According to the third annual American Express Global SME Pulse Survey1, Canadian small and medium-sized enterprises (SMEs) are forecasting decreased revenue and slower profit growth in 2019 and future years. Far fewer companies are anticipating a 5.1–10% growth rate in 2019 than in 2018 (6% compared with 28%). The forecasted net profit margins confirm this trend: only 5%, compared with 22% in 2018, are expecting to achieve 5.1–10%.
Despite these downward predictions, the majority of SMEs (78%) strongly believe that they play an important role in the overall health of the economy. They also remain optimistic about the state of local and global economies and are putting strategies in place to drive their growth, increase their efficiency and improve their bottom lines.
Adapting to meet ever-changing customer expectations
For the majority of SMEs (71%), meeting customer expectations is a long-term priority. This is not surprising when 61% say that their customers are demanding original or tailored products and services. SMEs understand that taking their customers’ expectations into consideration is directly linked to revenue growth.
“From declining profit margins to shifting customer demands, today’s SMEs face pressures that are no doubt putting a strain on their business,” said Paul Roman, Vice President and General Manager of Global Commercial Services at American Express Canada. “Despite the many challenges, Canadian SMEs are resilient and it’s clear from our study they’re staying nimble and making strategic shifts to drive future growth.”
Investing in technology to boost bottom lines
According to the survey, investing in technology is a main concern for SMEs and 40% of them believe that there can be no revenue growth without the use of new technologies to redesign and modernize products and services. Moreover, almost two-thirds of enterprises (62%) say that technology opens doors to new business opportunities.
Using new technologies to better understand customers’ needs is also a growing priority for SMEs. Accordingly, 27% of SMEs say that they are analyzing data provided by their customers and 51% are planning to use it over the next three years.
Improving operational efficiency with new tools
SMEs are constantly looking for new ways to increase their productivity. Increased productivity is cited as the main contributing factor to the 2018 financial performance. It therefore goes without saying that improving performance—and, consequently, their bottom lines—is a top priority.
To achieve this, SMEs are looking to implement new strategies. Specifically, 61% of SMEs state that they are implementing cost-saving programs to maximize efficiency. The solution, according to 38% of SMEs, is to use technology, including automation in the case of certain companies, to modernize operations. This is particularly true in the technology, aerospace (and defence) and telecommunications sectors. Lastly, 35% of SMEs plan to implement productivity-specific tools over the next three years. Nowadays, these tools are more accessible, easier to use and are generally associated with better decision-making, quality control and asset management.
While it cannot be denied that SMEs have to face many challenges, as highlighted in particular by the downward predictions for 2019, it is important to remain confident. Small and medium-sized enterprises are making the necessary changes to satisfy changing customer preferences, harness new technologies and improve their performance, with the aim of boosting future revenue.
The 2019 American Express Global SME Pulse Survey presents the results of a survey commissioned by American Express and conducted by Oxford Economics. The interviewees were senior managers from 3000 SMEs with between 10 and 250 employees and originating from 12 countries and 16 different industries. To learn more about the survey, visit www.americanexpress.ca/sme-2019
1 Source: 2019 American Express Global SME Pulse Survey
This article was originally published by American Express Canada on Les Affaires on January 7, 2020. Service de contenu Les Affaires. Find it here
This article is intended for general informational purposes only and does not constitute legal advice or an opinion on any issue. It should not be regarded as comprehensive or a substitute for professional advice.