Research indicates a gap of $1.3 trillion exists, presenting an opportunity for overall economy
With the United States experiencing a major demographic shift over the coming decades, the business community has a reason to focus on diversity, both on the consumer and provider sides. Recognizing the transformation that is underway, JPMorgan Chase and Next Street conducted a study titled, The Middle Matters: Exploring the Diverse Middle Market Business Landscape, reporting about midsize businesses in the U.S. economy and the segment’s diversity.
Terry Hill, Co-Head of Emerging Middle Market, JPMorgan Chase Commercial Banking, stresses the important role that mid-size businesses have and how timely support of small to mid-size businesses can have a significant beneficial impact.
“Midsize businesses are critical to the health of our economy and communities. They create millions of jobs, as well as the products and services that power our day-to-day lives. By providing tailored solutions that meet their unique needs, we can help companies build lasting legacies that uplift communities for generations.”
Next Street’s analysis indicates that the approximate 300,000 midsize businesses across the U.S., generating $13 trillion in annual revenue and employing over 40 million people, face challenges in sustaining revenue growth, growing competition and the impact of economic uncertainty.
While the mid-sized sector’s role is significant, accounting for 33% of annual revenue and 30% of all private sector employment in the country, it represents just 5% of the total number of national employer businesses.
For this report the midsize businesses are those generating between $11 million and $500 million in annual revenue, with most having revenue between $11 million to 100 million. Next Street’s analysis primarily reviews the middle markets of Chicago, Dallas and Los Angeles that in aggregate equate to 12% of the overall U.S. middle market.
With limited research to date on diverse, women and veteran-owned businesses, the report suggests that assisting the needs of midsize businesses brings an opportunity to empower underserved business owners that will contribute more to the economy. The report cites that diverse-owned businesses are approximately 30% of the middle market, but account for about 20% of the total market revenue.
The survey revealed that diverse-owned midsize businesses are, on average, 10 years younger and have fewer employees than non-diverse-owned businesses. Yet, they are growing at a faster rate (32%) than their non-diverse counterparts (19%).
While that is encouraging, those companies are facing challenges to their growth that includes: gaining access to capital and advisory services, receiving growth financing and creation and implementation of strategic business and innovation plans.
The report estimates that approximately $1.3 trillion in annual revenue would be generated if steps were taken to close existing gaps—which would result in greater national economic health and prosperity.
“We hope this new report serves as a call to action for middle market stakeholders to accelerate additional research efforts and solutions to serve the needs of diverse-owned midsize businesses,” said Charisse Conanan Johnson, Co-CEO of Next Street.
