about the survey · having made it through the 2008-09 recession, canadian smes were more likely...

About the survey

In October 2010, Forbes Insights conducted a survey of small and medium-sized enterprises (businesses with 250 or fewer employees) in Canada and five other countries (China, Italy, Singapore, South Africa, and the U.K.). In total, 315 Canadian SMEs participated in the survey, including representative samples of micro businesses (under 10 employees), small businesses (10-49 employees), and medium-sized businesses (50-250 employees). The survey was done in association with the Certified General Accountants Association of Canada (CGA-Canada), the professional association of certified general accountants in Canada; ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants; and CNDCEC, the professional body for certified accountants in Italy.

The aggregated findings are available in the study: Small and Medium-Sized Enterprises: Rebuilding a Foundation for Post-Recovery Growth.

2 © Copyright Forbes 2010

Key findings: revenue performance

Having made it through the 2008-09 recession, Canadian SMEs were more likely than SMEs in three of the five other countries to experience revenue growth over the past year. Overall, 40% of Canadian SMEs said current revenue was higher than it was a year ago, with medium-sized businesses the most likely to be growing. Looking ahead, 56% of Canadian SMEs expect higher revenue in the next year, 7% anticipate lower revenue, and 37% expect it to stay about the same. Profitability rates follow revenue. Today, 35% of Canadian SMEs said profitability was higher than it was 12 months ago, and 17% said it was lower. Over the next year, 54% expect profitability to be higher, and just 9% see it as lower.


How does your current revenue compare to what it was 12 months ago? Where will it be in 12 months?

15%

13%

41%

27%

37%

43%

5%

15%

2%

2%

0% 100%

12monthsfromnow

Today

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower

8%

10%

6%

5%

14%

13%

23%

21%

37%

19%

46%

27%

33%

31%

37%

42%

24%

43%

28%

28%

16%

29%

13%

15%

9%

10%

4%

5%

3%

2%

0% 100%

U.K.

SouthAfrica

Singapore

Italy

China

Canada

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower

How does your current revenue compare to what it was 12 months ago? (by country)


*

*Withinthesurvey,theterm“significantly”wasdefinedasanincreaseordecreaseof20%ormore.

Key findings: contributors to growth

Additional hiring will drive revenue for growing Canadian businesses. More than 30% of SMEs (31%) that anticipate revenue growth over the next 12 months said hiring additional staff would contribute to their growth. That was followed by introducing new products and services (28%), and increased sales of existing products and services (27%). In addition, 30% of medium-sized businesses said an increased online presence will fuel their revenue growth, and 28% said the growth would come from a new corporate ownership structure.


What factors do you believe will contribute to this increase in revenue in the next 12 months?

28%

18%

13%

21%

21%

21%

18%

30%

23%

26%

26%

5%

8%

16%

12%

18%

25%

34%

21%

31%

30%

38%

6%

16%

13%

20%

13%

11%

18%

26%

26%

29%

27%

13%

14%

14%

18%

18%

19%

24%

25%

27%

28%

31%

0% 50%

Newcorporateownershipstructure

Enteringnewgeographicalmarkets(internaQonal)

RaisingaddiQonalcapital(debtorequity)

Enteringnewgeographicalmarkets(domesQc)

Increasedoutsourcing

Strategicpartnerships

Increasingqualityofproductorservice

Increasedonlinepresence

IncreasedsalesofexisQngproducts/services

Introducingnewproducts/services

HiringaddiQonalstaff

CanadaSMETotal

Micro

Small

Medium


Key findings: cash flow management

Despite rising revenue, cash flow issues are is still a challenge for many Canadian SMEs. Overall, 30% of Canadian SMEs said it was harder to manage cash flow today than it was a year ago, 24% said it was easier, and 44% indicated it was about the same. Canadian micro businesses appeared to be the more susceptible to cash flow challenges; 35% said managing cash flow was harder, and 20% said it was easier.


Is it easier or harder today to manage your company’s cash flow (cash position) than it was 12 months ago?

