Mid-sized enterprises contributed €1.03 trillion to the European economy in 2014, a figure expected to grow by 3%, to €1.06 trillion in 2015. This is expected rise further, to €1.2 trillion by 2019, according to the European Economic Impact Report, which was published today by Sage Enterprise Market Europe. The research, undertaken with Cebr, analysed the contribution of mid-sized enterprises to 12 major economies of the EU. The study was supported by quantitative research from Redshift Research, who surveyed the thoughts of 814 business decision makers in 12 countries working in mid-sized European enterprises.

 

The report finds:

• The mid-market is a vital component of economic activity across Europe. It accounts for just 1% of firms in the business economy, yet accrues 20% of turnover, generating 18% of GVA.
• It provides employment for 17% of the workforce. In 2014, mid-market employment totalled 18.7 million people. By 2019, it will add around 124,000 jobs per year, with total employment expected to stand at 19.3 million people.
• Nearly two-thirds of mid-sized enterprises are innovators (63%), developing and adopting new products and business practices. In each of the countries examined, a higher proportion of mid-sized firms undertake innovative activity than is the case in the wider economies.
• In 9 of the 12 countries analysed, employees of the mid-market add more value than average employee

Growth

Despite continuing uncertainties across Europe, mid-sized enterprises are showing great business optimism. Three-quarters of the business decision makers said they expected their turnover to stay the same or increase in 2015, with more than a third (39%) expecting turnover to increase by up to 10%. This confidence is echoed by the fact that over half (55%) of mid-sized enterprises plan to grow their business by hiring new staff.

 

Innovation

Nearly two-thirds of mid-sized enterprises are innovators (63%), developing and adopting new products and business practises. In each of the countries examined, a higher proportion of mid-sized firms undertake innovative activity than is the case in the wider economies. 93% of mid-sized enterprises are planning on investing in their IT estate in 2015, with nearly a third (29%) planning on spending more than €50,000.

 

Talent

Innovation comes from attracting, and managing, the best talent. But this appears to be a perennial concern for mid-sized enterprises as 60% of business leaders considered retaining the best staff to be their major challenge when managing talent.

Providing employees a work/life balance is seen to be key to retaining the best talent, with 62% of business leaders saying flexible working hours was an attractive consideration in a future employer. Similarly, millennials also tended to place importance on flexible working, supported by technology and connected devices which allowed them to work outside the office environment.

 

Exporting

The mid-market has traditionally benefitted by being local but acting globally, allowing them to address wider markets while using local suppliers and operations. The study showed that the intra-European market is the most important for the overseas market with 71% targeting Europe for future export growth.

The survey also reinforced historic trends that a quarter of mid-sized enterprises have no sales from overseas markets. But for those that do, nearly one third achieve export sales that account for more than 20% of their business.

 

“Punching above their weight”

Jayne Archbold, CEO at Sage Enterprise Market Europe commented on the report’s findings: “There are 18.7 million people employed by mid-sized enterprises across Europe and this survey shows they form the pumping heart of the European economy.

 

“More than any other market, mid-sized businesses have shown that they are some of the strongest incubators of innovation. Mid-sized enterprises are built on the hard work of their employees and getting talent management right is a key concern,” Jayne continued. “Traditionally, mid-sized enterprises’ hiring has been squeezed by the entrepreneurial attractions of start-ups and the financial and career opportunities of larger enterprises.

 

“The fact that innovation is at the heart of this sector and that mid-sized enterprises are investing billions in research and development sends the message that these ambitious, skilled enterprises are punching above their weight when it comes to driving economic growth. Mid-market companies are the unsung heroes of the European economy.”

 

To access a copy of the full report, please click here.

 

About The Sage Group plc

Sage provide small and medium sized organisations, and mid-market companies, with a range of easy-to-use, secure and efficient business management software and services – from accounting, HR and payroll, to payments, enterprise resource planning and customer relationship management. Our customers receive continuous advice and support through our global network of local experts to help them solve their business problems, giving them the confidence to achieve their business ambitions.  Formed in 1981, Sage was floated on the London Stock Exchange in 1989 and entered the FTSE 100 in 1999. Sage has millions of customers and 12,975 employees in 23 countries covering the UK & Ireland, mainland Europe, North America, South Africa, Australia, Asia and Brazil. For further information please visit www.sage.com

 

Notes

The European Economic Impact report analyses the contribution of mid-sized firms to the economies of the EU. The main data source used for analysing the mid-sized sector is Eurostat’s structural business statistics (SBS) database. This dataset is compiled through enterprise surveys, administrative surveys and business registers. Throughout the report, firms are disaggregated into size classes according to their employment levels, defined as follows (in accordance with OECD and Eurostat guidance):
– Small firms: between 0 and 49 employees
– Mid-sized enterprises: between 50 and 249 employees (also referred to as the ‘mid-market’)
– Large firms: 250 employees or more
The mid-market snapshot survey was conducted among 814 Business Decision Makers in 12 countries working in mid-sized European enterprises (50-499 staff). The interviews were conducted online by Redshift Research in December 2014 & January 2015 using an email invitation and an online survey.