Mid-sized firms the ‘neglected child’ of European business

Europe’s mid-sized businesses could be missing out on up to €5.7m (£4.8m) of annual revenues due to various barriers that hinder their growth, claims Ricoh Europe.

The global tech group’s research bases its figures on an estimated 75,000 mid-sized businesses across Europe, which suggests total missed potential revenue could amount to as much as €433bn (£364bn); nearly equivalent to the annual gross domestic product (GDP) of Poland. Ricoh Europe defines a mid-sized business as one with 50 to 500 employees and annual revenue upwards of £2.5m but not exceeding £100m.

The group comments that while this “huge opportunity” is being missed, Europe’s mid-market is aiming for significant growth. Almost 40% of businesses plan to offer shares to the public via initial public offerings (IPOs) in the near-future, while another 21% plan to acquire other companies or merge with competitors to increase their competitive strength.

Despite their ambitions, 93% of mid-sized businesses report that they encounter barriers that prevent them from reaching their full potential. The top three obstacles to growth are the need to comply with complex and costly regulation; the struggle to attract the best talent; and finding, buying and applying the right technological solutions.

According to Jyoti Banerjee, co-founder of M-Institute, a UK-based think-tank representing medium-sized businesses: “Mid-sized businesses in Europe face very similar challenges, regardless of their country and sectors. This includes major structural and behavioural challenges that must be addressed at the level of the individual business, as well as in terms of national business policies.

“We should be celebrating the accomplishments of mid-sized businesses all over Europe. They are growing and creating jobs. But we must also recognise that more support from government and industry would make a huge difference to how this amazing, but often overlooked, group of companies perform.”

Caught in the middle

Among the findings of the research is that 30% of Europe’s mid-sized businesses have yet to apply digital solutions that would enable them to scale up to become big brands and in doing so capturing some of the revenue they miss out on each year.

“Most government support is focused on small businesses, while large enterprises are typically able to look after themselves due to their scale,” said David Mills, chief executive officer (CEO) of Ricoh Europe. “Mid-sized companies often feel like they are the neglected child of the European business world; £364bn is a staggering amount of capital for mid-sized businesses, and the European economy as a whole, to be missing out on.

“Digital solutions like e-invoicing and office automation support growth by making cash flow management and processes like invoicing and communicating with customers cheaper and more effective. We believe it is time for the mid-market to prioritise innovation and make sure its businesses are truly adaptable.

“The easiest way to do this is by streamlining processes that make it possible to overcome the range of challenges they are facing.”

Responding to Ricoh Europe’s research, Duncan Tait, Head of Americas and Europe, the Middle East, India and Africa (EMEIA) at Fujitsu commented: “Today’s business environment is one of the most challenging – and exciting – we have seen. Organisations are being disrupted across every sector, as changing human behaviour – a result of digitalisation – has forced them to reimagine their business model and opened up the market to new disruptive entrants.

Medium-sized businesses, without the scale of larger organisations or the agility of start-ups, are particularly at risk of being squeezed out. These mid-sized businesses will either thrive or fade into oblivion: depending on whether they use this time as a strategic opportunity to grow and digitally transform their organisation.”

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