Midsize businesses are critical to the U.S. economy, accounting for 33% of annual business revenues and 30% of all private sector employment. Diverse-owned midsize businesses—defined as those at least 51% owned and operated by members of historically underrepresented groups (including Black, Hispanic and Latino, Asian, and other people of color; women; and veterans)—comprise approximately 30% of the middle market. Yet they account for only about 20% of the revenue.
New research from Next Street, in collaboration with JPMorgan Chase, reveals that closing the revenue gap for U.S. diverse-owned midsize businesses presents an opportunity to generate $1.3T in additional annual revenue.
Missing in the middle
Despite significant revenue generation, the research shows that midsize businesses aren’t reaching their potential due to a variety of factors, including a lack of tailored resources. In particular, diverse-owned businesses face challenges accessing tools and information to support growth.
Key findings from the report, The Middle Matters: Exploring the Diverse Middle Market Business Landscape, are summarized in the infographic below.
Header: Midsize businesses are a core component of the U.S. economy.
Despite representing only 5% of the total number of national employer businesses, midsize businesses account for 33% of revenue generated and 30% of all private sector employment in the country.
IMAGE: Outline of the United States with the following text: 300,000 midsize businesses in the U.S., $13T Annual revenue, 40MM jobs.
Early and emerging midsize companies are particularly influential.
Together, the number of early and emerging midsize businesses account for nearly 90% of the U.S. middle market and generate $5.4T in annual revenue, more than 40% of total middle market revenue.
CHART: Bar chart with the following information: 66% Early ($11MM to $20MM), 22% Emerging ($21MM to $100MM), 12% Established ($101MM to $500MM)
These businesses represent a large opportunity for support organizations, financial institutions, and service providers to build relationships that could generate long-term value.
Five industries account for more than half of the middle market in the U.S.
Each of these industries has grown by more than 20% in annual revenue during the last fiscal year.
CHART: Pie chart with Top 5 Industries:
IMAGE: Price tag icon: Retail $2.1T Revenue; Gasoline stations, automobile dealers, grocery stores
IMAGE: Truck icon: Construction $1.8T Revenue; Building equipment, residential building and exterior constructors
IMAGE: Medic icon: Healthcare $1.5T Revenue; Physicians, dentists, family offices
IMAGE: Briefcase icon: Professional Services $1.3T Revenue; Legal, consulting and computer system services
IMAGE: Package icon: Wholesale $1.1T Revenue; Machine and equipment, grocery and durable goods merchants
Diverse-owned midsize businesses represent approximately 30% of the middle market, but only account for approximately 20% of the revenue.
CHART: Pie chart with the following information: 90K DIVERSE-OWNED MIDSIZE BUSINESSES*, $2.6T IN REVENUE, 300K MIDSIZE BUSINESSES, $13T IN REVENUE
Closing the revenue gap for U.S. diverse-owned midsize businesses presents an opportunity to generate:
IMAGE: Icon of a hand holding a dollar sign: $1.3T IN ADDITIONAL REVENUE
*“Diverse-owned” businesses includes Black-, Hispanic-, Latino(a)-, Asian-, and other people of color-owned businesses, women-owned businesses, and veteran-owned businesses.
This research focuses on three of the five top revenue generating U.S. markets.
These markets account for:
12% Total National Middle Market
$1.6T in Revenue
Chicago, IL with a car icon, briefcase icon and truck icon.
IMAGE: Outline of the state of Illinois with Chicago pinned.
In Chicago, there is a greater presence of midsize businesses in the Transportation industry.
And a greater presence of diverse-owned midsize businesses in Professional Services and Construction.
Dallas, TX with a checklist icon, briefcase icon, truck icon and car icon.
In Dallas, there is a greater presence of midsize businesses in the Administrative Services industry.
And a greater presence of diverse-owned midsize businesses in Professional Services, Construction, and Transportation.
IMAGE: Outline of the state of Texas with Dallas pinned.
Los Angeles, CA with a box icon, key icon, truck icon, price tag icon, and checklist icon
IMAGE: Outline of California with Los Angeles pinned.
In Los Angeles, there is a greater presence of midsize businesses in the Wholesale and Real Estate industries.
And a greater presence of diverse-owned midsize businesses in Construction, Retail, Administrative Services, and Real Estate.
The Middle Matters: Exploring the Diverse Middle Market Landscape. November 2023.
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