GE Capital releases data that shows the mid-market requires greater support and access to capital to grow
13 October 2011 [Melbourne, Australia]: Data from a new study reveals that despite medium sized businesses representing just 1.3% of all businesses in Australia, the sector contributed close to $425 billion towards GDP in the 2009-10 financial year, exceeding the valued added by either small or big business.
The analysis, released by GE Capital Australia & New Zealand today, is the first of its kind in Australia to define the mid-market and the contribution it makes to the country's economic performance. It forms part of a larger study aimed at creating a greater understanding of the challenges faced by the 'mid-market', a sector that sits between small and big business.
"Both small and large businesses get attention in the Australian marketplace, and are effective at influencing policy in their sector. The mid-market on the other hand often goes unnoticed, yet punches well above its weight," said Skander Malcolm, CEO and President, GE Capital Australia and New Zealand.
"As Australia seeks to determine how it can capture the benefits of the mining boom and prepare its business sector for a new global economy, the mid-market presents itself as a golden opportunity to drive a more sustainable path to growth", said Malcolm. "Through understanding the mid-market better, through providing access to expertise often lacking or unable to be resourced, and through greater access to capital, we are determined to help the Australian mid-market succeed."
Key data released on the mid-market:
The mid-market is a significant contributor to the Australian economy:
- There are approximately 25,520 mid-market businesses, contributing approximately 3.2 million full-time jobs to the Australian economy, well above the 1.7 million jobs within large business.
- The sector also generates more than one third of the economy's total revenue, turn over $1,049.7 billion in 2008-9.
- Over $250 billion in wages were paid by mid-market businesses, and over $174.7 billion was created in gross operating surplus
The mid-market is diverse:
- The mid-market is spread over a wide range of industries with the largest concentration of businesses in the wholesale trade industry followed by manufacturing, retail trade and construction.
- The mid-market is well represented throughout Australia, with operations spread across both metropolitan and regional areas. Regions like the South Eastern Australia region of Western Australia, as well as the Pilbara, Mallee and South Eastern region of New South Wales have the highest penetration of mid-market businesses outside of major metros.
The success of the mid-market differs to other sectors of the Australian economy:
- The mid-market had a growth in turnover (0.7% between 2004 and 2009), significantly lower than that of large businesses (2.6%).
- The number of businesses within the mid-market has also steadily dropped over the same time period, reducing from over 27,000 to 25,520.
- The fastest growing industry within the mid-market has been the education industry (34% turnover between 2004 and 2009), while falls were experienced by the financial and insurance services sectors (-11.2%)
The mid-market ($10m-$250m revenue) faces two main challenges to its growth:
- Access to capital is much more difficult for mid-market businesses due to comparatively higher costs of debt, and greater difficulty in securing equity funding.
- While mid-market companies want to hire more staff, they face both skills shortages and limited capacity to manage human resources effectively.
- "These findings highlight the need to further understand and provide solutions to this sector's specific challenges and drivers if we are to harness its growth potential," said Malcolm. "To progress this GE Capital will next month release the most comprehensive survey of mid-market CFO's ever conducted in Australia. This biannual study will seek to provide a greater understanding of the sector as seen by those individuals responsible for managing the financial risks of the organisation."
For more details on the mid-market data released today or to register for a copy of the forthcoming Mid-market CFO report,go to www.australianmid-market.com.au
Media contact
Anthony Spargo
GE Capital Australia & New Zealand
(w) 03-9921 6851
(m) 0414 107 591
(e) [email protected]
Anthony Spargo
Media Manager
[email protected]
+61-3-9921-6851