To help understand these challenges, we conducted a market research survey to garner insights from 618 SMEs across Australia and the USA in November 2023. The aim was to capture a comprehensive view of the hurdles these businesses face in the current climate. SME challenges are multifaceted ranging from financial constraints to technological advancements, and from market competition to business planning difficulties.
In this blog we will delve into our take on the findings and what businesses can to overcome these challenges.
Technology proved to be unanimously the biggest challenge for SMEs, especially among smaller businesses with 0-25 employees.
A staggering 89% of businesses sometimes, if not always, find integrating new technology a challenge. Add that to the fact that 44% say their tech infrastructure needs improvement.
These numbers show that SMEs are in critical need of guidance when 50% of them say digital transformation is integral to their success.
It seems many SMEs know where they need to go, but don’t yet have the tools they need to get there. Many understand the importance of getting tech right, to help give them the competitive advantage they need, without the resources to do it properly.
Getting your technology right can improve efficiencies and help lower costs in uncertain times. We suggest finding some tech-savvy people to help you streamline your tech stack and embed software that will have a transformative effect on your business before market uncertainty becomes a problem.
Most software companies also have implementation services where they can help transfer your current processes over to the new tech and train your whole team up at the same time. These services would be well worth the extra dollars for small businesses that struggle with the implementation themselves. Empiraa now has a full-service solution - check it out here.
Only 33% of businesses surveyed are very satisfied with their current team. If emojis were part of our website style guide, a shocked face would go at the end of that statement.
It is harder than ever for businesses to hire with 70% saying it’s sometimes or always a challenge. The post-Covid workforce is divided on the work-from-home debate and many businesses are unsuccessfully trying to push employees back into pre-2020 conditions when people now understand the benefit of flexible working arrangements. This is then having a direct impact on employee retention and more businesses are in the market for new talent.
Most people have a strong desire for certain flexibility, meaning that your business's inability to be flexible could mean the difference between getting the candidate that you want for the job or not.
Company culture is the hot topic right now with the majority of businesses focusing their attention here. Good culture starts with having the right people so your team can one as one synergic unit.
And so, many businesses face this ongoing dilemma of hiring the right people and building up great teams, so that they can contribute to good team morale and culture.
We don’t have a clear answer for how to overcome these specific challenges. Hopefully the hiring market will settle down soon, but consider what benefits you could offer staff outside of salary including flexible work arrangements.
Alternatively, instead of rushing to fill roles and risk getting the wrong people, look to hire temporary contractors or freelancers to assist with workload so that you can have the space to make the right decision around the best hire for your team.
Surprisingly 40% of businesses surveyed don’t have dedicated marketing teams. The breakdown was that 40% have in-house marketing, 19% use outsourced help, 37% don’t have any marketing but plan to and 3% had no plans to get marketing assistance.
We asked Kavita Herbert, CEO of Backbone what she thought of the numbers:
“I found it very interesting that 53% of businesses recognize that Social Media is the leading marketing tool & yet over 60% don’t have a dedicated in-house marketing team to help with this! Social Media is cluttered with very few credible experts to help navigate this space so it’s no surprise that nearly 40% find strategy development challenging!”
The biggest hurdles in marketing for businesses were a lack of effective strategy and a lack of expertise. With only 40% having internal teams focused on strategy and execution, it's clear many more businesses need to think about the potential benefit having an internal marketing team could bring.
Marketing is a subjective field and one that many small to medium business are overlooking. When things like brand awareness and social engagement don’t directly correlate to revenue, it can be challenging for businesses to justify the investment.
As a marketing professional writing this article, I will say that the intangible benefit that internal marketing can have in the short term, will down the track turn into tangible results in the form of customer acquisition and increased revenue. It just requires some time and faith, for the results to pay off.
As business planning specialists at Empiraa, we were especially interested in seeing the results of how SMEs were faring with their planning. We were pleasantly surprised to see that 70% of businesses are currently satisfied with their business plan. An additional 14% are very satisfied with their plan.
Teams are checking in regularly with half of businesses surveyed doing it monthly. 83% of businesses have some sort of contingency plan in place for business disruptions, and a further 14% are in the process of building one. All the signs of businesses well placed to meet market challenges.
67% of businesses say goals and KPIs are important, if not critical, to their success. But alarmingly, 33% of businesses felt neutral about the importance of goals and KPIs to business success. Of that number was 40% of all business owners surveyed.
This is an interesting perspective for business owners to have, given that only 29% of owners were happy with the current visibility they had over their business. The surefire way to resolve these visibility issues is to have a plan that everyone in the business is across. It is especially important as business owners and founders to get the vision and goals of where you want to go, out of your head and empower your team to help move your business in that direction. It is only once an action plan is created on how to reach your goals, that you can execute those dreams into reality.
57% of business owners also said that unforeseen market changes were the biggest risk for planning. Using a plan management software like Empiraa, allows you to create a plan that is agile and can adapt to these changing market conditions, so you can course correct promptly.
42% of SMEs are measuring their success by market share. Another 28% say they measure by customer satisfaction.
63% of businesses surveyed feel the need to diversify their products/services in the near future and an additional 15% say they need to diversify urgently. The breakdown was consistent across all business sizes we surveyed (1-25, 26-50, 51-100 and 100+). This could be because businesses need to stay competitive and adapt with market fluctuations which most find a significant challenge.
In a stricter economic time, revenue surely has something to do with this need. 32% of businesses say economic fluctuations are their biggest external challenge. To help offset these challenges, businesses should look to how they can use technology to streamline their processes as we mentioned earlier. Start thinking about adding additional revenue streams into your business to get ahead of the competition.
We hope that by reporting on these findings, businesses can feel a lot less alone in the challenges they are facing. There were strong trends among all categories which show the work that needs to be done.
Ultimately the way to deal with any challenge is to plan how your business is going to mitigate the risks and adapt to market fluctuations in the future. Having a solid plan that can stay agile will keep you on track and in the best position to face uncertain times.
The full report can be downloaded here. We believe that by sharing these results with you, that we can help the industry as a whole tackle these challenges head-on and find solutions that benefit everyone.
