Global SMEs are Resilient and Plan to Keep Growing Despite Economic Turbulence
March 06 2019 - 08:00AM
Business Wire
The world’s small and medium-sized enterprises (SMEs) are
forecasting slower revenue and profit growth, according to the
third annual Global SME Pulse: Smart Strategies to Improve the
Bottom Line, conducted by Oxford Economics on behalf of American
Express. Despite forecasts, global SMEs are developing strategies
to sustain their top and bottom line and feel positive about the
importance of their role in the economy.
The research, carried out among senior executives and
decision-makers at SMEs across 12 countries, found that 78% of
global SMEs say they continue to feel that SMEs are important to
the overall health of the economy.
Global SMEs say they will be under increased pressure to sustain
their bottom line in 2019. For U.S. SMEs, growing revenues and
building company reputation are the most important long-term
objectives (87% and 56% of respondents respectively), marking a
shift since 2018 where the top three priorities for U.S. SMEs were
profit margin growth (62%), revenue growth (57%) and building a
company’s reputation (41%). Global SMEs have also scaled down their
growth predictions for the future, with average predicted annual
revenue growth for the next three years dropping from 6.9% to 5.2%
and average predicted annual profit margin for the next three years
decreasing from 5.7% last year to 4.7%.
To counter the slower revenue forecasts for 2019, global SMEs
continue to report that understanding customer demands remains the
most important strategy for revenue growth (increasing from 56% of
U.S. respondents in 2018 to 67% in 2019). In addition, 71% of
global SMEs say they have a long-term plan that considers
technological, demographic and economic changes over the next 5-10
years. Global SMEs also think that using their advantages as a
small business is an increasingly important strategy for revenue
growth.
Longer term, global SMEs believe the biggest factor contributing
to financial performance in the next three years will be increased
productivity and operational efficiency. As a result, global SMEs
are – on average – forecasting labor productivity to improve by
3.7% a year over the next 3 years, a significant increase from the
low rates achieved by economies over the last 10 years. Innovation
helps boost labor productivity - global SMEs who are forecasting
higher productivity (more than 5% a year over the next three years)
report being more effective today in innovation (74% vs. 49% for
all other SMEs) and developing/retaining skills and talent (67% vs
48% all other SMEs).
“When planning for the future, it is also important that SME
leaders don’t forget about other routes for boosting business
performance,” said Antonio Gagliardi, Vice President of Strategy,
M&A and Alliances, Global Commercial Services, American
Express. “Our study has found that when it comes to innovation,
employing talented innovators and fostering an innovative culture
are the top drivers for improvement. To retain their edge, global
SMEs should continue to invest in ways of attracting and retaining
top talent for their organizations.’’
American Express’ study also found that technology is a key
focus for global SMEs in 2019, with respondents less confident in
their ability to apply the latest tech than they were a year ago.
U.S. respondents report that this is one of the biggest business
challenges they are trying to address in the next three years,
preceded by the need to quickly respond to changing business
demands.
In particular, global SMEs are shifting away from infrastructure
to enterprise and value-add technology. Workforce productivity
tools are the most important technology that global SMEs are
currently using and plan to use over the next three years –
representing a significant leap (31%) from the previous year. And,
while not reliant on them now, nearly a quarter (23%) of global
SMEs expect to be using machine learning, smart algorithms and
artificial intelligence technologies in the next three years.
Among global SMEs, cyber and data security sit alongside the top
three challenges cited as a growing threat, joining the perennial
threats of economic uncertainty (63% globally and 63% in the U.S.)
and changes to policies, laws and regulations (65% globally and 66%
in the U.S.), which have topped the list for the past three
years.
Notes to editors
About the report
In October and November 2018, Oxford Economics surveyed senior
executives at 3,000 SMEs ranging in size from 10 to 250 employees
across 12 countries and 16 industries. Telephone interviews were
used to explore opportunities and threats, business prospects,
strategies, investments and how SMEs could be better supported by
changes to regulation, financing and government support.
About American Express Global Commercial
Services
Through our Global Commercial Services division, American
Express offers powerful backing and support that helps companies of
all sizes gain financial savings, control and efficiency. We
provide a suite of payment and lending products, solutions for
travel and everyday business spending, cross border payments,
global currency solutions, and business financing.
To learn more about products and services for small businesses
and entrepreneurs visit American Express Business Cards.
About American Express
American Express is a globally integrated payments company,
providing customers with access to products, insights and
experiences that enrich lives and build business success. Learn
more at americanexpress.com and connect with us on
facebook.com/americanexpress,
instagram.com/americanexpress,linkedin.com/company/american-express,
twitter.com/americanexpress, and youtube.com/americanexpress.
About Oxford Economics
Oxford Economics is a world leader in global research and
economic analysis for business and government. They specialize in
evidence-based thought leadership, forecasting, and economic impact
analysis. Their economists use sophisticated analytical models and
have access to a rich database of figures, forecasts, and analysis
on 200 countries, 100 industrial sectors, and over 3,000 cities.
http://www.oxfordeconomics.com
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American ExpressPatrick Jones,
212-225-4706patrick.jones@aexp.com
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