~To focus on growing market share, increasing operational efficiency, and maintaining current company strengths~
New Delhi, November 30, 2018: Small and Medium-sized Enterprises1 (SMEs) in India are using their advantages – such as size, agility, and innovation – as one of their top three strategies for fueling revenue growth in 2018 even as they look at embracing responsible business practices as a way to attract more customers, the second edition of the American Express® Global SME Pulse2 2018 revealed. The survey further revealed that Indian SMEs, like their global counterparts are going ‘back to basics’ with a focus on growing current market share, increasing operational efficiency and maintaining current company strengths to unlock growth in 2018.
American Express has partnered with Oxford Economics to survey SMEs from around the globe, to understand the threats they face and the business opportunities and strategies they will take advantage of in the year ahead. The research makes for positive reading, showing that Indian SMEs – the backbone of the economy – will focus on core strengths to support confident growth plans in the coming year.
Saru Kaushal, Vice President and General Manager, Global Commercial Services, American Express Banking Corp., India said: “Our research shows that India’s smaller enterprises are primed for success in 2018 by balancing revenue growth with efficiency improvements and leveraging unique attributes of agility, innovation and strong customer relationships. Indian SMEs are now placing equal priority embracing responsible business practices to attract more customers.”
The American Express Global SME Pulse 2018 found that over half (55%) of Indian SMEs point to using size, agility, and innovation as one of their top three strategies for fueling revenue growth in 2018. Respondents (67%) also said that understanding their customers’ changing demands will also help revenue growth. Compared to others in their industry, 80% of Indian SMEs as compared to the global average of 74% said they are effective and efficient in managing day-to-day operations and 63% said they are better at developing and retaining skills and talent as against the global average of 60%. Over half (56%) cited developing and implementing innovations (both to products and services as well as ways of working) and 60% said that they are more effective in applying the latest technology than others in the industry.
“The ‘back to basics’ approach comes at a time when India’s SMEs feel confident about the global economy, and predict strong revenue growth. Indian SMEs are focusing on expense management as much as on increasing revenue. American Express’ customised expense management solutions and corporate card program are designed to help SMEs drive purchase savings and avoid any leakages as all transactions are tracked real time,”Ms Kaushal said.
Growing their share of the current market (60%), increasing operational efficiency (58%) and maintaining current company strengths are the top three activities that Indian SMEs believe will most contribute to their financial performance in the next three years.
Indian SMEs are looking closely at their finance options
In the context of rising borrowing costs, Indian SMEs are taking a hard look at their finance options. Indian SMEs surveyed said accessing finance is harder, compared to their counterparts around the world. 42% said getting access to finance to grow the business is difficult, compared to just a third (33%) in the global average.
Ms. Kaushal further said, “Rising borrowing costs and access to finance is making SMEs to look at alternate options of raising funds to fuel their ambitious growth. Our research shows that just 46% of Indian SMEs say that they are satisfied with the current financing options available to them, highlighting the time-consuming application process, high interest rates and hidden fees as the top ‘pain points’.
According to the survey, the fastest growing SMEs globally (those who expect to grow their revenues by over 10% annually over the next three years) are more likely to use less traditional methods of financing their businesses to fuel growth. While 82% of all SMEs plan to use bank loans next year, only 69% of the fast growing SMEs said that this was the case for their companies – with more of these businesses relying on flexible access to funds and using more innovative ways of raising capital – including public equity and finance sourced from other markets.
At a macro level, 78% of Indian SMEs recognise that SMEs play an important role in their country’s economy and Indian SMEs also foresee high revenue growth over the next three years of 7% a year, along with a 6% annual growth in profits (both very slightly higher than the global average).
Being a ‘responsible business’ is at the heart of Indian SME businesses
Another emerging theme from this year’s report is how SMEs across the globe are also embracing responsible business practices as a way to attract more customers. Worldwide, customers are demanding more ethical and sustainable products and services.
76% of India’s SMEs said there are more business opportunities providing ethical, transparent and local sourced products (slightly above the global average of 73%) and 83% said ethical and sustainable business practices will help improve their company’s growth and profitability as against the global average of 82%.
Corporate Comm India(CCI Newswire)
