continually adjusting.” 

 

The Role Of Regulations

As Covid-19 presented new challenges to the global economy, governments introduced new programs to help stave off a more severe economic downturn. While these programs took many forms, they all had new regulations in common.

The survey shows that most executives (54%) feel that a favorable regulatory and tax environment will drive company growth in the future; however, just 47% of surveyed executives credit the regulatory and tax environment with their growth to date.

But these numbers don’t tell the whole story. Of those executives currently running scenario-building efforts, nearly two-thirds (65%) flagged potential regulatory changes as a disruption to be considered.

More executives (73%) at larger companies (those with upward of $500 million in revenue) are likely to share this concern than their peers (62%) at companies that post between $100 and $500 million in revenue. 

Considered together, these results point to underlying uncertainty about the role of regulation: Will regulation help to exert some measure of control in a difficult growth environment? 

 

Tech That Smooths The Waters

Technology is one of the most important tools that executives have for managing growth and recovery.

To learn more about how executives are using technology, we asked how they’re working to improve agility across their organizations’ technological footprints. The responses showed that business leaders are: 

  • Increasing use of collaborative technologies (63%)
  • Embracing cloud and other flexible and scalable business models (54%)
  • Turning to advanced analytics and predictive technologies such as artificial intelligence and machine learning (49%)
  • Handling more repetitive functions through robotic process automation (26%)

The key words in executives’ responses that point to concerns about volatility are “flexible,” “predictive” and “automation.” Additionally, an increased use of collaborative technologies suggests a desire to decentralize decision making and mitigate bottlenecks.

 

Prepare Your Defenses

Finally, Elena Gomez, CFO at customer service software company Zendesk, said preparation is key.

“It’s important to be balanced,” Gomez says. “As you think about your … plans, continue to prioritize in the way you always have. But have your levers ready. If something were to go south, or if there were some different curveball we’re not seeing, what are those levers you’d deploy if you had to?”

 


 

The information contained herein is shared for educational purposes only and it does not provide a comprehensive list of all financial operations considerations or best practices. This information does not represent any commitment, financial obligation, advice, opinion, guidance or recommendation, whether formal or informal, of Capital One, National Association, or any of its officers, directors, employees, advisors, attorneys, consultants, affiliates or subsidiaries (collectively, “Capital One”). Nothing contained herein shall give rise to, or be construed to give rise to, any obligations or liability whatsoever on the part of Capital One. 

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