How Mid-Market Companies are Different
Mid-market companies, especially those that are family controlled have been envied by others when they take a long term view and plan the business with several generations in mind. However in recent years the very volatile credit markets in North America and globally have tended to challenge the long term approach of many of these mid-market companies. The term mid-market is a new term to many as it is not a well defined sector of the market. Mid-market or mid-sized is a way of indicating the companies that fit within certain parameters in terms of complexity and size such as the number of employees, annual sales, and market position.
In a study of mid-market businesses in Canada in 2006 by Ipsos defined as companies with 100 to 499 employees. The study found that mid-market companies make up roughly 2% of Canadian businesses but accounted for half the IT spending in Canada.
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.
US mid-market companies are often considered to have between 100 and 1,000 employees according to a 2009 IBM study, while an SAP study found these mid-market companies generate sales of between $30 million and $500 million which represents 1% of the number of all US companies and generates nearly 30% of corporate revenues.
A more common definition for mid-market companies elsewhere in the world tends to be 50-249 employees, according to the UK Department of Industry and Trade, and these mid-market companies employ about 14% of the workforce and generate 16% of the annual sales yet represent 2% of the total number of companies.
Therefore mid-market can refer to companies with as few as 50 employees to as many as 1,000 employees or annual sales as low as $5 million to as high as $500 million. We find most studies narrow the range of employees to 50 to 500 employees as being mid-market or annual sales of between $5 million and $100 million.
When mid-market companies face up to larger competitors they don’t have the power to dictate prices, attract and retain talented staff, nor secure financing or supplier discounts on as attractive terms as the large public companies.
The smaller companies can also out pace the mid-market companies with faster decision making and lower overhead structures.
The traditional edge that mid-market companies used to enjoy of taking the long term view is under threat as mid-market companies try to cope with volatile markets plus the slower decision making that accompanies taking a longer term view is also being challenged as mid-market management teams need to make decisions quickly to survive and cope with the volume of additional work that come in times of rapid change.
Stuart Morley MBA is a recognised authorityin interim management services to 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.
Tags: Business, change management, family business, leadership, management, mid-market companies, re-engineering, rebuilding companies, refinancing, restructuring, turnarounds
