For the last three years, Oxford Economics has worked with American Express to gauge the sentiment and report the future plans of small and medium-sized enterprises (SMEs), and the entrepreneurial heartbeat of global business. SMEs innovate, create new business models, and employ far more people than the world’s largest companies, even if they often receive less media attention.
In October and November 2018, we surveyed 3,000 SMEs in 12 countries and found their optimism in global economic prospects to be more robust than ever. Nevertheless, predictions about revenue and profit growth, though positive, are less rosy than in our last survey.
Despite this general optimism regarding prospects for 2019, clouds are undoubtedly forming on the horizon. At the time of our survey, steep falls in stock markets reflected wider fears about trade prospects and a diminished outlook for global growth. Fears of further monetary tightening, a Sino-American trade war, and concerns about Brexit, were gaining traction. At the same time, companies everywhere, including SMEs, are adapting to continued digital disruption and the shifting values of consumers and employees.
Over the next three years, SMEs will need to work smarter to improve their top and bottom-line performance. Our research highlights the ways in which SMEs are planning to achieve this, by playing to their unique strengths as SMEs. These include:
- Expanding revenues by keeping close to their customers, understanding their shifting demands, and responding quickly to changing preferences. Many SMEs are regularly introducing innovative new products and services, and are collaborating with partners, including large companies, to access a larger market.
- Improving productivity and efficiency across their operations. Many SMEs are prioritizing innovative ways to boost their efficiency and record significant year-on-year productivity gains, potentially helping to tackle the often-mentioned productivity challenge faced by many economies.
SMEs have long recognized the opportunity’s technology provides to foster growth and higher profits, but many have struggled to achieve the benefits. This year’s survey and case studies demonstrate that SMEs are becoming more ambitious, moving from infrastructure spending to investments in value-added enterprise systems, and more sophisticated data analysis. SMEs are also prioritizing innovation, particularly initiatives that nurture organic innovation among their own employees. This emphasizes the importance of attracting, retaining, and motivating a skilled workforce.
Our research showcases multiple paths to success. Not all SMEs aspire to rapid growth, nor need to deploy the latest technology. Yet a common feature of successful SMEs, as previous editions of the SME Pulse, have shown, is that SMEs must take full advantage of the defining capabilities and competencies that make them special. Even as pressure on the bottom line grows intense, they must continually learn new ways to enhance their operations and adapt their propositions to the shifting demands of the marketplace.