Canadian SMEs are shifting strategies to drive growth amid declining forecasts
TORONTO, Sept. 18, 2019 /CNW/ - Canadian small and medium-sized enterprises (SMEs) are forecasting slower revenue and profit growth this year, according to the third annual American Express Global SME Pulse Survey.
When asked about revenue projections, only 6 per cent of SMEs forecasted a 5.1-10 per cent growth rate, a significant decline from 2018 where 28 per cent of respondents forecasted the same rate. Similarly, SMEs are forecasting lower profit margins. Last year, 22 per cent of SMEs reported a 5.1-10 per cent net profit margin and in 2019 that number dropped to only 5 per cent.
Despite these lower forecasts, the majority of SMEs (78 per cent) believe their role is important to the overall health of the economy. They also remain optimistic about the state of global and local economies and are putting strategies in place to drive revenue growth, increase efficiency and boost bottom lines.
Adapting to meet ever-changing customer expectations
According to the survey, 61 per cent of SMEs say their customers are demanding new or tailored products and services, and 61 per cent also agree that understanding customer demands is important for revenue growth. While adapting to these evolving needs can be challenging, businesses are making it a long-term priority. In fact, 71 per cent of SMEs agree they will work hard to address the challenges associated with changing demands over the next three years.
"From declining profit margins to shifting customer demands, today's SMEs face pressures that are no doubt putting a strain on their business," said Paul Roman, Vice President and General Manager of Global Commercial Services, American Express Canada. "Despite these challenges, Canadian SMEs are resilient and it's clear from our study they're staying nimble and making strategic shifts to drive future growth."
Investing in technology to boost bottom lines
Canadian SMEs are looking to harness the power of new technology to boost their bottom lines. According to the survey, 40 per cent of SMEs agree using technologies to redesign products and services is important for revenue growth. Likewise, just under two-thirds (62 per cent) say digital technology provides them with new business opportunities.
The survey also found that using new technology to understand customer needs is a growing priority for SMEs. While only 27 per cent of SMEs say they use technology and tools to analyze customer data today, over half (51%) agree they plan to leverage them in the next three years.
Improving operational efficiency with new tools
SMEs are also focused on boosting their bottom lines with new strategies to increase operational efficiency. In the long-term, 61 per cent of SMEs agree they are implementing cost-saving programs to maximize efficiency over the next three years.
Canadian SMEs are also relying on technology to help drive efficiencies. In fact, 38 per cent of SMEs say they plan to prioritize technology to modernize processes and 35 per cent agree they plan to incorporate workplace productivity tools, both over the next three years.
While it is clear SMEs are facing challenges, they are making strategic changes to meet evolving customer needs, harness new technology and improve efficiency to boost revenue this year and thrive in 2020 and beyond.
About Global SME Pulse Survey
In October and November 2018, Oxford Economics surveyed senior executives at 3,000 SMEs ranging in size from 10 to 250 employees across 12 countries and 16 industries. Telephone interviews were used to explore opportunities and threats, business prospects, strategies, investments and how SMEs could be better supported by changes to regulation, financing and government support.
About American Express Global Commercial Services
Through our Global Commercial Services division, American Express offers powerful backing and support that helps companies of all sizes gain financial savings, control and efficiency. We provide a suite of payment and lending products, solutions for travel and everyday business spending, cross border payments, global currency solutions, and business financing.
To learn more about products and services for small businesses and entrepreneurs visit American Express Business Cards.
About American Express in Canada
American Express is a global services company, providing customers with access to products, insights and experiences that enrich lives and build business success. American Express was established in Canada in 1853 and offers a variety of consumer and business products. Learn more at americanexpress.ca and connect with us on Facebook, Twitter, YouTube and Instagram.
SOURCE American Express Canada
Alex Ford, [email protected]
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