This post shares insights into the state of growth in the Illinois middle market in relation to national growth averages. For more data on the Illinois middle market, view the State of the Middle Market in Illinois infographic released by the National Center for the Middle Market.
Just like middle market companies all across the nation, mid-sized firms in the state of Illinois enjoyed solid growth over the past 12 months. Yet, while the majority of middle market firms in the Prairie State reported past year increases in both revenues and employment, the rates of growth lagged somewhat behind middle market national averages. Nevertheless, Illinois middle market leaders are extremely optimistic about their future. They anticipate not only making up the differences in their growth rates; they expect to exceed the national averages for forecasted growth over the next 12 months.
Better economic conditions, sales effectiveness, and customer acquisitions will drive continued revenue growth.
Across the country, 70% of middle market firms report year-over-year revenue growth in the first quarter of 2015, and Illinois is no exception. While 69% of the state’s mid-sized businesses report past year revenue increases, revenues for Illinois firms grew by just 6.0% compared to average revenue growth of 7.4% for middle market businesses across the nation.
However, Illinois companies expect the rate of revenue growth to increase slightly to 6.4% over the next 12 months. In contrast, the national middle market foresees the rate of growth slowing to 5.4%.
The optimistic outlook in Illinois may be attributed to better overall economic conditions in the state, as well as improvements in sales effectiveness and expanding customer bases for middle market firms. More than one-third (35%) of Illinois businesses report better profit margins today than one year ago, and nearly half (48%) say their customer base has increased over the past year. Leaders see these recent improvements as translating into additional revenue increases in the coming year.
Business growth and expansion plans will necessitate hiring.
Although Illinois middle market firms report slightly lower past year employment growth (3.9%) than the national average (4.3%), firms in Illinois were more likely to expand the workforce last year than companies across the country (51% of Illinois companies added workers compared to 43% nationally).
Looking forward, Illinois-based companies are also more likely to anticipate employment growth over the next 12 months. They expect to grow their workforces by 3.5% compared to 3.2% anticipated employment growth for the overall national middle market. Illinois business leaders expect increases in their sales, larger customer bases, and the execution of expansion plans to stimulate the need for additional hiring in the 12 months ahead.
State government actions may impact growth plans.
The bright outlook in Illinois stands in contrast to a notable lack of confidence among middle market business leaders in the state and local economies. Across the nation, the vast majority of middle market executives express confidence in the economy close to home. But in Illinois, fewer than a quarter of firms (24%) feel secure about their state’s economy. Additionally, 82% of Illinois middle market companies list uncertainty over the impact of state government actions as a key challenge for their businesses.
Business leaders in Illinois would like to see state-level policy changes that promote a lower tax environment, simplify industry regulations, and better prepare the local workforce to fill available positions at their firms. Such changes could ignite even more rapid growth among Illinois middle market confidence, further improving economic conditions and bolstering confidence levels across the state.
To learn more about the Illinois middle market, and for a look at the Chicago middle market specifically, click here for the results of the Center’s study.