A new report on the future of small and medium enterprises (SME) has highlighted a high level of optimism into the next decade.
‘Opportunities and Challenges – The Next Five Years’ by international coaching organisation, Shirlaws also highlights an anticipation of challenges in recruiting and retaining staff and responding to customer demands.
Optimism is high in this sector of the commercial community. It sees itself as sustaining significant growth over the next five years; being the key source of innovation for larger players and anticipates consolidation, with increased mergers and acquisitions – particularly from foreign investors.
- 64 per cent of small companies (20 or fewer employees) believe they will grow at more than 10 per cent per annum
· 42 per cent of medium sized companies (21 to 249 employees) believe they will sustain 10 per cent growth per annum
- 71 per cent of SMEs believe they will be the key source of innovation for larger players
- 52 per cent of SMEs say that larger firms will acquire smaller players with 35 per cent believing foreign firms will acquire local companies
Founder of Shirlaws Global, Darren Shirlaw, said, “The SME sector is a major contributor to our economy and this report shows that it sees itself as the home of innovation and vision that will continue to attract the best talent in the market.
“Almost half of our respondent (49 per cent) also thought the SME sector would grow as more people become their own boss over the next five years.”
Recruiting and retaining talent was clearly perceived as the greatest barrier to growth in the next five years.
When asked what the critical factors were in recruiting and retaining the best employees, having a clear culture and values was cited as the most important factor, followed by training and development opportunities – all of which came above financial rewards.
- 62 per cent chose recruiting and retaining talent as one of their biggest business challenges
- 64 per cent said that having a clear culture and values is the most important factor in helping recruit and retain talent
- 60 per cent chose training and development as having a strong influence on their being successful in the labour market
- 54 per cent said that financial rewards would remain an important factor in recruiting the best talent
Darren Shirlaw explains, “Finding a balance between commercial and cultural issues is essential for achieving profitable growth
“In trying to attract the best talent, an SME can successfully compete with larger corporates - which may offer higher salaries - by developing a culture that provides challenges and responsibility, embraces flexible working practices and policies and values training and development programmes.”
Respondents were asked to choose what they saw as the biggest business challenges in the next five years from a list of 18.
The top five were:
1. Recruiting and retaining talent (62 per cent)
2. Increasing efficiency (46 per cent)
3. Finding new customers (36 per cent)
4. Developing future leaders (33 per cent)
5. Controlling costs (32 per cent)
Finding and retaining clients will be a major focus for SMEs in the next few years as they believe they will have to work hard to anticipate and respond to the changing demands of customers.
They see their customers demanding increased added value from their suppliers but continuing to bring pressure on them to reduce costs.
The top issue for respondents was to identify and sustain best practice in delivering service, followed by managing the cost of delivery and when to implement the correct information technology.
In terms of marketing, the sector expressed frustration ay not having sufficient time or money to adequately market their organisations and believed their critical marketing challenges were to improve target marketing, make more effective use of the internet and improve their customer insight.
Word-of-mouth marketing was prioritised as a key marketing tool.
The most important values they wanted associated with their products and services were ‘trusted’ ‘high value-add’ and ‘innovative’.
- 58 per cent saw customers increasingly looking to them for personal service
- 61 per cent said increasing added-value expectations of customers will continue to impact in their market
- 49 per cent said increasing cost pressures from customers will continue for at least the next five years
- 64 per cent chose improving the targeting of key customers as their top marketing challenge
- 52 per cent chose exploiting word-of-mouth marketing as one of their top marketing issues
- 56 per cent of respondents chose having their brand trusted as a priority
- 64 per cent said that identifying and sustaining best practice in service delivery was a key service issue
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