Medium-sized companies in Scotland are getting squeezed between smaller firms and major corporates and require extra support, a study has claimed.
Accountancy firm BDO said action is needed to help boost Scotland’s mid market firms which are are “under-valued and over-looked” by policy makers.
Medium-sized firms account for less than 1% of all companies but create more than a fifth of all private-sector jobs, according to accountancy and advisory firm BDO.
There are 2,094 businesses in Scotland with a turnover of between £10million and £300million a year, which contribute £66billion in revenue to the economy and provide jobs for 439,000 people, its Making the Most of the Middle report said.
Martin Gill, partner and head of BDO in Scotland, said more could be done to help such firms expand their operations, allowing them to create more jobs and revenue cash.
BDO argued that medium-sized firms are too large to benefit from policies which are tailored at small businesses but are too small to attract the same amount of attention as the largest firms.
Mr Gill said: “Without a shadow of a doubt Scotland’s mid-market is under-valued and too often over-looked.
“Mid-sized firms contribute a remarkable amount to GDP and jobs, and what’s exciting is that with the right support these businesses have the potential to deliver even more for our regional economy.”
Ian Ord, the co-founder of north-east communications firm Fifth Ring said his firm has grown to a mid-sized business with 80 employees in its offices in Aberdeen, Dubai, Houston and Singapore.
He said: “Being at the helm of such a start-up that has now grown to become a mid-size international business, there’s much that can be done to streamline bureaucracy and minimise the administration burden on these organisations by Government cutting down on red tape and better alignment of legislation.”
The BDO report calls for the UK tax system to be reformed, to provide more certainty for mid-sized businesses and to encourage such firms to plan for the long-term.
It also suggests more could be done to reduce the overseas tax barriers for UK firms when they are opening up a new branch or subsidiary operation overseas, and to reduce the regulations that can hinder international expansions.
It states that some industries are struggling to attract workers with the correct skills and calls for the education system to reflect and support the long-term aims of the UK economy.
To help manufacturing, it argues the next UK government should put in place a long-term strategy, to be delivered by a dedicated manufacturing minister, as well as recommending formal targets be set for manufacturing growth and a temporary cut in employer’s National Insurance for the sector.
BDO also called on local government to help break up large contracts into smaller ones, to give medium-sized firms a better chance of winning them.
A Scottish Government spokeswoman said:
“Our enterprise agencies work closely with companies of all sizes including medium-sized businesses and almost half of all businesses’ accounts managed by Scottish Enterprise are medium sized.
“This account-managed process is of especial value to mid-range high growth companies that BDO precisely identified.”