Survival, expansion top challenges for SMEs

MANILA, Philippines — Survival and expansion have been identified as the top challenges for small and medium and enterprises (SMEs) today, according to the World Economic Forum (WEF).

In its report written in collaboration with the National University of Singapore titled “Future Readiness of SMEs and Mid-Sized Companies: A Year On,” the WEF said 67 percent of executives from SMEs have cited survival and expansion as the top challenge they face at present, amid warnings of a global recession.

The report is based on a survey covering about 800 leaders and executives from SMEs and mid-sized companies from major regions of the world and various industries, including financial and professional services, education, agriculture, construction, commerce and public service.

Aside from maintaining and growing the business and expanding to new markets and clients or consumers, the WEF said 48 percent have also cited talent acquisition and retention as among their top concerns.

Other major challenges identified by SMEs are the importance and difficulty of maintaining a strong culture and clear company purpose and value (34 percent), technology and innovation (25 percent), funding and access to capital (24 percent), and the policy environment (22 percent).

With SMEs and mid-sized companies accounting for around 90 percent of all firms in the world, about 70 percent of employment, and up to 70 percent of the global gross domestic product, the WEF said these businesses play a significant role in growth, innovation and sustainability in global, regional and local economies.

“Given their collective weight, as well as their tremendous potential, ensuring SMEs and mid-sized companies are thriving and future-ready is fundamental,” the WEF said.

In order for these businesses to be future-ready, the WEF said it is important for them to be successful in these three pillars: sustaining long-term innovative growth, developing high levels of adaptive capacity, and delivering positive impact for the planet and people.

Citing challenges such as geopolitical tensions emerging from Russia’s invasion of Ukraine, energy crisis, hyperinflation, demand for sustainable innovation, climate change, and rapid technological developments, the WEF said resilience and agility are the most important ingredients for businesses to thrive in this environment.

“SMEs and mid-sized companies have a significant opportunity to increase their levels of future readiness by focusing on increasing their resilience capabilities, while making the most of their existing high agility,” the WEF said.

It said SMEs could increase their future readiness and address top challenges through talent management, digital transformation of business models, and implementation of sustainability measures.

“The business community is stepping up to tackle the biggest issues facing the world. SMEs and mid-sized companies are key enablers in this pursuit,” WEF president Borge Brende said.

As the wider policy environment will also affect SMEs’ ability to thrive, the WEF said it is crucial for policymakers, investors and other stakeholders to help build businesses’ future readiness.

“SMEs and mid-sized companies have unique strengths in their ability to pivot their business models to be more future-ready, and by hiring and developing the right talent, they can mobilize positive internal and external change faster than larger companies. However, to fully realize their potential, they also need the support of policy-makers in recognizing their credentials, as well as in rewarding sustainability initiatives,” Rashimah Rajah, professor at the National University of Singapore and co-lead author of the report, said.