Feb 8, 2023
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At a Glance: Survey - Most Difficult Aspects of Running a Business in the Current Environment (Q1 2023)

The top 3 biggest challenges facing middle market companies surveyed are not necessarily what you might think. While ongoing uncertainty and employee engagement topped the list, the #1 anticipated difficulty for 2023 was keeping up with technology and developing digital transformation strategies.

Where are we now?

  • Middle market companies surveyed were asked to rate their top 3 concerns for 2023. 
  • Top concerns across sectors are now digital transformation/staying current with technology (56%).  
  • Employee engagement (34%) holds the secondary spot as mid-market firms struggle to keep their workforce productive, and to understand the purpose of their work.
  • While ongoing uncertainty (30%) is still a perceived challenge, it’s not the primary concern for any sector.
  • Healthcare had one of the most divergent ranking results in comparison to peer groups.

Where do we go from here?

  • Uncertainty – In past periods, rising rates were a primary driver of uncertainty as central bankers battled inflation. This concern is now receding as rate decreases are being priced into the latter half of this year, and the effects of higher rates becomes known.
  • Technology – Expect renewed focus on technology as a byproduct of the ChatGPT cultural phenomena, and as societies’ general awareness of AI’s capabilities (and shortcomings) increase. However, a general trend to do ‘more with less’ appears to be in focus as firms begin driving efficiencies, and this is where technology’s benefits are usually the strongest.
  • Employee engagement – It may appear contradicting that firms care more about engagement rather than preventing layoffs (27%) or fostering firm culture (14%). It could also reflect the acknowledgement by management of added pressure to retain existing employees while their peers are laid off. How this will resolve itself is not yet apparent.

What does this mean for Canadian business?

  • 2023 is the year to invest in technology, FP&A (financial planning & analysis) tools continue gain momentum (expected to grow 4x over the next 7 years) as firms beef up their planning tools and migrate to cloud based solutions.
  • Employee engagement remains a complex problem to solve, which could be further complicated by an economic slowdown expected later this year.
  • Ongoing uncertainty is becoming less of a concern as inflation and rates appear to have stabilized and are nearing an interim peak.

SOURCES

https://www.middlemarketcenter.org/performance-data-on-the-middle-market

https://www.globenewswire.com/en/news-release /2022/ 10/06/

https://henon.io

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