29%

24%

20%

24%

45%

44%

43%

44%

25%

29%

35%

30%

1%

4%

2%

2%

0% 100%

Medium

Small

Micro

CanadaSMETotal

Easier

Aboutthesame

Harder

Don’tknow


Key findings: cash flow challenges

Expense control is one of the biggest cash flow challenges Canadian SMEs are facing. While a slowdown for receivables was a primary concern in other countries, Canadian SMEs were more concerned with handling their expenses. Overall, their top three cash flow challenges were higher business expenses (29%), taxes (29%), and difficulty cutting expenses (22%). Medium-sized businesses had a bigger concern than other Canadian SMEs with inventory turns. Micro businesses were more affected by lower revenues.


12%

17%

11%

16%

22%

9%

17%

21%

27%

24%

11%

11%

10%

14%

12%

20%

19%

22%

30%

28%

8%

6%

12%

10%

6%

22%

26%

24%

28%

34%

10%

11%

11%

13%

13%

18%

21%

22%

29%

29%

0% 50%

Difficultyinsecuringfinancing

Risinginterestrates

Reducedsalespipeline

Lossofloyalcustomers

Slowerinventoryturns

Slowerpayingornon‐payingcustomers

Lowerrevenues

Difficultycu^ngexpenses

Taxes

Higherbusinessexpenses

CanadaSMETotal

Micro

Small

Medium

What were the greatest cash flow challenges your business faced in past 12 months?


Key findings: anxiety about survival

A significant number of respondents were anxious that they don’t have a strong enough capital position to survive another downturn. Asked whether or not they felt they had adequate cash reserves to weather another financial crisis, 31% of Canadian SMEs said they did not. However, that rate is lower than SMEs in four of the five other countries in the survey. Other findings further highlight their concerns: •  65% of Canadian SMEs said their market segment is more competitive

than ever •  54% were concerned about their company’s long-term survival •  46% indicated they believe that a lack of capital has hindered their ability

to succeed


Please rate your level of agreement with the following statements about your small or medium-sized enterprise.

16%

21%

23%

16%

30%

21%

42%

43%

11%

21%

9%

10%

34%

24%

20%

21%

9%

21%

6%

10%

0% 100%

Lackofcapitalhashinderedourcompany’sabilitytosucceed.

I’mveryconcernedaboutmycompany’slong‐termsurvival.

OurmarketsegmentismorecompeQQvethaneverbefore.

Wehaveadequatecashreservestoweatheranotherfinancialcrisis.

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree


Key findings: growth inhibitors and enablers

Competition, financing, and taxes may be hindering Canadian SMEs’ ability to grow. Survey respondents were asked if different factors inhibited or enabled their prospects for growth over the next two years. Among Canadian SMEs, 44% indicated they believed domestic competition hindered their chances to grow, while just 13% thought it enabled growth; 40% felt availability of financing hindered growth (21% enabled), and 38% said taxes hindered growth (20% enabled).


Looking ahead to the next 24 months, what will be the impact of the following factors on your prospects for growth?

28%

30%

34%

43%

24%

20%

21%

13%

25%

26%

26%

27%

29%

38%

40%

44%

0% 50%

Pastinvestmentdecisions

Availability/affordabilityoftechnology

Availabilityofqualifiedstaff

Consumerconfidence

Canadiangovernmentpolicies/regulaQons

Taxes

Availabilityoffinancing

DomesQccompeQQon

Hindergrowth

Enablegrowth


Key findings: financing performance

Even during the height of the 2008-09 recession, most Canadian SMEs that applied for outside financing got most of the capital they required. Overall, 78% of SMEs said they applied for financing over the past 24 months. Of those, 64% said they secured all or most of the funding they sought, 25% said they received some, and 11% received none.


Thinking of all your financing needs over the past 24 months, which of the following best describes the outcome for the financing (regardless of type) that you actively sought?

11%

25%

36%

28%

0% 50%

Wedidnotsecureanyofthefinancerequired

Wesecuredonlyalibleofthefinancerequired

Wesecuredmostofthefinancerequired

Wesecuredthefullamount


Key findings: access to financing

Some Canadian SME respondents said they’re starting to see easing of their financing markets, but more see no change. 32% said their ability to secure financing improved over the past year, while 15% said it worsened, and 46% said it remained about the same. The outlook for the next year is even better: 44% of Canadian SMEs anticipate their ability to secure financing will improve. Just 10% expect it to be worse, and 39% foresee no change.


Over the past 12 months, did your company’s ability to secure financing improve, worsen or remain the same? How will it be in the next 12 months?

