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Categories
| SMEs expect to win market share during downturn |
| Management | |||
| Written by Emily Tan | |||
| Monday, 25 May 2009 10:34 | |||
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According to an Economist Intelligence Unit (EIU) survey, 65% of the respondents were confident that their market share would increase by the end of the recession and 73% expected revenues to increase. However, only 37% expected their companies to do better this year than last. This was in line with the EIU forecast, which predicted a contraction of the global gross domestic product by 1.8% in 2009 and only a modest expansion of 1.9% in 2010. The EIU online survey, Understanding growth priorities at small and medium-sized businesses, was conducted last month and polled 328 executives from SMEs worldwide. Most of the respondents were C-suite executives, department heads and managers. The survey was sponsored by IT giant Verio and had participants from North America (29%), the Asia-Pacific (29%), Europe (29%) and other parts of the world (14%). EIU said the respondents’ optimism was surprising, if not overly inflated, given their sobering views on the short-term outlook. Furthermore, almost half of the respondents said their local government was either “unsupportive” or “not at all supportive” of their business, and 39% reported the same of national governments and lenders. Giving the main reasons for the lack of support, respondents said “mid-size businesses do not attract enough attention” (30%), “the public at large perceives large companies as more important” (28%) and “small- and mid-size businesses have fewer advocates” (24%). In Malaysia, one of the main problems faced by SMEs is access to capital. In an interview with The Edge Financial Daily in mid-May, former deputy governor of Bank Negara Malaysia (BNM) Tan Sri Dr Lin See Yan said businesses’ lack of access to capital would slow down the country’s economic recovery. “If the situation is not rectified, there is a danger of us falling into a liquidity trap, a situation where the lower cost of borrowings is not leading to an increase in access to capital,” he added in the report published on May 18. The EIU study identified a possible disconnect in strategy that might hamper the growth of SMEs when the economy improves: While most of the respondents cited “reaching new customers” as the biggest obstacle to growth, only one-third named customer service as a means to prepare for economic recovery. Instead, 56% preferred to actively acquire customers by entering unfamiliar geographical markets and 65% planned to do so when the economy improves. About half of the respondents also listed marketing as a critical way to prepare firms for a recovery. Such data suggested that SMEs were not retrenching but actively pursuing new growth opportunities. This should not be a problem as they appeared to have little trouble attracting and retaining skilled people, with only 6% expecting a fall in the quality of talent in their organisations when the economy improves. In fact, 38% expected the quality of talent in their organisations to rise, even with increased competition for top talent. This article appeared on the Management page, The Edge Financial Daily, May 25, 2009.
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