The Mighty Middle Market

Christine PoonDean of Fisher College of BusinessThe Ohio State University

Meet the Mighty Middle

197,000 BUSINESSES BETWEEN $10MM—$1B4th LARGESTGLOBAL ECONOMY

ONE-THIRD PRIVATE SECTOR GDP ($3.84 TRILLION)

43.3MM JOBS – ONE THIRD OF TOTAL PRIVATE SECTOR JOBS IN THE U.S.

US CENSUS DATA

Meet the Mighty Middle• Pillars of their communities

• 82% survivorship rate during recent financial crisis• 70% in business 20+ years• Grounded in their communities

• Majority are privately held

• Widely dispersed across all regions and industries

Chicago’s Mighty Middle Market

1% FIRMS

4,700 BUSINESSES

21% REVENUE

26% JOBS

Note: Estimates based on available data from Dun and Bradstreet and previous research conducted by the National Center for the Middle Market.

Economic OutlookMiddle Market Executive Confidence

29%22%

36%

48%50%

59%66%67%

70%

Global Economy US Economy Local Economy

1Q ‘12 1Q ‘13

36%

59%70%

40%

58%

74%

1Q ‘12 1Q ‘13 1Q ‘12 1Q ‘13

New EnglandNew England+192K

NJ & NY

+369K

Mid Atlantic+330K

Southeast+373K

Southwest+324K

Midwest+460K

Western-38K

Mountain-Plains+162K

Middle Market Companies Net Jobs Contributions: 2007 - 2010

MM+2.2MJobs

Big Biz-3.7MJobs

Outlook of the Middle Market…

CAUTIOUSLY OPTIMISTIC

Top 5 Business Challenges

COST OF HEALTHCARE

COST OF DOING BUSINESS

92%

84%

89%

ABILITY TO MAINTAIN MARGINS

UNCERTAINTY OF HOW GOVERNMENT ACTIVITIES WILL IMPACT BUSINESS

82%

ABILITY TO ATTRACT, TRAIN, AND RETAIN TALENT

75%

1Q 2013: Next 12 Months

1Q 2012: 92%

1Q 2012: 86%

1Q 2012: 88% 1Q 2012: 77%

1Q 2012: 81%

Healthcare

HealthcareNearly half of the firms are considering options:

1. Renegotiate with current insurer 25%2. Seek new insurer 12%3. Encourage wellness efforts 20%4. Pay fines and eliminate coverage 7%

4Q 2012

Impact of Healthcare on Jobs

4Q 2012

Two-thirds of firms claim that they will be impacted – top three actions:

• Less investment 32%

• Hiring Freeze 30%

• Laying off workers 17%

Skills Gap

Impact of Skills Gap

1Q 2013

More than 40% in Midwest report there is a skills gap

42%58%

37%

63%

Midwest Nation

Skills gap present

No Skills Gap

Skills gap present

No Skills Gap

Impact of Skills Gap

1Q 2013

1.30%

Top three workforce challenges:

Most challenging areas to hire:

Finding sources of talent

Lack of workers with relevant experience

Lack of workers with relevant training

0%20%40%60%80%

100% 79% 78% 73%82%62%

77%MMI Midwest

Sales Skilled Trade Operations0%

10%

20%

30%22%

18% 16%19%

28%

16%

MMI Midwest

Resolving the Skills Gap

1Q 2013

1.30%

Programs that would be most effective:

Improvements in the secondary educational

system

Business/community college partnerships

Regional vocational training programs

National vocational training programs

A streamlined hiring process for foreign

workers

0%

10%

20%

30%

40%

50%41% 39% 37%

12% 9%

66% Educational Improvements/Partnerships42% Vocational Training

Growth Champions

1.30%

Growth Champion Characteristics

Investment in InnovationBroader Geographic Vision

Customer FocusStrong Management Culture

Operational Excellence

Note: Identified in the National Center for the Middle Market’s foundational research “The Market that Moves America”.

www.middlemarketcenter.org