Middle Market Firms: A Powerhouse for Your Growth
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Middle Market Firms: A Powerhouse for Your Growth

By Geri Stengel, Founder & President of Ventureneer and Research Advisor, American Express

Geri Stengel, Founder & President of Ventureneer and Research Advisor, American Express

Middle market businesses—those that generate between $10 million and $1 billion in annual revenue—are considerably outperforming the overall economy. The number of middle market firms rose 84 percent from 2011 to 2017, in sharp contrast to the 20 percent decline in the number of businesses overall, as tracked in the Dun & Bradstreet database.

The key to their growth is longevity—an average of 35 years in business—which gives them the experience to navigate economic crises, according to the Middle Market Power Index: Economic Might of Middle Market Firms by American Express and Dun & Bradstreet. That experience also means they will be good partners as both suppliers of and customers for innovative technologies. Nearly half of them are in manufacturing, wholesale and business services sectors that both drive and need technology.

As suppliers, middle market businesses are agile, responding to changing needs quickly and effectively. Because they have a proven track record, engaging with them is less risky.

As customers, the growth of middle market businesses can mean a steady revenue source. The American economy as a whole was sluggish between 2011 and 2017—with employment growth of 37 percent and revenue growth of 49 percent—but middle market firms doubled in both employment and revenues, according to the 2017 index.

Middle market companies are an eye-opening market themselves and offer a huge pool of experienced workers. The nearly 180,000 companies that make up the middle market generate a combined $9.3 trillion in revenues and employ roughly 52.7 million workers. These companies account for 27 percent of all revenue and employ more than one in four U.S. workers. From 2011 to 2017, they created more than half—52 percent—of all net new jobs in the United States.

In addition to experience, growth, stability, and agility, middle market businesses have attributes that make them especially valuable partners in an economy that demands products and services. Middle market firms are increasingly owned by women and minorities, who know how to meet the demands of diverse markets. Women now own 7 percent of all middle market firms, a 120 percent jump in six years.

Minority-owned middle market businesses soared 86 percent in the last six years to 6 percent of all middle market firms. Their owners can provide insights into developing products and services for expanding markets in minority communities. Both women- and minority-owned middle market businesses have a strong pipeline of companies on the threshold of $10 million revenues. These are robust, tested businesses that can help produce new technology and will be eager consumers for your products and services.

Add to this the fact that middle market firms are going global. With a majority of the world’s purchasing power located outside the United States, exporting represents a growth opportunity that middle market firms are seizing. The number of middle market companies that export their goods or services has quadrupled during the past six years. These companies recognize that, in addition to increased sales and profits, growth through exporting creates jobs, reduces risk through market diversification and differentiates products and services.

They are savvy enough, however, to be aware that there are added complications when selling outside the U.S. Because of the importance of exporting to the economy, resources are in place to help them and their partners—deal with these challenges.

Like middle children, middle market firms are often overlooked, but their achievements and potential are significant. They are worth watching closely in the near future.

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