By Daniel Hunter
Small and midsized firms worldwide put sales and earnings growth at the top of their list of priorities, and expect to see growth despite a gloomy economic outlook, according to a global survey of 1,072 small and midsized enterprises (SMEs) by the Economist Intelligence Unit.
The survey is roughly evenly divided between SME managers in five developed and five emerging economies. All companies in the sample have annual revenues under US$750m; about three-quarters are considerably smaller, with revenues of under US$250m.
The survey shows broad similarities in goals, with 53% of SMEs in developed markets and 55% of those in emerging markets citing growth in sales and earnings as a top priority. Besides pursuing growth in revenues and earnings, other top priorities for SMEs in both developed and developing countries include becoming more efficient, using technology more effectively, and developing new products and services.
The survey also shows broad similarities in expectations, with 65% of emerging market SMEs and 58% of developed country SMEs expecting a tougher business environment over the next three years. Despite these expectations, companies are optimistic about their own prospects. In developed markets, 68% expect higher turnover over the next 12 months, and in developing countries, 78% do. A sign of this confidence is that clear majorities of SMEs expect to grow their workforces.
Beyond this sense of optimism, SMEs are wary of the impact of government on their businesses, both in developed and developing countries. Large majorities of SMEs–86% in industrialised countries and 90% in developing countries–point to government bureaucracy and regulation as an obstacle to their business.
However, in other areas, SMEs in developed and developing countries diverge in their outlooks and expectations. Here are some of the main areas of divergence:
· Developed-market SMEs are more likely to have deep concerns about flagging market demand. Weak economic prospects and shrinking or stagnant markets are seen as a major obstacle for 30% of SMEs in developed countries, compared to 22% in emerging markets.
· Perhaps due to this concern about stagnant economic growth in their existing markets, SMEs in developed countries (28%) are more likely than those in emerging economies (22%) to believe strongly they must expand abroad to keep their competitive edge.
· Confidence in their own capabilities runs higher in SMEs in industrialised countries. Although SMEs worldwide are confident about their own future growth, those in developed countries (42%) are more likely than those in emerging markets (25%) to believe they are well equipped to deal with the obstacles they face.
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