Scotland’s 4,400 mid-sized companies are falling behind larger businesses on technology, talent and trade, according to a new report from Royal Bank of Scotland. The bank says these firms, which together employ 644,000 people, are underserved because most support is designed for either small businesses or large corporates.
The study, titled The Middle Speaks: narrowing the mid-market conversion gap through technology, talent and trade, defines the mid-market as companies with annual turnover of £10 million to £100 million and/or between 50 and 500 employees. Scotland’s mid-market firms have combined annual turnover of £122 billion. The research draws on ScaleUp Institute analysis and on engagement with more than 200 mid-market businesses and members of the Mid-Market Growth Council. It calls the shortfall against bigger companies the conversion gap.
To close it, the report calls for stronger business networks that can support mid-sized firms, and for companies to work with the Scottish Government, innovation centres, universities, business support groups and regional clusters so that new technology and skills turn into growth. It also recommends cutting the administrative and regulatory burden on firms trying to join export and skills programmes, enter supply chains or raise growth finance, and doing more to promote existing help, including services offered by the Scottish Chambers of Commerce.
Charandeep Singh, chief executive of the Scottish Chambers of Commerce, said the chambers were already helping firms on these priorities and that working with RBS could increase that impact, describing mid-market companies as ambitious and keen to invest. Kevin Havelock, mid-market champion at RBS, said such businesses were often overlooked in policymaking compared with small firms and large corporates. NatWest Group chief executive Paul Thwaite called them “one of the UK’s greatest growth opportunities”, while Irene Graham, chief executive of the ScaleUp Institute, said the sector needs a system built around the challenges of getting bigger.
The report follows RBS research published last month that identified more than 350 Scottish businesses in what it called an untapped innovation cohort. That work found Scotland has 1,737 innovative businesses, of which 1,027, or 59 per cent, receive public funding and 367 are university spinouts, a total beaten only by London among the UK’s regions and nations. Scotland’s untapped cohort rate of 34.9 per cent sits below the UK figure of 38.1 per cent, but still amounts to 358 businesses that the bank believes have room for further growth.
