SME optimism about the future is high according to a new global survey from American Express.
A survey of a representative sample of senior executives and decision makers in over 3,200 SMEs in 15 countries – including 300 in the United Kingdom – finds them confident about the future performance of their businesses and optimistic about the economy.
Over half of SMEs surveyed say they expect significant revenue growth over the next year.
The SMEs believe they have put in place strategies that will help them thrive in an age of uncertainty. They are confident they can deliver increased revenues and profit.
The survey for the inaugural American Express Global SME Pulse – which defines SMEs as businesses with 10-250 employees and revenues of up to $30 million (£24.2 million) – was carried out in October and November 2016 by Oxford Economics.
The findings for revenue growth show that:
– 58 percent of SMEs across the Americas, Asia, and Europe expect significant revenue growth over the next year
– In the UK, half of SMEs expect to grow revenues by a minimum of 4 percent in the next 12 months
– 16 percent of these UK SMEs are anticipating revenue growth of at least 8 percent over the year
The findings for profitability reveal:
– 57 percent of UK SMEs are forecasting net profits of 4 percent per annum over the next 3 years
– 22 percent of UK SMEs forecast their net profits will exceed 8 percent per annum over the period
SME optimism extends to their view of the health of world’s economy in 2017. The survey finds they are more than twice as likely to be positive (39 percent of SMEs) than negative (16 percent of SMEs) about the global economic climate.
This optimism is similarly reflected in the UK, whose SME leaders are almost twice as likely to be positive than negative about the UK economic climate in 2017.
In this context, ‘economic climate‘ means the same as ‘economic conditions.’
Economic, political uncertainty at home
Despite the level of SME optimism, the survey also identified some areas of concern. SMEs in the UK and the rest of the world see economic uncertainty in their home market as the biggest threat to business.
Political uncertainty is a particular concern for 28 percent of UK SMEs, while over a third (35 percent) of UK SMEs say a major threat to their business performance is the uncertainty in their European markets.
However, despite the uncertainties, SMEs in the UK and other countries are concentrating on growth and expansion to boost their financial performance.
Exports key to growth
Over two-fifths (43 percent) of UK SMEs see expanding into new domestic markets as a top priority over the next 3 years, while a third (33 percent) are focusing on growing their share of current markets.
Increasing operational efficiency is also a priority: 35 percent of SMEs see this as the key driver of improved financial performance in the next 3 years.
Many SMEs in the UK and beyond also see exports as a mainstay of growth. Nearly a third (32 percent) of UK SMEs see the route to improved financial performance over the next 3 years as through expansion into new international markets.
SME optimism also seems high in readiness for export growth: 47 percent of UK SMEs say they believe they have the right strategies in place to increase export sales. Also, half of UK SMEs say it is easier to access new export markets today than it was 3 years ago.
SME optimism ‘encouraging’
Jose Carvalho, American Express Senior Vice President, Global Commercial Payments Europe, says it is very encouraging to see this level of SME optimism and confidence.
“The research shows SMEs are focusing on expansion and growth opportunities, reaching out to new markets and customers at home and globally,” he notes.
He adds that some SMEs are finding it difficult to access finance and are looking beyond traditional sources to secure the funds they need for long-term growth.
The telephone survey collected data from 3,205 SME chief executives, chairs, managing directors, general managers, heads of finance, and chief financial officers in: Argentina, Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, Mexico, Singapore, Spain, the UK, and the United States.
It follows the results of the Aldermore SME Future Attitudes report published in December 2016 that found four in five UK SMEs are confident about their business performance in 2017.