Mid-sized businesses (MSBs) are the unsung heroes of the UK economy; they account for just 1% of firms, but generate 22% of revenue and 16% of employment.
But it is reported that if MSBs’ potential was fully harnessed they could contribute as much as £50bn to the economy by 2020. So, what’s stopping them achieve this? And why do so few make it to the FTSE and go on to dominate on a world stage?
The notion that MSBs may actually suffer their own form of “middle child syndrome” is not as farfetched as it sounds; it goes some way to explaining the barriers MSBs face and how these can be overcome.
Overpowered by the elder sibling
The ever-domineering elder sibling can prove a real challenge, holding those smaller at arm’s length, meaning control and superiority is retained. Business is no different. MSBs understandably struggle to compete on the same scale with their larger and often global counterparts and financing growth can often seem like a daunting, if not near on impossible, task.
When MSBs look to grow, there are choices to be made around funding the process. While there is arguably a gap in the supply of long-term finance for MSBs, a lack of skills and awareness of the right finance strategy to stimulate growth can often act as an inhibitor too.
This knowledge deficit means MSBs rely too heavily on what they know works best; often meaning they “play safe” in terms of their financial strategy. This is evident in a recent CBI survey which found 63 per cent of firms don’t plan to broaden the range of funding they currently use over the next five years. If bank lending is proving too expensive for MSBs, they must look elsewhere to achieve that needed growth capital.
The middle child can often feel their value is overlooked. Everyone wants to be friends with the elder sibling, as they are big and “cool”, but if they can’t be, buddying up with the youngest sibling is often the favourable alternative, as they know they will be in control and calling the shots. This is, unfortunately, mirrored somewhat in business when it comes to recruiting and retaining talent.
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