Despite making up such an important sector of Canada’s economy, middle-market businesses are currently dealing with many challenges that are keeping them from keeping up with or leading the pack in the Canadian business landscape.
Business headlines are often dominated by enterprises and small businesses, but there exists an entire sector of business between those two which contributes significantly in terms of revenue and jobs generated to the Canadian ecosystem: middle-market businesses.
Definitions of what exactly classifies as a middle-market business vary greatly, but in Canada, it is generally accepted that a middle-market business is a firm with between 100 and 499 employees.
And while middle-market firms only make up about 1% of all Canadian businesses, they account for about 16% of all jobs in the country and generate 12% of our national GDP and 16% of the value of our exports, according to statistics from BDC.
Despite making up such an important sector of Canada’s economy, middle-market businesses are currently dealing with many challenges that are keeping them from keeping up with or leading the pack in the Canadian business landscape.
A combination of sector-specific challenges – such as middle-market businesses inability to generate revenue quickly or their often unique company cultures – and software vendors not properly understanding the needs of the middle market, has left them lacking the tools they need to modernize their businesses and looking to alternative means to streamline their operations.
Tackling the unique struggles of the middle market
Before we dive into the software needs of the middle market and the divide between those needs and what software vendors are currently offering, it is imperative that we point out some of the factors that make the middle market so challenging at times.
First and foremost, due to the fact that a majority of middle-market businesses are private firms, a majority of the time they do not have access to funds from the public market. Coupled with a history of reluctance from investors to invest in middle-market businesses, this leaves these firms without the ability to quickly and easily generate revenue as they need it.
And as many businesses of all sizes across the country are seeing their software budgets cut following a very tough 18 months, this has only compounded the financial constraints that middle-market businesses have when trying to get the software tools they need.
Another important factor to note is that middle-market businesses tend to come with their own unique company culture traits – often operating with a long-term outlook, a willingness to invest in their own people, and an ability to make quick decisions with a lean hierarchy – and when they look for a software vendor, they are looking to find a vendor of a similar size with similar values, of which there are not currently many in Canada.
Meeting the software needs of the middle market
As so much of the world’s businesses have undergone a digital transformation to modernize how they operate – spurred on by the pandemic but already trending beforehand – they are most often doing so with some of the many new and innovative software solutions being brought to market for the purposes of digitizing businesses of all types and sizes.
But due to its unique challenges – some of which we just spoke about – as well as a divide in mutual understanding between them and software vendors, middle-market businesses are finding it very tough to get the tools they need to create the modern operations they and their customers need.
While needs can vary from business to business, across the board within the sector of middle-market businesses in Canada there exists a great need for software with pricing plans tailored to the middle market, connected platforms capable of integrating with and managing their wide range of devices, and solutions that are designed to be scalable to their unique needs.
And yet, despite there existing a great need for such software solutions, software vendors seem to have a disconnect with this sector of Canadian businesses and many of them are not meeting these needs.
Bridging this divide to understand the unique challenges and needs of middle-market businesses, will be essential for software vendors to be able to better align their offerings with this business sector, and will be greatly mutually beneficial to both sides.
Until that divide can be bridged, what can those middle-market businesses do to make up for their software shortcomings?
Shortcutting the software deficit of the middle market
Until the software market is able to catch up to the news of the middle market, these businesses should be looking to other areas they can innovate in to try and make up for the software deficit.
One area they should be taking a hard look at is low-code/no-code development platforms.
With just a little reskilling or upskilling, you can have members of your team creating the apps your business needs – tailored exactly to them – without the large amounts of time usually needed to design them or the money usually needed to purchase them; all of which is very beneficial to the middle market firms in Canada who are struggling to generate the revenue they need to jumpstart the post-pandemic recovery of their business.
