The Unique Challenges of Mid-Market Companies

There is considerable media coverage of large public companies and small mom and pop businesses but very little coverage of mid-market companies that are key players in every sector of the economy. What do we mean by mid-market companies? Well there several indicators of mid-market including: the number of employees, annual sales and market position.

Mid-market companies, also called mid-sized firms, typically have 100-499 employees, according to a study done by Ipso in 2006 in Canada, that found this sector comprises about 2% of Canadian businesses yet they invest in nearly half of all the IT spending in the country.

In the US mid-market companies are sometimes defined as having sales of $5 million to $100 million ( Indiana Chamber of Commerce Foundation Study) yet in 2008 this represented 3% of the number of businesses but accounted for 30% of the jobs in Indiana.

Other US studies use a wide range. IBM used between 100 and 1,000 in a 2009 study of mid-sized businesses and SAP used a definition of sales of between $30 million and $500 million which represents 1% of the number of all US companies and nearly 30% of corporate revenues.

In the UK, the Department of Trade and Industry defines mid-sized firms as having 50-249 employees and these firms make up 2% of the firms in the UK but employ 14% of the work force and generate 16% of the annual sales.

We find most studies define mid-market as companies with 50 to 500 employees but can be has high as 1,000 employees and generates annual sales of somewhere between $5 million and $100 million with a few definitions stretching the range to $500 million.

Mid-market companies lack the resources available to large companies who can leverage pricing and supplier discounts in the market as well as offer more incentives to attract and retain talented staff plus secure financing on more attractive terms than mid-market companies.

The smaller companies can also out pace the mid-market companies with faster decision making and lower overhead structures.

Many mid-market companies enjoy a long term view because they have found protected market niches or have been able to find ways to survive by changing slowly. However with the increasing volatility in the global economy, few mid-market companies have the luxury to change slowly. We see a mad scramble by these small mid-market management teams in recent years to find ways to change more quickly to cope with the volume of additional work that market changes have thrust upon them!

Stuart Morley MBA is a recognised authorityin advising mid-sized companies during their rebuilding phase. Go to his website Mid-sized Companies in Trouble for more information including video clips, articles specifically for mid-sizedmarket organizations and order his recently co-authored book (with Gord Griffiths and Morris Slemko) called “Weather the Storm” Survival Guide for Mid Market Organizations.