11%

8%

33%

24%

39%

46%

6%

13%

4%

2%

7%

7%

0% 100%

12monthsfromnow

Today

Significantlyimproved

Improved

Remainedaboutthesame

Worsened

Significantlyworsened

Notseekingfinancing


Key findings: debt financing

Secured bank loans are the most common form of debt financing Canadian SMEs use today, and that will stay consistent over the next two years. However, a disproportionate number of Canadian businesses today have turned to personal credit cards to fund their operations—often a risky substitute when other forms of financing are not available. Overall, the top three forms of debt financing Canadian SMEs use today are secured bank loans (31%), personal credit cards (30%), and business credit cards (28%). Over the next two years, secured bank loans (29%) are expected to be most prevalent, followed by revolving lines of credit (25%), and business credit cards (23%); personal credit cards drop to seventh place at 16%.


Types of debt financing used

14%

15%

15%

17%

18%

14%

14%

19%

15%

23%

25%

16%

29%

14%

16%

17%

17%

19%

19%

20%

22%

24%

28%

28%

30%

31%

0% 40%

Corporatebondissue

Factoring/invoicediscounQng

Governmentloans/creditinsuranceguarantees

Loansfromfriends/family

Securedbankoverdrae

Unsecuredbankoverdrae

Tradecreditfromsuppliers

Governmentgrants

Unsecuredbankloan

Businesscreditcards

Revolvinglineofcredit

Personalcreditcards

Securedbankloan

Today

Overnext24months


Key findings: goals for financing

Canadian SMEs want to use debt and equity financing to hire additional staff. While SMEs in other countries may be looking for working capital, SMEs in Canada are focused on staffing and expansion. In the U.K., for instance, 48% of SMEs said they want to use debt financing for working capital. In Canada, the top three things they expect to use debt financing for over the next two years are: hiring additional staff (25%), domestic expansion (24%), and new technology (24%). Those seeking equity have similar goals.


Looking ahead to the next 24 months, what will you be using financing for?

9%

14%

13%

17%

16%

14%

19%

22%

17%

22%

28%

31%

8%

12%

12%

14%

14%

17%

20%

20%

23%

24%

24%

25%

0% 40%

Tradefinancing

Research&development

Foreignexpansion

AcquisiQons

Plantandequipment

RefinancingexisQngdebt

Expandingmanufacturing/servicecapacity

Workingcapital

Customerfinancing

DomesQcexpansion

Newtechnologyinvestment


Debt

Equity


Key findings: equity financing

Medium-sized businesses in Canada are much more likely to consider equity financing than are either small businesses or micro businesses. Looking ahead to the next two years, 33% of medium-sized businesses (50-250 employees) said they plan to seek angel investments, and 29% will seek venture capital or private equity. They plan to use equity primarily for technology investment (41%), hiring additional staff (29%), domestic expansion (27%), and foreign expansion (24%).


What kind of equity financing do you plan to seek In the next 24 months?

What will you be using this equity financing for? (medium-sized businesses only)

8%

12%

24%

9%

23%

9%

20%

24%

36%

19%

25%

14%

20%

25%

26%

29%

30%

33%

0% 50%

IPOorpublicstockoffering

Equityinvestmentfromfriends/family

ReinvesQngprofitsinthebusiness

Equityinvestmentfromventurecapitalorprivateequityfirm

Equityinvestmentfrompersonalincome/savings

Equityinvestmentfromangelinvestorsorsimilar"informal"investors

CanadaMedium

CanadaSmall

CanadaMicro

11%

15%

19%

19%

20%

21%

24%

27%

29%

41%

0% 50%



Workingcapital

Plantandequipment

AcquisiQons

Customerfinancing

Foreignexpansion

DomesQcexpansion




Key findings: lessons learned

Canadian SMEs in the survey said the recession essentially forced them to become better businesses. Overall, 64% said they are planning more effectively, and an identical 64% agreed they are smarter today about running their businesses than they were before the recession. 68% said they feel they are in a stronger position today than they were prior to the downturn.




