Hard Going for the Little Guy
Small and medium businesses are facing tough times and must adapt to stay in business, according to a new report from AMI-Partners. AMI's "2006-2007 Worldwide Small and Medium Business Market Overview and Comprehensive Market Opportunity Assessments" report found SMBs to be struggling in mature, emerging, and newly industrialized markets. Although the problems facing the SMBs in these separate segments are different, all will need to do some self-diagnosis in order to correct depressed bottom lines, and consolidate, lower operational costs, and differentiate product lines where appropriate.
"There's been a lot of talk in the media lately of economic uncertainty, but we wanted to find the end results not just in mature markets, but down the chain as well," says Spencer Richardson, an analyst at AMI. The report found that economic shakeups had profound affect on SMBs in all markets. In mature markets, the result has been largely cost cutting measures. Sixteen percent and 17 percent of small businesses in the United States and the United Kingdom, respectively, are planning to downsize through layoffs and outsourcing initiatives. Economic uncertainly and insufficient access to capital are the primary hindrances to growth for SMBs in this market, according to the report. Richardson recommends that SMBs in mature markets should not be looking to invest in new products and services to improve offerings as well as considering consolidation.
SMBs in emerging markets face slightly different challenges. Lack of access to capital is the top concern for these companies. Although this is a concern for those in mature markets as well, it is felt more strongly in emerging markets. Richardson says that unlike SMBs in mature markets, "They are not cost-cutting, but it's having more of an effect on their businesses' bottom line. There's a buffer that mature markets have that emerging markets just don't." The report indicates that in order for these companies to get funding, they must increase the value of their offerings as the emerging market SMB space is growing to be more and more competitive.
For the 7 percent of SMBs who operate in newly industrialized markets, the top challenges are getting access to market intelligence and information. The report cites focusing in information technology and connectivity as the most important steps for these SMBs.
Richardson believes that it is crucial for SMBs in one market to understand what is going on in other markets as well. He says, "There's a lot of talk for SMBs to go global sooner than ever was the case. Now, they kind of have a better perspective of what the markets they are trying to enter are looking like in terms of competition."
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