Recent data shows that mid-sized companies — those with annual revenue of $10 million to $1 billion — provide an outsized economic boost to Texas from robust revenue and employment growth.
Texas’ 10,000 middle-market businesses represent less than 1 percent of all companies statewide, yet they account for 16 percent ($495 billion) of total Texas business revenue and 29 percent of the state workforce, the National Center for the Middle Market (NCMM) reported today.
Nationally, nearly 200,000 mid-sized firms represent 3 percent of all businesses, but are projected to create 61 percent of all new jobs in the coming year.
The improved performance rate of 64 percent for Texas mid-sized businesses in the last 12 months surpassed the national rate of 62 percent, according to a survey by the NCMM, a collaboration between GE Capital and Ohio State University’s Fisher College of Business.
NCMM executive director Thomas A. Stewart said middle-market companies in Texas and across the country have ” found a higher gear.” He noted that U.S. mid-sized companies have seen revenue growth accelerate for four straight quarters and employment growth average 3.5 percent in the last year, up 1 percentage point higher from the average in the previous two years.
Employment at Texas mid-sized companies was up 2.6 percent in the last 12 months, compared with 3.5 percent nationally. Nationally, the healthcare industry has seen the most middle-market job growth. Business executives expect continued job growth over the next 12 months.
Revenue at Texas mid-sized companies grew 6.5 percent in the last 12 months vs. 7.5 percent nationwide. About two-thirds of Texas and U.S. executives expect revenue to continue growing over the next 12 months.
So, is it any surprise that Texas business executives are more optimistic about the local, national, and global economies than their counterparts?
The NCMM survey found that 94 percent of Texas middle-market executives are confident in their local economy vs. the national rate of 74 percent. Regarding the U.S. economy, 73 percent of Texans are confident vs. 67 percent nationwide. Regarding the global economy, 56 percent of Texans are confident vs. 26 percent nationwide.
Still, companies in Texas and nationwide continue to see challenges ahead.
The cost of health care still ranks as the top challenge to doing business for Texas mid-size companies, followed by the uncertainty of government actions and the ability to sustain profit margins and grow revenue.
Nationally, middle-market companies continue to face difficulty attracting people for senior-level positions and many expect the retirement of Baby Boomers to negatively affect their financial performance.
NCMM surveyed 1,000 C-suite executives in mid-September across the country.