20%

25%

21%

48%

49%

43%

10%

11%

10%

16%

11%

18%

6%

4%

8%

0% 100%

Survivingtherecentrecessionmadeourbusinessstronger

IamsmarteraboutrunningmybusinesstodaythanIwasbeforetherecession

TherecentglobalrecessionputaddiQonalpressureonourbusinesstoplanmoreeffecQvely

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree

Key findings: advice profiles

Looking at how SMEs use outside advice, four profiles emerged based on an SME’s need for confidence in their business decisions and their trust of outside advisors. •  Community Networkers: Community-based businesses that try to get

maximum value from their advice relationships. They work with professionals, and also leverage trade associations and chambers of commerce.

•  Confidence Seekers: SMEs that value advice mostly from highly trusted authorities, gaining confidence from the expert’s experience and insight. They also trust the government for advice more than do other SMEs.

•  Skeptics: These SMEs don’t find themselves reassured by advice. They are only confident in formally qualified advisors, but may be just as happy not to seek advice at all.

•  Go-It-Aloners: This group takes almost no advice, and they don’t go out of their way to find outside counsel.

Compared to other countries, Canadian SMEs are more likely to be either Community Networkers or Go-It-Aloners.


Methodology

The information in this report is based on the results of a survey conducted online in October 2010 by Forbes Insights in association with CGA-Canada, ACCA, and CNDCEC.

Forbes insights received responses from 315 owners and decision makers at small and medium-sized enterprises in Canada. In total, 1,777 responses were received from SMEs in six countries: Canada, China, Italy, Singapore, South Africa, and the U.K.

For purposes of this study, SMEs were defined as businesses having up to 250 employees. The sample included SMEs of three sizes: micro businesses (those with fewer than 10 employees) made up 36% of Canadian respondents; small businesses (10-49 employees) were 35%; and medium businesses (50-250 employees) were 30%.


About the survey

In October 2010, Forbes Insights conducted a survey of small and medium-sized enterprises (businesses with 250 or fewer employees) in China and five other countries (Canada, Italy, Singapore, South Africa, and the U.K.). In total, 257 Chinese SMEs participated in the survey, including representative samples of micro businesses (under 10 employees), small businesses (10-49 employees), and medium-sized businesses (50-250 employees). The survey was done in association with ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants; the Certified General Accountants Association of Canada (CGA-Canada); and CNDCEC, the professional body for certified accountants in Italy.




Chinese SMEs outpaced other SMEs surveyed in revenue growth over the past year, and their future outlook is even brighter. Overall, 60% of Chinese SMEs said current revenue was higher than it was a year ago, 16% indicated revenue was lower, and 24% said it was about the same. Medium-sized businesses were the most likely to have grown—70% said revenue was higher and just 6% said it was lower. Looking ahead, 77% of Chinese SMEs expect higher revenue in the next year, 7% anticipate lower revenue, and 16% expect it to stay about the same.



8%

10%

6%

5%

14%

13%

23%

21%

37%

19%

46%

27%

33%

31%

37%

42%

24%

43%

28%

28%

16%

29%

13%

15%

9%

10%

4%

5%

3%

2%

0% 100%

U.K.

SouthAfrica

Singapore

Italy

China

Canada

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower



17%

14%

60%

46%

16%

24%

7%

13%

3%

0% 100%

12monthsfromnow

Today

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower

*


Key findings: top concerns

Despite strong growth, SMEs in China are concerned about the battle for customers and more aggressive competition. Asked about their top concerns over the past year, Chinese SMEs, like SMEs in the other countries surveyed, cited finding new customers and prospects (36%). However, it was closely followed by increased competition, cited by 34% of Chinese respondents, and finding and retaining qualified employees, chosen by 30% of Chinese SMEs.


Over the past 12 months, what have been the top challenges your SME has faced? (select three)


13%

16%

17%

17%

20%

23%

27%

30%

34%

36%

0% 40%

Determininganappropriategrowthstrategy

RetainingexisQngcustomers

Findingfinancing

ImprovingmarkeQng

Managingcashflow/maintainingcashposiQon

Economicuncertainty

Maintainingormaximizingprofitmargins

Findingandretainingqualifiedemployees

IncreasedcompeQQon

Findingnewcustomersandprospects


Chinese SMEs are focusing on product/service innovation to fuel their growth next year. Asked what factors they believe will contribute to their increase in revenue over the next 12 months, SME respondents turned to increasing the quality of products/services (53%), introducing new products/services (52%), and increased sales of sales of existing products/services. In addition to product sales, medium-sized SMEs in China expect growth to come from strategic partnerships and domestic expansion.




