SMEs Forecast Increased Revenues &
Profits, Plan to Focus on Domestic Expansion and Sales Growth to
Drive Financial Performance
Small and medium-sized enterprises (SMEs) in the U.S. and
worldwide are optimistic about the economy and confident about
their future business performance, according to the inaugural
American Express Global SME Pulse.
The new survey of senior executives and decision makers from
SMEs across 15 countries reveals these businesses in the U.S. are
even more optimistic about the global economy than their foreign
counterparts. More than half of U.S. executives (54%, vs. 39%
overall) are positive about the global economic outlook over the
next 12 months. When asked to consider the local economic
environment, they are even more upbeat, as nearly six in ten are
positive (59% vs. 45% overall).
Executives are also confident in their ability to deliver
increased revenues and profitability. More than two thirds of the
U.S. SMEs surveyed (69%, vs. 58% overall) expect significant
revenue growth of at least 4 percent over the next 12 months. Forty
two percent anticipate revenue growth of at least 8 percent over
the same period, double that of SMEs worldwide (21%). In terms of
profitability, U.S. SMEs are also upbeat, with thirty five percent
forecasting a net profit of at least 8 percent per annum over the
next three years. U.S. SMEs say their most important strategy to
grow domestic revenue is more effective marketing and sales to
domestic customers (48%), followed closely by understanding
changing customer demands (46%).
“Small and medium-sized enterprises have put strategies in place
to grow product and service innovations, quickly respond to
changing business demands and develop and retain skills and talent
to help them thrive,” said Brendan Walsh, Executive Vice President,
Global Commercial Payments, American Express. “They are confident
about and invested in the future of their businesses.”
While SMEs are optimistic about the economy and their own
business, they also recognize areas for concern. Nearly half (47%)
rank economic uncertainty as the greatest external threat to their
business. SMEs also identify political uncertainty (31%) and
changes to domestic policies, laws or regulations as a key threat
(24%).
SMEs take on new strategies to enhance innovation
U.S. SMEs also find themselves addressing challenges that will
have a longer term impact on their businesses. Nearly three
quarters (73%) identify developing and implementing innovations as
the challenge they will work hardest to address over the next three
years. To improve innovation, companies identify different
approaches they are currently taking or will use in the future,
including:
- Encouraging all staff to contribute
ideas (68%)
- Incorporating customer feedback into
the research and development process (67%)
- Encouraging an innovative culture by
accepting challenge and risk (66%)
- Employing talented innovators
(65%)
- Creating innovation taskforces within
the organization (62%)
- Allocating staff time for idea
generation (62%)
- Investing more in R&D (62%)
SMEs are focusing on expansion and sales growth
Despite uncertainty, SMEs are focusing on growth and expansion
strategies to improve their financial performance. More than one
third of U.S. SMEs say growing their share within existing markets
and expansion into new domestic markets will most contribute to
their businesses’ financial performance over the next three years
(each, 36%). Fewer believe expanding into new international markets
will be a contributor to financial performance (27%).
As they look to expand, many SMEs encounter difficulty when
trying to access the financing required for growth. Six in ten
businesses (60%) say they face difficulty accessing the financing
they need to grow their business. More than three quarters (78%)
are satisfied to some degree with the current financing options
available to their business.
Today, most U.S. SMEs rely on bank loans (58%) and existing
working capital (50%) to fund their investments. Over the next
year, SMEs plan to take advantage of a diverse set of funding
options. Bank loans and existing working capital will remain
important, but many SMEs will also be looking to non-bank sources
of finance such as private equity (36%), crowdsourcing (35%),
existing working capital and flexible access to funds such as
credit cards (each, 33%).
Survey Methodology
Oxford Economics carried out a telephone survey among 3205
owners, executive board members (including Chief Executives,
Chairmen, Managing Directors, General Managers) and Chief Financial
Officers / Heads of Finance in SMEs with between 10 and 250
employees and revenues of up to $30 million. The companies were
based in 15 countries: Argentina, Australia, Brazil, Canada, China,
France, Germany, India, Italy, Japan, Mexico, Singapore, Spain, UK
and USA. The survey interviews were conducted October 24 - November
29, 2016. The margin of error for the global survey is 1.73% at the
95% level of confidence. In the United States 300 leaders from SMEs
participated in the study. The margin of error for the United
States is 5.64% at the 95% level of confidence.
About American Express Global
Commercial Payments
Through its Global Commercial Payments division, American
Express offers a suite of payment and lending products that
help businesses and organizations of all sizes gain financial
savings, control and efficiency. Global Commercial Payments
provides solutions for travel and everyday business spending, cross
border payments, global currency solutions, and business
financing.
To learn more about Global Commercial Payments visit
business.americanexpress.com
To learn more about American Express OPEN, which provides
products and services for small businesses and entrepreneurs in the
United States, visit www.OPEN.com
About American Express
American Express (NYSE:AXP) is a global services company,
providing customers with access to products, insights and
experiences that enrich lives and build business
success. Learn more at americanexpress.com and connect
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version on businesswire.com: http://www.businesswire.com/news/home/20170216005189/en/
M Booth for American ExpressAlex Della Rocca,
212-539-3203Alexd@mbooth.comorAmerican ExpressMelissa Filipek,
212-640-8658melissa.j.filipek@aexp.com
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