Survival and expansion biggest challenges for SMEs: World Economic Forum

New research from the World Economic Forum (WEF) and the National University of Singapore Business School revealed that survival and expansion are key challenges for small and medium-sized enterprises (SMEs).

The report highlighted that SMEs are overrepresented when it comes to impacts from the pandemic, as geopolitical tensions including the Russian invasion of Ukraine, the energy crisis and hyper inflation are all putting increasing pressure on SMEs to adapt.

According to the report, “SMEs and mid-sized companies tend to be more financially fragile, have smaller cash buffers, weaker supply chain capabilities and lower uptake of digital tools and technologies. This places them on the front line of various types of turbulence and shocks.”

The report suggested that SMEs with a focus on resilience and agility are better placed to survive and thrive in volatile environments, and organisational change can be a key factor in achieving higher levels of future readiness.

According to Rashimah Rajah, professor at the National University of Singapore and co-lead author of the report, there are significant opportunities for SMEs in leveraging their adaptive capacity.

“SMEs and mid-sized companies have unique strengths in their ability to pivot their business models to be more future ready and, by hiring and developing the right talent, they can mobilise positive internal and external change faster than larger companies. However, to fully realise their potential, they also need the support of policy-makers in recognising their credentials as well as in rewarding sustainability initiatives,” Rajah said.

The report revealed that leadership around organisational change programs to initiate future readiness is critical when it comes to transforming SMEs. WEF also recommended engagement with the wider policy environment including policy-makers, investors and stakeholders to support change.

“Increased resilience can be achieved with a focus on successive stages of maturity, starting with the importance of authentic leadership, followed by the development of talent in the broader organisation, and finally by focusing on the formalisation of the business framework such as orientation, business model flexibility, networks, digital infrastructure and governance,” the report stated.