11%

22%

24%

24%

21%

16%

21%

37%

40%

43%

43%

54%

56%

5%

9%

9%

11%

14%

26%

28%

24%

29%

35%

38%

48%

50%

6%

3%

9%

3%

6%

23%

23%

31%

34%

23%

40%

57%

54%

7%

12%

14%

14%

15%

22%

25%

29%

33%

35%

40%

52%

53%

0% 60%

MergersandacquisiQons


ChangeoflocaQon/increasingofficesize











ChinaSMETotal

Micro

Small

Medium


For Chinese SMEs, strong growth can signal cash flow concerns. Overall, 31% of Chinese SMEs said it was harder to manage cash flow today than it was a year ago, and 15% said it was easier; 53% indicated it was about the same. Interestingly, Chinese medium-sized businesses are having the more difficult time, with 38% finding cash flow management harder.




13%

16%

18%

15%

49%

57%

51%

53%

38%

27%

29%

31%

1%

2%

1%

0% 100%

Medium

Small

Micro

ChinaSMETotal

Easier

Aboutthesame

Harder

Don’tknow


Higher expenses and slower receivables are putting the greatest strain on cash flow at Chinese SMEs. Asked to select their greatest cash flow challenges over the past year, 40% of all Chinese SMEs cited higher business expenses. Other top cash flow concerns were slower paying or non-paying customers (38%), lower revenue (23%), and difficulty securing financing (21%).




10%

19%

15%

20%

15%

18%

20%

9%

43%

46%

11%

12%

13%

18%

22%

21%

22%

28%

34%

39%

16%

10%

20%

12%

24%

20%

18%

33%

39%

33%

12%

14%

15%

18%

20%

20%

21%

23%

38%

40%

0% 50%


HigherdiscounQng/chargingless

Taxes

Morestringentpaymenttermsfromvendors

Slowerinventoryturns

Longersalescycle


Lowerrevenues



ChinaSMETotal

Micro

Small

Medium


Half of Chinese respondents are anxious that they don’t have a strong enough capital position to survive another downturn. Asked whether or not they felt they had adequate cash reserves to weather another financial crisis, 50% of Chinese SMEs said they did not, while 44% agreed they did. Medium-sized businesses appeared the least anxious—58% agreed they had adequate cash reserves to weather another financial crisis.


We have adequate cash reserves to weather another financial crisis.


6% 38% 6% 42% 8%

0% 100%

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree


Access to capital for SMEs has been constrained in China—54% of Chinese SMEs said they secured all or most of the finance they sought over the past two years. While Chinese SMEs may be experiencing the most revenue growth, access to capital does not necessarily follow suit; the Chinese banking structure is not as friendly to lending to smaller enterprises. On top of that, the high growth rates of these companies could be pressuring their cash flow. Of those Chinese SMEs that sought financing over the past 24 months, 9% said they secured the full amount, 45% secured most, 35% secured a little, and 11% received none.




11%

35%

45%

9%

0% 50%






Chinese SME respondents see some easing of their financing markets. Overall, 31% said their ability to secure financing improved over the past year, while 18% said it worsened, and 48% said it remained about the same. The outlook for the next year is much more positive: 48% of Chinese SMEs anticipate their ability to secure financing will improve, 11% expect it to be worse, and 38% foresee no change.




7%

4%

41%

27%

38%

48%

9%

15%

2%

3%

3%

3%

0% 100%

12monthsfromnow

Today


Improved


Worsened


Notseekingfinancing


When it comes to debt financing, Chinese SMEs today are using secured bank loans, but loans from friends and family are also important. Overall, the top forms of debt financing Chinese SMEs use today are secured bank loans (33%), personal credit cards (26%), unsecured bank loans (24%), and loans from friends/family (22%). Those are also among the main debt vehicles Chinese businesses intend to seek over the next two years, although some may put their personal credit cards away for business credit cards.




8%

9%

13%

6%

11%

17%

16%

23%

17%

21%

20%

17%

32%

6%

7%

9%

10%

12%

13%

14%

16%

16%

22%

24%

26%

33%

0% 40%

Corporatebondissue

Securedbankoverdrae





Governmentgrants

Businesscreditcards



Unsecuredbankloan

Personalcreditcards

Securedbankloan

Today Overnext24months


Chinese SMEs want to use debt and equity financing to build capacity and upgrade their corporate infrastructure. More than half of Chinese respondents (52%) said they plan to use debt financing to expand their manufacturing/service capacity. That was followed by new technology investment (43%), working capital (36%), and plant and equipment (34%). These businesses appear to have little appetite for foreign expansion. Those seeking equity have similar goals.




