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5 Tips to succeed as a mid-market business

Why is there so little information out there for growing businesses that are becoming big? By looking at research from the Australian Bureau of Statistics (ABS), we can determine that the mid-market in Australia are those medium-sized businesses that have between 20 and 200 employees and turnover between $2 million and $25 million. By this definition, there are about 51,000 medium-sized businesses in Australia’s mid-market, which accounts for just 2.4% of all businesses in Australia. If you are looking for a minority group, Australia’s mid-market would fit the definition.

One of the major disadvantages of being in the mid-market in Australia is that there is very little external support. Governments focus on small and micro-businesses because that is where the majority of votes are. At the other end of the scale, large Australian corporates have the political connections and money to influence government policy for their own benefit. Basically those in the mid-market have few resources to help them achieve success. This doesn’t mean it can’t be done, however. Here are 5 tips to help your business continue to grow.

  1. Build a team

As the business grows, it can no longer be dependent on the owner. In most small businesses the owner is the main income producer — and he or she may also be the bookkeeper, marketing manager, HR manager, receptionist and cleaner. Even with a few employees to help, the owner is often a Jack-of-all-trades.

To succeed as a mid-market business, the business owner has to realise they need to let go. They can no longer do everything, and they have to employ a management team to help build the business.  However, if you don’t have robust recruitment and HR systems in place, this can create its own headaches — often it takes business owners several attempts at getting the right people in the right positions to grow the business.

Keep in mind that adding another layer of management into your business will increase your overheads so you need to be comfortable that you will be able to generate enough revenue to justify these increased costs. Plenty of business owners say that they made more money when they were smaller until the business grew to a size that it was able to afford the increased costs. You need to see the cost of adding a management team as an investment that must provide a return in the form of increased profits.

  1. Act like a big business when it comes to systems

Large corporate entities are built on a foundation of a strong corporate governance framework. Likewise, it’s imperative that medium-sized businesses implement systems, process and procedures that enable them to maintain control of the business. Too often mid-market businesses try to continue to operate with a small business mentality.

I have seen large businesses attempting to use off-the-shelf accounting software to manage the operations, and they can’t understand why they don’t have control over the business. At a certain point, almost all growing businesses will need to implement enterprise class software solutions such as an integrated ERP system that allows you to collect, manage, manipulate and analyse data from various sources to enable you to obtain the right information to make the right decisions.

We often say business owners need to ‘act like a big business,’ which means putting in place the systems that are appropriate for the size of the business to maintain control.

  1. Form an Advisory Board

As your business grows and you start to lose control and let go, it can become a very lonely existence — everyone in your life has a vested interest in your business so they cannot give you impartial advice. Often owners of mid-market businesses form an Advisory Board to help grow the business.

An Advisory Board is a group of independent, external advisors who provide non-binding strategic guidance, advice and support to the owners or shareholders of the business.

Members of the Advisory Board are really a resource that owners and managers in the business can call upon for advice and wise counsel. They can provide insights and advice that can only be provided when you are external to the business and not involved in the daily fire fight. Members can also introduce the business to others within their network who that can provide assistance in many varied forms.

With a strong management team and robust governance systems established, the business owner can now focus on working on the business — not in the business — and growing the business strategically.

  1. Surround yourself with trusted advisers

Likewise, you must surround yourself with an external team of trusted advisors and mentors who you can call on for advice and guidance. These include an accountant, a lawyer and a bank but could include many other advisers and consultants.

Like Governments, accountants, lawyers and bankers tend to either focus on small business or large corporates. Very few focus on the mid-market. However, it is worth your time to seek out professionals who have specific experience working with mid-market businesses and who can take a whole-of-business, strategic approach rather than focusing on one area of expertise.

As the traditional African proverb says, “It takes a village to raise a child.” It also takes a village to build a successful business — you can’t do it by yourself.

  1. Think of your business as an investment

A lot of small business owners effectively think of their business as a job and have no plans to build a larger business in which they can build equity. In fact, over 60% of all businesses in Australia do not employ anyone — this could be the self-employed sub-contractor tradesman, or possibly a home-based businessperson who is happy earning enough money to fund his or her personal life.

An owner of a mid-market business must think differently. You must think of your business as an investment. Your ultimate aim is to get a return on your investment, and the only way to do this is to make money.

Every decision you make will have a financial impact. Remember to ‘act like a big business’ to grow and ultimately increase the value of your business.

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About the Author

Tim Miles

Tim Miles is the co-founder of  Miles Management Consulting which supports business owners and leaders to drive better business performance.

Tim has vast experience in the strategic and financial management of businesses with a particular focus on cash flow and profit improvement, strategic thinking and performance reporting.  He has extensive knowledge of business start-ups and acquisitions as well as exit and succession planning.  Tim is an adviser with Supertrac, a corporate advisory firm specialising in business divestments, mergers and acquisitions.

Tim is a Fellow of the Institute of Chartered Accountants (FCA), Graduate of the Australian Institute of Company Directors (GAICD) and a Certified Exit Planning Advisor (CEPA) with the Exit Planning Institute (EPI).

If you have any specific questions or would like to suggest future blog topics, please do not hesitate to contact Tim on tim.miles@milesconsulting.com.au.

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