Small and midsized enterprises in both developed and emerging markets have expressed that one of their top priorities over the next 12 months will be to grow sales and earnings, according to a new study released by The Economic Intelligence Unit, an independent business research and forecasting resource, on behalf of SAP.
However, research findings indicate that 62 percent of SMEs surveyed said they expect the business climate to become increasingly worse over the next three years—a statistic that was especially prevalent for companies in emerging markets with less than $100 million in revenue annually.
This indicated to the EIU that while SMEs acknowledge the realities of the current economy, they are still eyeing expansion. In addition to improving sales and earnings, a top priority for the 1,000-plus enterprises surveyed was becoming more efficient through the use of technology and the development of new products and services.
"Measures such as cutting costs, or closing and selling businesses or focusing on short-term problems [appeared lower] on the list of priorities, so the main message here from this is companies are very growth-oriented," said Christopher Watts, business and financial researcher, and contributing editor to the Economic Intelligence Unit, during a call.
According to Watts, as SMEs grow, they will look for scalable technology that will aid them in improving business efficiencies such as purchasing, procurement, buying in bulk, and distribution, as well as in business management to automate processes like budgeting, forecasting, and accounts payable.
As companies move outside of their common boundaries, "they understand the importance of technology as a competitive equalizer for them to compete with larger companies," said Eric Duffaut, president of Global Ecosystem and Channels at SAP.
When it comes to reaching new audiences, small and midsize enterprises will look first to the Internet—through the use of mobile applications and social media—to connect with a broader array of prospective customers in addition to geographic expansion. SMEs that operate in developed markets, Watts said, "are looking to markets in larger, developing countries where there is a greater consumer base and better growth prospects."
When asked what some of the top obstacles were to expansion, the surveyed companies flagged government bureaucracy and regulation, as well as a growing tax burden. Points like a weak economy, shrinking markets, or a decline in customer confidence fell further down the list of companies' concerns, the EIU found.
The survey measured the sentiments of SME managers in five developed and five emerging economies with revenues under $750 million. About three-quarters of the sample had revenues under $250 million.