RiskTech Forum

EIU survey shows small and midsize enterprises confident about their future

Posted: 18 October 2012  |  Source: SAP

According to an Economist Intelligence Unit survey sponsored by SAP AG (NYSE: SAP), small and midsize enterprises (SMEs) in emerging countries are expanding and flourishing financially while their counterparts in the developed markets — despite more difficult market conditions — are confident of an economic upswing in the near future. Finding and keeping new customers, attracting talent and operating efficiently stood out as top challenges worldwide, while companies in emerging markets see effective use of technology as a key priority in achieving growth. The announcement was made during European SME Week, being held in Brussels from October 15-21, 2012.

Asked about their top business priorities for the next 12 months, respondents in developed and emerging markets appear to share broadly similar goals: growing sales and earnings. Fifty-three percent of those in developed markets and 55 percent of those in emerging economies cite growth as a top business priority. In India, the figure is 76 percent and in the UK, 71 percent. The lowest showings are in France, at 25 percent, and Russia, 35 percent.

SMEs Expect Their Businesses To Grow
SMEs expect to support growth plans by hiring additional staff. Of those surveyed, 94 percent stated that revenues remained flat or increased over the last three years. Twenty-eight percent reported increases of more than 10 percent and 39 percent responded with up to 10 percent growth. Looking ahead, 96 percent of respondents expect either a flat or positive revenue development over the next 12 months.

The research was based on a survey with more than 1,000 executives of SMEs, with an annual turnover of US $20-$750 million, and on a series of in-depth interviews with senior managers of SMEs. Respondents and interviewees came from developed economies of France, Germany, Japan, the UK and the U.S. and emerging economies of Brazil, China, India, Mexico and Russia.

"We believe that especially in today's economic climate, entrepreneurs and small to midsize businesses make up the backbone of the economy — they have the ability to drive innovation, job creation and economic stability," said Eric Duffaut, president, Global Ecosystem & Channels, SAP AG. "SAP understands the needs of entrepreneurs and small to midsize businesses, and our dedicated portfolio of business software offers them the best practices, flexibility and choice they need to adapt, innovate their business model, grow effectively and profitably and, ultimately, become better-run businesses."

Expansion Beyond Home Markets
Asked about their business priorities for the year ahead, SME managers in all surveyed economies said that expanding their business into new markets is one of their top business priorities. Twenty-eight percent of the executives interviewed in developed countries strongly agreed that they have to enter foreign markets to keep their competitive edge. In comparison, 22 percent of respondents in emerging economies believe that is the case.

"The survey findings are significant because they reveal a high degree of confidence among managers of SMEs that they can achieve growth in the period ahead," said Christopher Watts, a contributing editor of the Economic Intelligence Unit and author of three articles analyzing the online survey. "Given the critical role of SMEs in driving both developed and emerging economies, this confidence is a very positive signal."

Key findings of the survey include: