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Sunday, 08 November 2015 21:48

Michigan ranks 4th for middle-market firms owned by women, minorities

Written by  Jill Hinton
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Michigan ranks near the top nationally for the growth of women- and minority-owned businesses in the middle-market segment.

That’s according to a new national report from American Express and Dun & Bradstreet, which analyzed 136,603 middle-market businesses, defined as companies with annual revenues of more than $10 million but less than $1 billion.

Women-owned firms account for about 9 percent of middle-market companies in the state, while minority-owned businesses make for about 7 percent. That’s better than the national average by 2 percent and 3 percent, respectively, and puts Michigan fourth behind Alaska, Virginia and Maryland in terms of the states with the highest growth for women- and minority-owned firms.

Womenable Inc. owner and analyst Julie Weeks said the overall increase nationally can be attributed “in some sense” to improving public policy. That includes more women’s business centers, the Small Business Administration’s 8(a) program that serves small disadvantaged companies and the growth in minority business development associations.

“The fact that there are procurement goals for women- and minority-owned firms, that gives firms a growth trajectory,” Weeks said.

In fact, the top three states all have significantly higher concentrations of federal procurement opportunities, which can drive business to women- and minority-owned firms, Weeks said, noting she’s uncertain what drove Michigan’s strong performance

“Larger firms are more likely than average to be in manufacturing and transportation or in wholesale trade, so maybe that’s a factor,” said Weeks, adding that all of those are big industries in Michigan.

Around 13 percent of Michigan’s middle-market companies have female CEOs, the same percentage as the national rate, putting the state ahead of its neighbors in Minnesota, Wisconsin and Ohio, which all came in at 12 percent.


GROWTH NATIONALLY

Across the U.S., women-owned companies make up 6 percent of the total number of middle-market firms, while minority-owned companies make up 5 percent. Despite their smaller representation, both groups are creating comparatively larger portions of revenue and job growth within the middle-market group of businesses.

Nationally, the ranks of women- and minority-owned middle-market businesses rose by 24 percent and 22 percent, respectively.

While overall employment in the middle market grew by just 4.4 percent, it surged 37.8 percent among women-owned firms and 38.7 percent among minority-owned companies. Similarly, revenue for middle-market firms dropped 2 percent overall, yet rose 23 percent among similarly sized women-owned companies and 19 percent among minority-owned businesses.

Businesses owned by women and minorities also are entering the middle market at a faster pace than their peers.

“Crossing the $10 million threshold has to do with mentors, it has to do with mindset, it has to do with metrics,” Weeks said. “There are a lot of programs now that are recognizing the need to pay some attention to post-startup businesses to get them to the next level.”


BREAKING INTO THE MIDDLE MARKET

For Rose Harr, CEO and owner of Cadillac-based BlueWare Group, figuring out how to break into the middle market was a big challenge for her company.

“I’m more of a ‘whatever it takes, let’s get it done’ (kind of person),” Harr said. “But when you get to the size of $10 million and above, you need to be more cognizant of, and appreciate, the process.”

The software business she started 20 years ago is struggling to raise the capital it needs to expand, especially since she owns a software firm that’s based outside of Silicon Valley. That has Harr taking classes — she’s often the only woman in these cohorts — and connecting with resources like the Women Presidents’ Organization, which works exclusively with second-stage business owners.

Weeks’ advice for middle-market Michigan companies and those looking to reach $10 million in annual revenues: Take advantage of federal contracts and of programs to grow through exports.

Other companies looking to transition into the middle market could also benefit from so-called “economic gardening” programs, according to Dino Signore, manager of entrepreneurial education at the Cassopolis, Mich.-based Edward Lowe Foundation.

Economic gardening includes efforts by local officials to cultivate employment and economic growth within a limited geographical area, as opposed to “economic hunting” where companies are enticed with tax abatements and incentives to move from other regions.

The Edward Lowe Foundation takes economic gardening one step further by combining it with coaching for second-stage companies in Michigan. Because so much attention is being given to startups these days, second-stage companies are left to figure out things on their own, Signore said.

“It’s a great match because economic gardening helps (middle-market firms) grow,” Signore said. “It gets them information about their markets and about their industries, (plus) the second-stage entrepreneurs typically are already in the community.”

Although women- and minority-owned businesses traditionally have found it challenging to break into the middle market, experts like Weeks expect more companies in those groups to cross that threshold.

“With rising levels of educational and managerial experience, those businesses are going to come into business ownership (automatically) thinking about growing bigger,” Weeks said. “Given the fact that women-owned firms and minority-owned firms are younger than average, and they’re growing into the middle market at a much faster rate … there are a lot more women- and minority-owned firms that are going to be crossing through the gates of the middle-market segment.

“That, combined with the fact that these firms are typically younger, I think portends great growth in diversity in the middle market in years to come.”

Read 2899 times Last modified on Sunday, 08 November 2015 21:57

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