What is an MSB?

Government use a formal definition for MSBs based on an annual turnover of £25m-£500m per year which is simply too broad, and the businesses within this range are too disparate in their operations, ambitions and needs to have effective application. The government’s definition, while unhelpful, is clear. So why the confusion? Perhaps because this is how others see MSBs:

• In contrast to the broader government definition, HMRC research classifies MSBs as having £10m-£200m annual turnover and/or more than 20 employees
• The EU define an MSB as having more than 250 employees – with no reference to turnover
• CBI use a broad definition of £10m-£500m in annual turnover, although the focus of some of their significant MSB research has been on companies at the lower end of this range – with turnover between £10m and £100m or with 50-499 employees
• Global research and advisory firm Gartner classes any company with between 100 and 999 employees and/or an annual turnover of £25m-£500m as an MSB
• Accounting and advisory firm BDO defines MSBs based on an annual turnover of £10m-£300m and reference structure – a combination of private-equity owned businesses and AIM-listed companies
• Their peers Grant Thornton see MSBs as having 50-499 employees
• In recent global studies, banks like HSBC simply consider them to be firms with 200 to 2,000 employees and interchangeably use the term mid market enterprise (MME) with MSB.
• NatWests recent study, which is comprehensive, includes MSBs from £5m-£250m

In summary, you are an MSB if you turnover between £5m-£500m per year and have between 20 and 2000 employees – not a useful category of businesses who are meant to share issues, opportunities and requirements.

Our research proposes a broad definition of an MSB as typically having an annual turnover of £10m-£149m and a 50-499 employee headcount. Not withstanding outliers and significant overlap between segments, exacerbated in some cases by sector, this was the group with the most in common.

This evidence-based classification for MSBs should act as a catalyst for government, vendors, suppliers, advisors and membership bodies to provide tailored policy, regulation, services and support.

It should also act as a self identifier for MSBs to seek out support and services targeting their specific needs and challenges.

However, more than half of the respondents fitting this criteria self identified as small business. This ‘identity crisis’ and the inability to identify themselves correctly means that the business support services and advice being sought and used by MSBs may not be the right fit to produce an effective or even expected outcome for their challenges and opportunities.

The relative lack of specific recognition and attention to MSBs within academic and industrial literature is both an indicator and a contributor to this lack of clarity surrounding this category of business.

Furthermore, the same lack of a clear and consistent definition for MSBs across government departments, professional bodies and researchers contributes to a ‘forgotten middle’ in UK business.

The potential benefit of being mid size is lost amidst the (currently popular) agenda of supporting startups and the rich territory that large enterprises offer for egos, suppliers and advisors. The risk resulting from this identity confusion is that the use of a specific term to target a group for support and assistance may fall upon receptive ears, but those who are the most responsive may very well not be the intended target audience for the offered service.

Failure to act will only perpetuate the current identity crisis with the resulting significant consequence of further marginalising MSBs.

Government, service providers, academic institutions, and MSBs themselves, must recognise ‘mid size business’ as a distinct category with its own inherent, positive characteristics and unique needs – rather than being solely a functional categorisation for tax or employment purposes.

The combination of an evidence-based definition for MSBs and identification of their priorities and challenges should act as a catalyst for government, vendors, suppliers, advisors and membership bodies to provide policy, regulation, services, solutions, support and resources that:

• Leverage and amplify MSBs’ inherent characteristics
• Specifically address MSB issues in a relevant way
• Offer broad-based, contemporary advice that is not determined solely by the capabilities of vendors and suppliers
• Are credible and independent
• Dispose of verbose, nebulous or theoretical solutions, and focus on the practical, applied and usable
• Are affordable and easy to access in the privacy of the home or online, and on demand
• Enable clearer targeting of national and regional business support functions to optimise investment returns.