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The mid market – the essential south


As we move into the second year of our campaign to champion the mid market in the Central South, we believe the message is now being heard loud and clear – these dynamic and growing companies are an essential part of the region’s economy, says Malcolm Thixton, lead partner at BDO LLP


Indeed the mid market is an increasingly essential part of the UK’s economy. Recently, BDO produced a startling piece of research, which showed that for the first time, UK mid-sized companies have overtaken their counterparts in the Mittelstand, Germany’s much feted mid market, both in terms of sales generated and the number of people employed.


We found that UK mid-sized companies had grown turnover by 33% over the previous five years while the Mittelstand had grown turnover by only 12% over the same period. This is a staggering achievement for Britain, and one to be celebrated. However, Germany has always invested in and has policies directly aimed at its mid market, which culturally stands as the economic backbone of the nation. While the UK’s mid-sized businesses are worth more for the time being, there is much more we need to do to cement our position as Europe’s mid- market leader if we want to stay there.


Here in the Central South, our most recent analysis shows the mid-market has grown turnover by 7.5% over the past year and 22% over the past three years. While there have not been any truly dramatic changes, we have seen the number of privately-owned companies in the £10-300 million turnover bracket increase by 15%, reflecting a steady increase in our mid- market population over the past 18 months.


The spilt between sectors remains broadly static. However, we have seen an 8% increase to 19% in companies delivering support services, bringing it in line with the region’s largest sector – manufacturing. While support services spans a diverse range of industries, this growth partially reflects an increasing number of recruitment companies in the mid-market that are potentially benefiting from the upturn in the economy over the past few years.


As our BDO Central South Mid Market campaign rolls forward through 2015 and into 2016 we will build on two key areas of


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bases while maintaining the prices they charge, strengthening margins and their long-term sustainability. BDO supports the mid market nationally through its sponsorship of the Sunday Times Profit Track programme and, locally, we will again identify the Central South’s top companies by profit growth. We will talk to them to find out what the influencing factors are in their decision making, if these have changed and whether funding for growth remains a key concern.


Our mid-market forecast


So what do we think the coming year will bring for the mid-market companies in the region? We asked the 170 business leaders at our Central South Mid Market gala dinner in February whether they felt the economy would continue to grow this year, encouragingly, the answer was a resounding ’yes’.


And although two thirds of our guests said their business decision making would be impacted by the outcome of the General Election, we believe that whatever the result, the Central South will continue to punch above its weight.


focus from last year: international expansion and profit growth. We will also take a look at the fast growing businesses below the £10m turnover threshold – the mid-market companies of tomorrow – whether their challenges differ and how they can learn from those that have gone before them.


Broadening horizons


We discovered last year that while an encouraging number of the region’s mid- market businesses are looking at international markets for expansion, the majority are still targeting established ’old world’ markets such as North America and Western Europe. In addition to identifying and talking to the top performing companies for international growth as to where their focus lies, we will outline the practical steps required to make the most of opportunities whatever the territory.


Profitable growth


With the economy on the mend and benefiting from falling energy prices, businesses have a greater opportunity to grow their profits, as well as their sales, by managing their cost


THE BUSINESS MAGAZINE – SOLENT & SOUTH CENTRAL – MAY 2015


All of the BDO Monthly Business Trends indicators are showing positive outcomes with the Output and Optimism Indices, which predict economic growth three and six months ahead respectively, remaining significantly above the 100 mark, indicating growth above the long-term trend. In addition our Employment Index is measuring 113.0 – which is well above its long-term trend, suggesting that UK firms will continue to boost job creation in the coming months.


Our region’s mid-market companies have shown steady growth over the past three years and with continued focus on growing internationally, investing and innovating, we are confident that there will be further strengthening of the local economy over the coming years.


Details: Malcolm Thixton 023-8088-1895 www.bdo.co.uk


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