In 2016, Bibby Financial Services published its inaugural Global Business Monitor report, providing unique insight into the opportunities and challenges facing small and medium sized enterprises (SMEs) across Asia, Europe and North America.
Amid geopolitical change and rising economic uncertainty, the study highlighted specific issues facing such businesses, including rising input costs, the burden of government regulation and ongoing cashflow management.
Though issues keeping business owners awake were predominantly close to home, there was undoubtedly concern over the global economy following a series of events shifting the international tone towards isolationist and trade-restrictive policies.
Twelve months is a long time in economic terms and a year on, the only thing constant is change.
In July, the IMF maintained its earlier global growth forecast at 3.5% for 2017 and 3.6% for 2018. While its growth forecast remained the same, expected sources of growth were markedly different from previous estimates. The IMF asserted that improved growth in the Eurozone, China and Japan would compensate for slower growth in the UK and US.
In the first quarter of 2017, the UK and U.S. were the slowest growing G7 economies based on quarter-to-quarter GDP, expanding by 0.7% and 1.2% respectively. In contrast, during the same period, and powered by a buoyant energy sector, the Canadian economy expanded by 3.7%.
Growth in China has continued at a steady pace in 2017 with imports rising in August for the first time in two years. Japan, hot on the heels of its new trade deal with the European Union, has seen its longest economic expansion in more than a decade.
In the face of much political debate, the Eurozone has performed remarkably well. Unemployment has fallen and output has risen. As a result, GDP growth increased to 0.6% in the three months to June, representing the bloc’s seventeenth consecutive quarter of growth.
Germany is no longer the sole driver of Eurozone growth. Instead, a combination of accelerated growth in Ireland, the Netherlands and Spain, and strong manufacturing output in Germany and France have contributed to this expansion.
Whether, as growth figures suggest, we are witnessing an economic changing of the guard remains to be seen. However, our Global Business Monitor for 2017 does reflect a changing mood among SMEs.
More than half (55%) are expecting sales to increase in the year ahead. While down from 95% in 2016, nine in 10 (91%) SMEs still plan to invest in their business before the end of the year. Staff training and development, IT and recruitment form an almost unanimous top three, in relation to investment intentions.
But despite green shoots of confidence, findings highlight age-old concerns that continue to hinder growth. Just 7% cite international trade as their greatest opportunity over the year ahead and one in five attribute this to concerns over managing currency fluctuation. Unlike their larger counterparts that are seen to embrace new technologies, just 5% of SMEs see digital technologies as their greatest growth opportunity.
Though payment times vary – ranging from 23 days in the U.S. to 45 in Poland and Hong Kong – more than half (55%) cite issues surrounding the collection of payment from customers as a cause for concern. Furthermore, a third have suffered from bad debt, due to customer non-payment or insolvency.
Findings of the study demonstrate important differences in relation to the types of challenges facing SMEs in different parts of the world. More importantly, however, the research highlights the intrinsic characteristics that bind SMEs together, irrespective of location.
The International Organization for Standardization estimates than nine in ten of all businesses worldwide are SMEs. Such businesses are, therefore a key barometer of past, present and future performance.
While confidence amongst SMEs seems to be in rude health, challenges persist that continue to threaten SMEs’ true economic contribution.
As the world continues to shape itself following a time of extraordinary change, it is those economies that build a supportive and thriving environment for SMEs that will be best placed to grow in 2018 and beyond.