45% of Executives Say Uncertainty Has Led to Diminished Profits

Middle-market companies are confronted with a volatile business environment that challenges their ability to make informed decisions and maintain competitive positions.

According to the PYMNTS Intelligence eBook “10 Impact Statements,” 28% of middle-market companies reported operating under a high level of uncertainty from February 2024 to November 2024.

This uncertainty stemmed from fluctuating market conditions, changing consumer behavior and unpredictable regulatory shifts. The eBook was based on surveys of 540 middle-market executives across various industries. It offered insights into how uncertainty impacts revenue, competitiveness and decision making, while highlighting strategies like adopting analytics to mitigate these challenges.

The Impact of Uncertainty on Operations

Uncertainty impacts the day-to-day operations of middle-market businesses. In the 30 days before being surveyed, 30% of executives said uncertainty affected their firms’ performances. The eBook found that 21.7% of executives surveyed in November noted issues with customer demand behavior, 39.3% experienced supply chain disruptions, and 12.3% faced challenges with competitive positioning. These wide-ranging effects underscored the difficulties businesses face during uncertain times.

These operational disruptions translate directly into challenges for growth and profitability. The ongoing volatility in key business areas means firms must remain agile, adjusting strategies to overcome short-term hurdles, even while struggling to plan for long-term success. With many companies managing these challenges, the bigger picture — ensuring long-term competitiveness — may suffer.

Rising Costs and Lost Profit

The financial toll of uncertainty on middle-market firms is undeniable. According to the eBook, companies lost 6% of their revenue due to ongoing uncertainty, a burden that manifested in various ways, including increased operational costs, higher borrowing expenses and missed growth opportunities. Uncertainty resulted in diminished profits for 45% of executives over the previous 12 months. This means companies are dealing with increased costs and inefficiencies, and they’re failing to capitalize on growth opportunities.

As these costs accumulate, businesses are forced to rethink their strategies. Those that can’t adapt quickly risk falling behind, while those that can find ways to operate efficiently in the face of uncertainty may gain an advantage.

Mitigation Strategies: How Firms Are Responding

In response to the challenges of uncertainty, middle-market executives implemented strategies to mitigate its effects. The eBook found that 45% of executives asked for informal advice from their business networks, while 76% used analytics in the 30 days before being surveyed. Other common strategies included hiring specific skill sets and incorporating process automation.

Data-driven solutions are proving effective at reducing uncertainty. As businesses adopt tools to gain insights into market trends and customer behaviors, they can make more informed decisions, decreasing the overall impact of unpredictable conditions. With the right technologies and strategies in place, firms can better prepare to manage uncertainty and sustain profitability, even in turbulent times.