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%).
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 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 with us on facebook.com/americanexpress, foursquare.com/americanexpress, linkedin.com/company/american-express, twitter.com/americanexpress, and youtube.com/americanexpress.
Key links to products, services and corporate responsibility information: charge and credit cards, business credit cards, Plenti rewards program, travel services, gift cards, prepaid cards, merchant services, Accertify, corporate card, business travel and corporate responsibility.