How SMEs are unlocking growth in 2018
American Express' SME research reveals the strategies firms are turning to for growth
As the backbone of our economy, the sentiment of small and medium-sized businesses is a useful barometer of the wider feelings amongst British firms – and at American Express, we are always interested in learning from the challenges and opportunities SMEs face and the strategies they look to in order to grow their businesses.
Our 2018 SME research study, conducted in association with Oxford Economics, is encouraging in terms of SME sentiment in the UK. It found that optimism levels are high, with 57 per cent of UK respondents feeling optimistic about the global economy over the next 12 months, compared to just 14 per cent going into 2017.
And in the hunt for ambitious growth, we found three strategies that leaders and financial decision makers at these firms are turning to time and again to survive and thrive.
Focus on customers and adapt to their changing demands
Through their size, SMEs can have an edge when it comes to agility, innovation and the ability to maintain strong customer relationships. Key to securing long-term loyalty will be to keep the customer front of mind.
Reassuringly, British SMEs are well aware of this: the UK was the most customer-centric out of the 12 countries (across Europe, North America, Latin America and Asia Pacific) questioned for this study, with 45 per cent of British SMEs saying that reacting to changing customer demands is important for revenue growth, compared to a global average of 36 per cent.
Keeping up with changing consumer trends is crucial. In 2018, this could mean an increasing focus on socially sustainable products and services – as confirmed by over three-quarters (78 per cent) of SMEs, who have noticed a growing demand for these sorts of products. Media attention and a shift in consumer attitudes mean that being a socially sustainable business is now an important route to growth – so it's the perfect time for businesses to re-examine and emphasise their responsible business credentials.
It isn’t just their ability to adapt to change quickly that offers SMEs growth opportunities, they are also experts at making their investments work as hard as possible – particularly when it comes to technology.
Indeed, our research shows that using technology will be key to helping SMEs respond quickly to changing customer demands. SMEs are consolidating their tech capabilities to streamline operations and reconnect with customers – with 42 per cent saying they plan to modernise processes using technology to boost operating effectiveness.
The vast majority also plan to use technology to secure faster, more reliable communications systems in 2018, and over two-thirds want to implement high quality, user-friendly customer facing websites and mobile applications.
Don’t rule out looking overseas for growth
While just 24 per cent of the SMEs we spoke to globally say they are currently exporting, these businesses are experiencing stronger financial performance compared to those that aren’t. They are also more confident about the economy and better innovators, suggesting there’s an opportunity to increase profit and capability by looking abroad.
While expanding internationally comes with challenges, the rewards are worth it. SMEs are in a prime position to make inroads overseas by taking advantage of their natural agility and attention to consumer demands.
Research is crucial to success: you can do this by building market intelligence, making the most of government advice and support, and determine which payments providers will best help you settle international payments quickly and swiftly.
However, nothing is as valuable as getting to know the markets you’re planning on expanding into first-hand – so it’s important to get out there and explore opportunities for yourself.
Supporting positive growth plans
It’s encouraging to see such high confidence levels among UK SMEs – with almost a quarter (23 per cent) predicting they can achieve revenue growth averaging over 10 per cent for the next three years. With strong strategies for success, small and medium-sized businesses are in a prime position for a rewarding 2018, and their ambition should instil confidence in UK businesses of all sizes.