CHARLESTON—West Virginia ranks 19th in the nation for the percentage of so-called “middle market” companies in the state, which contribute an outsized portion to both tax revenues and jobs, according to the latest Middle Market Power Index from American Express and Dun & Bradstreet.
Such firms, which have between $10 million and $1 billion in revenue, make up 1.04 percent of the state’s companies, compared to the national average of slightly below 1 percent, according to Julie Weeks, author of the report and an American Express research adviser. Multiple factors play into the number of middle market firms, she said.
“Industrial heritage in a state and a region plays a big role in the share that are middle market firms, because we see nationally that manufacturing and wholesale trade are the sweet spot for the middle market,” Weeks told the West Virginia Record. “States that have a more manufacturing or industrial heritage are likely to have a larger share of firms that are middle market.”
Once heritage is accounted for, there are other things that help middle market firms grow and stay healthy, she said.
“In terms of the growth and vitality of middle market firms, I think the role of state government is a big factor, because of the fact that exporting opportunities can help middle market firms grow, and a lot of states have export promotion programs, doing trade missions and such to other companies," she said.
"I think that plays a big role in promoting the middle market as opposed to another state that might not do that kind of export promotion. Also, government procurement programs at the state level and the federal level. If you're living near a lot of government spending, like a military base or even a big GSA presence can help a firm grow into the middle market. Having market opportunities that are beyond business to consumer, that are B2B or B2G—business to government, makes a lot of difference in the growth of middle market firms from one state to another.”
Middle market firms are often overlooked, despite the fact they account for more than a quarter of total private business revenue in the United States and employ 27 percent of the country’s private sector workforce. And while a large percentage of them are in manufacturing and wholesale trade, there are middle market firms in nearly every sector, Weeks said.
Most of them have been around for 30 or more years, and another reason they don’t get as much attention is that many aren’t high-profile, technology-based startups. But that doesn’t mean they haven’t embraced technology, she said.
“You can be in manufacturing and be very high tech, or even wholesale trade,” she said. “There is a lot of growth potential in what some might call less glamorous businesses, and in fact most of the economy is not flashy, high-tech, Silicon Valley kind businesses. And if you look at the ecosystem, there are plenty of flashy, high-tech businesses that don't last very long.”