It is no secret Canadian small and medium-sized enterprises (SMEs) face barriers to growth regularly. With external pressures from new market competition, ever-changing consumer demands and disruptive technologies, SMEs across Canada are feeling the pressure to keep up.
Despite these hurdles, they remain optimistic when it comes to the future of their businesses, according to the third annual American Express SME Pulse Survey, a global study to investigate how today’s SMEs are adapting to disruption and economic uncertainty. In fact, the report showed promising trends. While last year, a mere 6 percent of SMEs forecasted a 5.1-10 percent growth rate, this survey shows a strong increase to 32 percent of SMEs anticipating this level of growth over the next few years. This range of growth, while moderate, still demonstrates SMEs are on a path towards achieving higher revenue goals.
Overall, it is clear SMEs are taking a proactive approach to overcome challenges to boost their bottom lines. To do this, they’re shifting their strategies and focusing their efforts in three key areas: meeting customer expectations, investing in new technologies and improving operational efficiency to drive growth.
Adapting to meet consumer needs
As options for consumers continue to expand, so do their expectations. For business owners, especially those in the early stages of growth, adapting to these demands isn’t always easy. Despite this, tackling these challenges is considered a top priority, with 71 percent of SMEs agreeing to work hard to address these difficulties over the next few years.
The majority of SMEs (61 percent) recognize that better understanding customers’ needs directly impacts their business success. This shift in strategy, according to the report, is more important today than ever before as those surveyed agreed their current customer base is looking for new or tailored products and services. Whether it’s investing in new product development, more personalized services or better mobile options, SMEs are staying nimble to meet these ever-changing demands, and in turn, are better prepared to adapt in order to grow.
Boosting bottom lines with new technologies
It goes without saying that the advent of innovative technology is providing countless industries with new opportunities for growth. According to the survey, SMEs recognize how important technology adoption is to business success, with nearly two-thirds (62 percent) in agreement that it opens the doors to new business opportunities.
It’s clear the majority of SMEs are feeling the pressure to stay competitive, but there are varying results when it comes to those who are currently leveraging new technologies to their advantage. In fact, less than half of SMEs surveyed say they consider applying technology to redesign products and services and one third say they are ineffectively applying the latest technology compared to others in their industry.
Despite this, SMEs are working hard to address these challenges and are shifting their strategies to better set themselves up for success. An overwhelming majority of SMEs who believe applying the latest technology is a current challenge say they plan to work hardest to address this over the next three years. It’s a clear upward trend; while this year’s results show only 27 percent of SMEs are using technology and tools to analyze customer data, over half agree they plan to leverage these tools in the near future.
Increasing operational efficiencies to drive growth
Most business owners understand why improving operational efficiencies can be a solid foundation for growth. Optimizing payments and improving back-end office functions like finance and accounting can have a direct impact on profit margins. With payment solutions from American Express, businesses can maximize their cash flow with up to 55 interest-free days to pay for expenses, which can reduce the funding gap between accounts payable and receivables to enable businesses to put their cash to work in the interim and invest in driving growth.
From the report, it’s clear Canadian SMEs understand how important it is to invest in new strategies to increase operational efficiencies in order to promote long-term growth. In fact, 61 percent say they currently plan to implement cost-savings programs to maximize efficiency.
On top of using technology to better understand customer needs, SMEs are turning to new tech tools to lower costs and boost efficiency. Thirty-eight percent of SMEs say they plan to invest in tech to modernize processes and optimize efficiencies over the next few years. What’s more, 35 percent say they plan to incorporate workplace productivity tools.
Even though Canadian SMEs faced lower growth forecasts last year, the next few years show promising upward trends. It’s clear they are committed to overcoming challenges and by making strategic changes to meet evolving customer needs, leveraging new technology and increasing operational efficiency, SMEs will continue to succeed for years to come.
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