There are nearly 200,000 middle-market businesses representing one-third of the U.S. economy. While definitions of this group vary, the National Center for the Middle Market categorizes it as businesses with top-line revenue between 10 Million and 1 Billion. These companies are private and public, family-owned, geographically diverse, employ approximately 48 million people and span across all industries.
These businesses outperformed the SAP 500 through the last financial crisis (2007–2010 period) by adding 2.2 million jobs across major industry sectors and U.S. geographies, establishing their importance to the overall health of our economy.
In our last webinar with Doug Farren, Director of the Center, we got a chance to look behind the data collected in their bi-annual survey, the Middle Market Indicator report. This report surveys 1,000 CEOs representing nine sectors across the low, mid, and upper end of the revenue range.
What does the pandemic performance of this market tell us about 2021 and beyond?
Thoughts on Growth
While some middle-market companies hit dramatic lows in 2020, nearly half are projecting revenue growth in 2021. Since this data tracks all industries, including the hard-hit hospitality and retail sectors, we could see an even more positive growth forecast than expected by summer as more people receive the vaccine. I believe the pent-up demand for travel and eating out, coupled with warmer weather, should help these businesses recoup in the second half of the year, provided they are ready. Many have significantly reduced their workforce and marketing efforts. They will need to be proactive about hiring to keep pace with increased demand and invest in marketing that they are reopened.
Open to Work
In 2020 we saw both ends of the spectrum in terms of employment. We entered the year with record low unemployment that posed challenging growth caps for many industries. In April of 2020, we reached an all-time high of 14.80 percent. An upside is that many companies have experienced opportunities to hire more qualified candidates than they have in recent years. As of January 2021, the unemployment rate was 6.3 percent, but the numbers don't tell the full story. Just over one-third of mid-market companies plan to add jobs this year, yet will there be candidates to fill these positions? The lack of qualified candidates for roles in manufacturing and other non-exempt jobs pre-pandemic remains. The ease of receiving unemployment further discourages applicants from even trying for new or re-employment. If this sector doesn't embrace adding tactics to attract diverse candidates in their hiring strategies, there will be a long-term impact on their growth ability.
Digital Transformation: It's About Time!
Pre-pandemic saw many organizations invest in technology, automation, and innovations in their core operations. At the same time, other essential business functions like hiring, sales, and marketing remained in the dark ages. It is not surprising that Information Technology (IT) tops the list of investment priorities for the mid-market. Overnight, businesses had to transform their marketing growth strategies, daily operations, customer interactions, and employment practices. While many may have believed this would be temporary, there will be numerous new practices that will remain and be accelerated. Reaching prospects, customers, and even employees and candidates will be permanently altered. With the introduction of creative ways to use technology and optimize sales and hiring practices, prioritizing these investments will be vital to remaining competitive.
The mighty Mid Market is uniquely positioned to lead our recovery because we are nimble. We are able to take a longer view and work strategies that may not show immediate returns. After a roller-coaster year, I am ready to wear my shades.
Watch the webinar to learn more: Will The Mid-Market Lead Our Nation's Recovery?