How Middle Market Firms Are Pulling The Economy Through

The ability of middle market firms to withstand just about anything is in part due to their longevity — 35 years on average — which has given them resilience and made them the foundation of U.S. business growth for the past six years.

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Geri StengelGeri Stengel

Economic crises, hurricanes, earthquakes: Middle market firms — those generating revenue between $10 million and $1 billion — have endured and survived them all. The ability of middle market firms to withstand just about anything is in part due to their longevity — 35 years on average — which has given them resilience and made them the foundation of U.S. business growth for the past six years. One-third of these companies are in manufacturing or wholesale trade.

Decades of experience makes them good partners as both suppliers of and customers for manufacturing firms. As suppliers, middle market businesses know how to retool for new products and conditions. With a proven track record, they can support your business as it stretches to seize new opportunities.

Having already dealt with the significant changes caused by computerization, these firms are experienced in adaptation and ready for the next wave of change: robotics, Internet of Things (IoT) and artificial intelligence. The longevity of middle market firms indicates that change doesn’t daunt them.

The remarkable, continuous growth of middle market businesses means they can be a steady source of revenue for their own suppliers. Since 2011, middle market firms doubled revenues and employment, according to the most recent Middle Market Power Index: Economic Might of Middle Market Firms from American Express and Dun & Bradstreet. Compare this with the overall economy which was sluggish: revenues increased by only 49 percent for all business and employment grew by only 37 percent overall.

That growth in employment translates into an impressive pool of experienced workers. About 52.7 million U.S. workers — more than 1 in 4 — are employed by a middle market firm, as tracked in the Dun & Bradstreet database. And that number has been steadily growing. In the last six years, middle market firms added more than half of all net new jobs in the U.S.

Middle market firms are taking advantage of new opportunities. The biggest markets are outside U.S. borders so to really expand, businesses go global. And middle market firms are no exception. In the last six years, the number of middle market firms that export their products has quadrupled. These companies recognize that, in addition to increased sales and profits, exporting creates jobs, and reduces risk by expanding their market.

Globalization means new challenges, however. Firms must create products and services that fill the needs of diverse cultures, just as firms serving diverse local communities must. The number of middle market firms owned by women and minorities, who know how to meet the demands of these markets, is increasing. Women now own 7 percent of all middle market firms, a 120 percent jump in six years. Minority-owned middle market businesses soared 86% in the last six years to 6 percent of all middle market firms. These numbers are likely to increase dramatically because many of companies on the cusp of crossing the $10 million revenue mark are owned by women or minorities. Strong, tested by decades of challenges, these are companies that can help manufacture innovative products and bring them to market.

With longevity, stability and resilience, middle market firms — especially manufacturers and wholesalers — seem to be weathering all storms.

Geri Stengel is a Research Advisor to American Express.

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