JPMorgan and Next Street today released a report, The Middle Matters: Exploring the Diverse Middle Market Business Landscape, that provides insights into the midsize businesses that power the U.S. economy.
Middle market businesses record annul revenue of between $11 million and $500 million, as defined by the report. Michigan has one of the largest collections of middle market businesses in the country, and the Association for Corporate Growth Detroit Chapter is one of the largest organizations of its kind.
Conducted and analyzed by Next Street, the research reveals that while midsize businesses generate significant revenue nationally and locally, there is an opportunity to better support them as they face headwinds such as increasing competition, slowing revenue growth, and an uncertain economic outlook.
The report details the U.S. midsize business:
- Market: There are approximately 300,000 midsize businesses across the U.S. that generate $13 trillion in annual revenue and employ more than 40 million people.
- Importance: These businesses account for 33 percent of annual revenue generated and 30 percent of all private sector employment in the country, and represent 5 percent of the total number of national employer businesses.
- Discrepancy: Diverse-owned businesses represent roughly 30 percent of the middle market, but generate about 20 percent of the total market revenue.
- Opportunity: Closing this gap could generate an additional $1.3 trillion in annual revenue, presenting a meaningful opportunity to support national economic health and prosperity.
“Midsize businesses are critical to the health of our economy and communities,” says Terry Hill, co-head of emerging middle market, JPMorgan Chase Commercial Banking. “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.”
To date, there has been limited investment in research that highlights diverse-, women-, and veteran-owned midsize businesses. Understanding the needs of midsize businesses that make up the middle market offers a significant opportunity to empower underserved business owners and bolster the economy.
Diverse-owned midsize businesses are, on average, 10 years younger and employ fewer employees than non-diverse-owned businesses. According to the businesses surveyed, diverse-owned companies are growing at a faster rate (32 percent) than their non-diverse counterparts (19 percent). The report finds that diverse-owned midsize businesses face roadblocks to growth.
Key challenges include:
- Accessing capital and advisory services
- Acquiring growth financing and improving capital structure
- Creating and implementing strategic business and innovation plans
In addition to exploring the current state of the middle market, the report describes opportunities for broader access to financial resources and overall support for midsize businesses.
“There is growing support in the business community for a greater understanding of the middle market overall, and the dynamic businesses within it,” said Charisse Conanan Johnson, co-CEO of Next Street. “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.”
The full report can be found here, and infographics with key findings from the report can be found here.
The study included primary and secondary data sources, surveys, interviews, and focus groups. Most midsize businesses fell into the $11 million to $100 million range of annual revenue. Next Street’s analysis primarily focused on the middle markets in Chicago, Dallas, and Los Angeles —which, when combined, represent 12 percent of the overall U.S. middle market.
For the purposes of this report, “diverse-owned” includes Black-, Latino(a)-, Asian-, and other people of color-owned businesses, women-owned businesses, and veteran-owned businesses.
JPMorgan Chase Commercial Banking is a business of JPMorgan Chase & Co. (NYSE: JPM), a leading global financial services firm with assets of $3.9 trillion and operations worldwide.
Next Street designs and develops solutions to connect entrepreneurs and small business owners with various resources and has a network of small business advocates, operators, and investors.
