In Praise of Medium Sized Business

The Economist lays out the impressive numbers over the past few years from one of our least talked about segment of companies: medium sized businesses.

America has around 197,000 medium-sized firms, defined as those with annual revenues between $10m and $1 billion, according to data from the National Centre for the Middle Market at Ohio State University. Together, they employ over 40m people in the country and account for around one-third of private-sector GDP (equivalent to the economies of India and Russia combined).

Some 82% of medium-sized firms survived the dark years of 2007-10, compared with 57% of small firms. And although the survival rate among the 2,100 big firms (with revenue over $1 billion) was 97%, these giants shed 3.7m jobs during those years. Mid-sized companies, by contrast, added 2.2m jobs. This trend has continued as the economy has struggled back to its feet. In 2010-11, medium-sized firms increased employment by 3.8%, compared with growth of 2.5% by small firms and 0.8% by big business…

…The biggest concerns of the executives surveyed quarterly by the National Centre are regulation and access to growth capital (they have plenty of working capital for ongoing operations, having built up cash reserves just like their bigger corporate brethren). Mid-sized firms tend to bear the heaviest burden of new regulations, since smaller firms are often given some exemptions initially, whereas bigger firms have legions of lawyers to cope with the additional rules. Conversation among the 1,000 or so middle-market executives due to attend the National Centre’s annual meeting on October 24th is expected to be dominated by worries about the new health-care system. Given the importance of medium-sized firms to the economy, politicians might look more carefully at how they are affected by new laws.

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One Response to In Praise of Medium Sized Business

  1. Pingback: Is Small Business Overrated? | Reason and Politics

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