JPMorgan and Next Street today published The Middle Matters: Exploring the Diverse Middle Market Business Landscape, a report that provides insight into the mid-sized businesses that power the US economy.
Mid-market businesses report annual revenue between $11 million and $500 million, as defined in the report. Michigan has one of the largest collections of mid-market businesses in the country, and the Detroit Association for Corporate Growth is one of the largest organizations of its kind.
Conducted and analyzed by Next Street, the research reveals that while medium-sized businesses generate significant revenue nationally and locally, there is an opportunity to better support them as they face headwinds such as increasing competition, slowing revenue growth and uncertain economic perspective.
The report details the average US business:
- Market: There are about 300,000 mid-sized businesses in the US that generate $13 trillion in annual revenue and employ more than 40 million people.
- Significance: These businesses account for 33 percent of the annual revenue generated and 30 percent of all private sector employment in the country and account for 5 percent of the total number of national employer businesses.
- Disparity: Businesses with different ownership represent roughly 30 percent of the average market, but generate about 20 percent of total market revenue.
- Opportunity: Closing this gap could generate an additional $1.3 trillion in annual revenue, representing a significant opportunity to support national economic health and prosperity.
“Mid-sized businesses are critical to the health of our economy and communities,” said Terry Hill, co-head of emerging middle markets, JPMorgan Chase Commercial Banking. “They create millions of jobs, as well as the products and services that power our daily lives.” By providing customized solutions that meet their unique needs, we can help companies build lasting legacies that lift up communities for generations.”
To date, there has been limited investment in research that highlights diverse women-owned and veteran-owned medium-sized businesses. Understanding the needs of the average business that makes up the middle market offers a significant opportunity to empower underserved business owners and strengthen the economy.
Average businesses with diverse ownership are, on average, 10 years younger and employ fewer employees than non-diversified businesses. According to the companies surveyed, companies with diverse ownership are growing at a faster rate (32 percent) than their peers without diverse ownership (19 percent). The report found that medium-sized businesses with diverse ownership face barriers to growth.
Key challenges include:
- Access to capital and advisory services
- Acquisition of financing for growth and improvement of capital structure
- Creation and implementation of strategic plans for business and innovation
In addition to examining the current state of the mid-sized market, the report describes opportunities for greater access to financial resources and comprehensive support for mid-sized businesses.
“There is growing support in the business community for a better understanding of the middle market as a whole and the dynamic businesses within it,” said Charisse Conanon Johnson, co-CEO of Next Street. “We hope this new report serves as a call to action for midmarket stakeholders to accelerate additional research efforts and solutions to serve the needs of a diverse range of owned midsize businesses.”
The full report can be found here and infographics with key findings from the report can be found here.
The study includes primary and secondary data sources, surveys, interviews and focus groups. Most mid-sized businesses fall in the range of $11 million to $100 million in annual revenue. Next Street’s analysis focuses primarily on the mid-sized markets of Chicago, Dallas and Los Angeles — which, combined, account for 12 percent of the total U.S. mid-market.
For the purposes of this report, “diverse ownership” includes black, Hispanic, Asian, and other people of color women-owned and veteran-owned businesses.
JPMorgan Chase Commercial Banking is a business of JPMorgan Chase & Co. (NYSE: JPM), a leading global financial services firm with $3.9 trillion in assets and operations worldwide.
Next Street designs and develops solutions to connect entrepreneurs and small business owners with a variety of resources and has a network of small business advocates, operators and investors.