Small and medium-sized enterprises (SMEs) in Canada remain positive amid uncertainty
The SME Pulse 2019 report from American Express reveals how small and medium-sized enterprises (SMEs) are working to boost the bottom line amid a shifting business landscape.
Whether it’s global trade tensions, the risk of recession or the rise of disruptive technology, Canadian businesses face a myriad of challenges. While these obstacles affect the country’s largest organizations, they are especially disruptive to their smaller counterparts—small- and medium-sized businesses.
The Canadian business landscape is home to many such organizations. According to the federal government, in 2017 there were 1.15 million SMEs across the country, which employed 89.6 per cent (or 10.7 million people) of the private sector workforce. They also accounted for 50.2 per cent of Canada’s GDP from 2010 to 2014. Simply put, what affects Canada’s SMEs affects the economy.
It’s encouraging, then, that Canadian SMEs remain positive about the economy and their strategies for the future. This insight is reflected in this year’s SME Pulse Survey, a study conducted by Oxford Economics on behalf of American Express to investigate how SMEs are adapting to disruption and economic uncertainty in 2019 and beyond.
Along with their international counterparts, Canadian SMEs appear more optimistic about their future growth than they have in previous years. For example, last year a mere 6 per cent of them predicted 5.1-to-10 per cent revenue growth, compared to this year where more than double (14 per cent) are forecasting the same level of growth. These companies also recognize how their unique capabilities help them to thrive in this new environment.
With more optimistic forecasts comes more hopeful outlooks for the overall economy. The majority of Canadian SMEs surveyed (66 per cent) still have a positive outlook on the state of the global economy, as well as their role within it.
“By their nature, SMEs are resilient—a characteristic that helps drive their success,” says Paul Roman, Vice President and General Manager of Global Commercial Services at American Express Canada. “The fact that so many remain assured of their future prospects is perhaps indicative of the faith many have in their abilities, despite the headwinds that might be present in the Canadian economy.”
Yet while a slowing in the global economy, intensifying trade tensions and other factors have meant a weakening outlook for revenue and profits, other factors may be opening the door to business opportunities for SMEs. This includes trade deals like the Canada-European Union Comprehensive Economic and Trade Agreement (CETA) and the potential ratification of an updated North American trade deal may be helping to bolster SME’s outlook as they strive to outpace global competition.
Protecting The Bottom Line
With cost control remaining a top priority for SMEs, it’s unsurprising that while economic optimism remains high, so does the pressure to boost the bottom line. Accordingly, Canadian decision-makers are implementing strategic shifts to achieve growth, with many focusing on meeting ever-changing customer demands. Overall, 61 per cent say their customers more often want new or tailored products and services, with the same group understanding how interpreting consumer demands into their business plans is important for revenue growth.
While adapting to this changing landscape of consumer needs, most SMEs in Canada agree it needs to remain a long-term priority. In fact, 71 per cent plan to work their hardest on the challenges associated with responding to changing business demands over the next three years.
As the field moves from a predominantly tactical role towards the more consultative role of trusted advisor, supply chain professionals can provide valuable insights that SMEs need to respond to shifting customer demands in an ever-changing market.
Technology Gains Ground
There’s no doubt that technology is changing people’s lives. At the same time, robotics, automation, the Internet of Things (IoT), artificial intelligence and other emerging technologies have the potential to transform many of today’s business processes. Therefore, SMEs are making major strategic shift towards investing in these new-gen technologies to better understand their customers’ needs. For more than one-third (40 per cent) of SMEs, using new tech tools to redesign products and services as a means for growth is extremely important. This is especially true as a larger majority (62 per cent) understand that digital technology can provide them with new opportunities.
While only 27 per cent say they currently use technology to analyze customer data, 51 per cent said they plan to leverage it over the next three years. This jump in numbers illustrates that, while SMEs may still be immature when it comes to implementing appropriate tech solutions for their businesses, they understand more and more the need to evolve alongside enhanced tools in order to achieve growth.
SMEs now realize that disruption is inevitable. Digital transformations, while potentially stressful, can help to ensure these companies keep or build close relationships with customers, remain competitive, continue to innovate, attract and retain talented employees and realize business objectives.
“As technology becomes more affordable and user-friendly, SMEs are able to access and leverage it more readily,” notes Roman. “As this evolution continues, we expect to see more and more SMEs view technology as an opportunity, rather than a challenge, for their businesses.”
Efficiencies Are Key
Another bottom-line boosting strategy many Canadian SMEs are implementing involves improving operational efficiencies. Over the next three years, 61 per cent of respondents say they’re introducing cost saving programs to increase efficiencies. Supply professionals are well situated to help SMEs with this objective, as their skills, including identifying wasteful processes, tracking supplier performance, mitigating risks and identifying operational weaknesses-strengths, can all improve the effectiveness of an SME’s business performance.
Overall, the global survey results demonstrate that despite challenges, SMEs remain confident about their future prosperity. Under pressure to sustain performance, it is clear why organizations appear to focus more on customers and anticipating their shifting demands, as well as investing in technology that can help them better understand their customers and improve overall operational efficiencies.
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