With so much attention being focused on start-ups, the value of mid-sized businesses is being overlooked, says Andrea Opoku

I came across an article recently criticising the UK government about the amount of support and funding available to start-up businesses but what seemed to be a complete lack of interest in mid-sized firms.

Start-up is one of, if not the most, widely used buzzwords in the business world with billions of pounds worth of funding and resources being pushed towards creating and supporting more and more new businesses. These include start-up grants and loans as well as entire areas of some UK cities being earmarked as business hubs and incubators.

What we don’t hear much of is the support and available funding for mid-sized companies. Supporting these start-ups and small lifestyle businesses is all well and good but research and economic figures prove that the Government is missing a trick and that the real key to long-term economic growth lies in mid-sized companies.

The Opportunity

CBI figures show that mid-sized companies, with revenues between £10m and £100m, account for just 1% of all businesses in the UK, but are responsible for 22% of revenue and 16% of jobs. 

Research from GE Capital forecasts mid-sized firms to grow by 6.1% in 2014, twice as fast as the wider economy.

The CBI estimates that if mid-sized firms were better supported, they could generate an extra £20bn-£50bn of economic value for the UK.

The Positives

Mid-sized companies are generally doing well and have a positive outlook on their own future growth. 92% are confident of growth in their business over the next 12 months and over 80% are planning on increasing their workforce in 2014 (Source: Grant Thornton 2014).

Their bigger size means they have deeper pockets so are more likely to weather economic storms. Conversely mid-sized companies as they grow and become more attractive propositions for financing, seem to also become more risk adverse and less likely to get into debt. The possible reasons for this I will touch on a bit later.

Their relatively smaller size means they are more agile and can move, change and if necessary re-invent themselves to survive in evolving market conditions.

So you may ask, if mid-sized companies have all this going for them, why should the government get involved and give them more support?

The answer is these organisations represent a huge opportunity, as the figures above indicate, if they can get access to support in tackling the issues they face.

The Challenges

Despite the positives, the majority still face many challenges:

Funding

Evidence indicates that mid-sized companies generally have less debt and are more risk adverse. This could signal a lack of suitable finance options available to business as they get to this stage in their life cycle. Where for start-ups and small businesses they have the choice of personal or family funds, unsecured credit or schemes like Start Up Loans. For a mid-sized business, which may still have difficulty accessing bank funding, these fragmented funding options aren't going to be sufficient.

People

As these companies grow, finding and managing the people with the right skills, culture and attitude to grow with them becomes more of an issue. The leaders of these companies need support in managing the direction of the business as well as the people they need to support their growth strategy.

Red Tape

Bureaucracy and red tape is often cited as one of the biggest challenges mid-sized companies face. They are big enough to be considered for Government contracts, for example but don’t have the time or resources to go through the maze of regulations and paperwork to have a real chance of winning.

Red tape and a lack of knowledge of doing business internationally may be an indicator of some of the decreasing figures on exports and international business. Total exports of mid-sized businesses amounts to £36 billion but growth is slowing. Also only 29% of UK Mid-sized companies have international operations compared to Turkey, which has 65%, China 55% and Germany 45% (Source: Grant Thornton Report 2014).

So to answer the question in the title, it’s obvious to see that many of these companies are stuck in the middle: doing well enough to not urgently need support but still trying to overcome great challenges. Challenges which, if these companies had the resources to tackle, would see them providing an enormous boost to the UK economy, securing our long-term economic futures.