JACO helps middle-market businesses overcome 6 common challenges

Last summer, a family-owned business came to us with several problems that, to them, seemed insurmountable. A once-thriving business, this company of 150 employees was struggling to keep its doors open. Facing tough competition in the marketplace in a rising interest rate environment had created a shaky economy; they began losing employees to competitors and found it difficult to replace them without access to necessary capital. After a few hours sitting with our team, they learned that not only were the issues they were facing quite common for middle-market businesses like theirs, but our team is highly skilled at collaborating and providing the support, expertise, and insights needed to navigate through periods of uncertainty like they were facing.

Unfortunately, we hear about situations like this at JACO all too often. In this case, we were able to help this family business, and they are now on the right path forward. However, unless companies that face these common challenges seek assistance from an experienced advisor, it can often end in disaster. JACO’s business advisors work with you to ensure long-term success, telling you what you need to hear, not necessarily what you want to hear. We provide straightforward counsel tailored for your company during challenging or stressful business cycles.

When working with mid-market, closely held, and family-owned businesses, we encounter six common financial challenges. Below, we outline these challenges and how you can best overcome them, if not avoid them altogether.

Securing financing can be difficult, as these businesses are often too large for small business loans but not large enough to attract significant attention from major financial institutions. Other factors that impede access to capital are higher interest rates, which make borrowing more expensive, insufficient collateral, and shaky financial performance, which limit lending options. To navigate these challenges, our team of business advisors can work with you on diversifying your lender base, including finding alternative financing options such as private credit funds and working to improve your financial performance and reporting. Because private credit lenders see potential in mid-market-sized businesses and are willing to provide the necessary capital for growth, private credit offers a tailored solution, flexibility, and streamlined decision-making.

Attracting and retaining skilled employees is a major challenge for all. One of the biggest reasons for this is that these smaller businesses have limited resources compared to larger companies. These smaller businesses often can’t offer attractive compensation packages and career advancement opportunities like larger companies and, therefore, struggle to compete. Building strong cultures that people want to be a part of, providing meaningful work, and the opportunity to be a part of a team or work family is very fulfilling to many exceptional candidates. When a company’s culture is intentionally aligned with its business strategy, it sets the stage for a continuous cycle of productivity and success—both at an individual and organizational level. To truly unlock the potential of high-performing teams, businesses must inspire their employees. Inspired individuals become resilient, self-aware leaders who advocate for healthier work environments, ultimately driving greater success for the company.

For several reasons, this is a common challenge for mid-market businesses. One is the lack of succession planning. Without a clear, documented succession plan, businesses can face major disruptions that hinder growth. Every business owner or leader should consider succession planning as part of their regular strategic planning. As part of your planning, think about your current team and who might be able to grow into essential roles with training, coaching, further education, or on-the-job training. Who in the organization shows potential for development? Who has acumen for the business? Who comes to the table with problems AND solutions? Who asks why? Where are the holes in your organization? Strengths? Weaknesses? Strategize the next five, 10, 15, and 20 years by writing it down and making your plan. It’s okay if it changes, but you need a starting point.

Mid-market businesses often face intense competition from larger companies and smaller, more agile startups. The challenge comes from limited resources to properly differentiate themselves in the market and become a “me too, only cheaper” commoditized brand (brand recognition), customer perceptions, and expectations. Mid-market businesses must continuously adapt their strategies to meet evolving customer needs while maintaining their core brand identity with clear points of differentiation.

Strategic planning is an indispensable tool for any company aiming for success, especially mid-market businesses. Businesses should develop a solid plan that aligns with their financial goals, which ultimately will pave the way for sustainable growth and long-term profit. However, the challenge a lot of mid-market businesses face is what to include in the plan. Some questions you should ask yourself are: how has your competition changed? How have your customers changed? If and how will your industry continue to evolve? Once you have answers to these questions, you can start developing your strategic plan. Creating a strategic plan shouldn’t feel overwhelming. When you work with an experienced business advisor like JACO, we can help by developing and implementing your plan through a strategic analysis, financial forecasting, and risk assessment.

Good cash management is essential to the success of any business but can be a significant challenge for mid-market, closely held, and family-owned businesses. Why? Many may be using unreliable cash flow forecasts caused by outdated tools and cash flow forecasting methods, poor inventory management, which can tie up significant amounts of cash, and economic volatility, adding uncertainty to the company’s liquidity. Using a 13-week cash flow model is not only a great tool for day-to-day cash management, it helps with significant spending decisions and operational planning. Whether you’re anticipating an increase in sales or expenses or forecasting how much cash you will have on hand on any given day, it empowers you to be proactive in managing your finances by identifying potential areas of concern before they arise.

Smaller companies often must commit their precious resources to the absolute necessities—paying their people, keeping the lights on, reinvesting in the corporation, and paying taxes. It is the reality of business ownership. Finding time for budgeting, cash flow management, risk management, pricing strategies, financial modeling, and strategic planning is necessary but difficult.

These challenges are common, and unlike the family business mentioned earlier, you shouldn’t have to face them alone. A good business advisor will collaborate with you and your team to provide the support, expertise, and insights needed to navigate periods of uncertainty and will anticipate your unique needs to help you make well-informed decisions. They will ensure you develop and execute your strategies, overcome challenges, and maintain focus on your vision. By immersing themselves in your business and culture to better understand its needs and unique challenges, they become an extension of your business, providing strategic leadership and seamless management of all engagements from kick-off to completion, ensuring your needs are met and your company’s values are honored.

You may meet some or all these challenges, but a trusted business advisor can help you weather them with the least disruption to your vision and overall goals possible.

Jeff has over 30 years of strategic planning, business development, and business transformation leadership experience. Having worked with mid-market, closely-held and family-owned businesses his entire career Jeff has a unique understanding of how these enterprises operate and the challenges they face.

He is passionate about working with business leaders to build strong cultures while developing and executing strategies that deliver exceptional results that benefit all the company’s stakeholders. Jeff’s hands-on approach to working with companies begins with a commonsense approach to strategy development.

With extensive experience in organizational turnaround and growth Jeff follows a defined process (disciplined, focused, intentional) to guide clients from strategy to execution. His experience covers a multitude of industries, with an in-depth understanding of automotive manufacturing.

Jeff holds a Master’s in Business Administration from the Capital University School of Management and earned a Bachelor of Arts in Business Administration and Management from Ohio Dominican University.