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Punching above its weight: the power and potential of Australia's mid-market

posted by Justin Ward on 29/12/2014

In Australia, the mid-market sector (defined as businesses with an annual turnover of $10 to $250 million) consists of 1.4 per cent of all Australian companies. However, this sector punches well above its weight. The mid-market sector contributes $425 billion each year to the Australian economy, employs around one in four employees, and accounts for nearly one-fifth of all borrowings and deposits.

According to GE Capital’s recent Australian Mid-Market Report 2014, the mid-market sector is one of Australia’s top performing sectors. As Aaron Baxter, Managing Director, Commercial Finance, GE Capital, Australia and New Zealand, says “the signs remain positive for the [mid-market] sector despite a year of change across domestic and international economies”. Mr Baxter added that GE Capital was regularly surprised by the sector’s “creativity, agility and ability to thrive in times of adversity”.

In this blog post, we’ll discuss the key findings of this report, including how enhanced talent management strategies can help your mid-market business achieve its growth targets.

Seeing the positives

The research conducted by GE Capital found that business sentiment improved in all sectors of the Australian economy during 2013. This was partly due to a decline in political and regulatory uncertainty after the 2013 federal election.

As can be seen in Figures 1 and 2, respondents were particularly optimistic about current business conditions in the mid-market sector, and relatively positive about the sector’s future prospects. As the GE Capital report states, “the mid-market is gaining the upward momentum it enjoyed back in December 2012 … this uplift shows the resilience of the mid-market sector to overcome changing conditions”.

Figure 1: Current conditions index
Current conditions index Source: GE Capital, Australian Mid-Market Report 2014
Figure 2: Future expectations index
Future expectations index Source: GE Capital, Australian Mid-Market Report 2014

Taking note of trends

So, what is happening inside the mid-market sector? According to the GE Capital report, we are seeing some structural shifts among businesses in this sector.

First, in the current economic environment, mid-market companies have to do more with less. That is, while they are still looking to grow, they simply don’t have the capacity to add employees at present. This means they are increasingly pursuing “jobless growth”. While 61 per cent of mid-market businesses are expecting to increase revenue during 2014, more than half of these companies are planning to employ the same number of staff or fewer to achieve this objective.

Second, mid-market companies are changing how they work. We are seeing companies harness innovations such as the cloud and software-as-a-service, as well as re-assessing their research and development requirements, to achieve their business objectives.

What does this all mean for my business?

In our view, the research points to the power of people for mid-market companies. For instance, as part of its research, GE Capital also asked respondents to identify the essential factors that would help mid-market companies achieve their growth targets. The top five responses were:

  • Having a senior management team that leads effectively
  • Having a company culture that nurtures and develops talent
  • Being able to manage inventory and working capital efficiently
  • Having a superior sales team and efficient targeting strategies
  • Setting formal growth targets annually

These results show the importance of people, namely talent management, in driving growth. As the GE Capital report states, enhanced talent management can get employees more invested in their company, and potentially lead to higher-quality customer service.

Given these findings, your business may need to carefully evaluate its current staffing mix and talent development strategies. The goal here is to ensure that your approach to people is aiding – rather than hindering – growth.

At Macleay Partners, we have helped a range of mid-market businesses overcome challenges, including in the area of talent management. We’d be delighted to discuss this report in more detail with you, and chat about any issues your business faces. Please contact Macleay Partners Director Justin Ward at or on (02) 8211-2733.

About the Author

Justin Ward

Justin Ward / (02) 8211-2733

Justin is the Director of Macleay Partners. He brings a proven track record of delivering successful outcomes in difficult circumstances with diverse experience in areas of audit, consulting and insolvency.

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