10%

14%

11%

12%

16%

28%

24%

36%

34%

38%

42%

58%

6%

8%

9%

10%

20%

22%

28%

30%

34%

36%

43%

52%

0% 70%

Foreignexpansion

AcquisiQons


Tradefinancing

Customerfinancing



DomesQcexpansion

Plantandequipment

Workingcapital



Debt

Equity


Chinese SMEs in the survey said the recession essentially forced them to become better businesses. Overall, 72% said they are planning more effectively, and 80% agree they are smarter today about running their businesses than they were before the recession. 73% feel they are in a stronger position today than they were prior to the downturn.




12%

11%

9%

61%

69%

63%

3%

4%

5%

20%

14%

20%

4%

2%

3%

0% 100%




Stronglyagree

Agree

Don’tknow

Disagree

StronglyDisagree

Key findings: financial management






Compared to other countries, Chinese SMEs are most likely to be Skeptics.


Methodology

The information in this report is based on the results of a survey conducted online in October 2010 by Forbes Insights in association with ACCA, CGA-Canada and CNDCEC.

Forbes insights received responses from 257 owners and decision makers at small and medium-sized enterprises in China. In total, 1,777 responses were received from SMEs in six countries: Canada, China, Italy, Singapore, South Africa, and the U.K.

For purposes of this study, SMEs were defined as businesses having up to 250 employees. The sample included SMEs of three sizes: micro businesses (those with fewer than 10 employees) made up 20% of Chinese respondents; small businesses (10-49 employees) were 49%; and medium businesses (50-250 employees) were 31%.


About the survey

In October 2010, Forbes Insights conducted a survey of small and medium-sized enterprises (businesses with 250 or fewer employees) in Italy and five other countries (Canada, China, Singapore, South Africa, and the U.K.). In total, 266 Italian SMEs participated in the survey, including representative samples of micro businesses (under 10 employees), small businesses (10-49 employees), and medium-sized businesses (50-250 employees). The survey was done in association with CNDCEC, the professional body for certified accountants in Italy; ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants; and the Certified General Accountants Association of Canada (CGA-Canada).




Financial uncertainty still haunts Italian SMEs. SMEs in other countries appear to be looking toward post-recovery growth, but businesses in Italy may still be battling to get through recent economic turmoil. Asked about their top concerns over the past year, 29% of SMEs in Italy cited economic uncertainty, and 29% also chose finding new customers and prospects. Third on the list of concerns was finding financing (25%).




7%

9%

12%

12%

13%

14%

15%

17%

17%

17%

18%

18%

25%

29%

29%

0% 40%

Buildingbrandequity

GovernmentregulaQons

OperaQngwithsmallerstaff

Customerservice


ImprovingmarkeQng

IncreasedcompeQQon



Keepingupwithtechnology



Findingfinancing


Economicuncertainty


Of the countries in the survey, SMEs in Italy were the least likely to have experienced revenue growth in the past year. Overall, just 24% of Italian SMEs said current revenue was higher than it was a year ago, 34% indicated revenue was lower, and 42% said it was about the same. Medium-sized businesses the least likely to have grown—19% said revenue was higher but 41% said it was lower. Looking ahead, 41% of Italian SMEs expect higher revenue in the next year, 16% anticipate lower revenue, and 43% expect it to stay about the same.



8%

10%

6%

5%

14%

13%

23%

21%

37%

19%

46%

27%

33%

31%

37%

42%

24%

43%

28%

28%

16%

29%

13%

15%

9%

10%

4%

5%

3%

2%

0% 100%

U.K.

SouthAfrica

Singapore

Italy

China

Canada

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower



4%

5%

37%

19%

43%

42%

15%

29%

1%

5%

0% 100%

12monthsfromnow

Today

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower

*



Italian SMEs that anticipate growth next year believe it will come from product sales and improved quality. Asked what factors they believe will contribute to their increase in revenue over the next 12 months, SME respondents named increased sales of existing products/services (33%), and increasing the quality of their products/services (33%), followed by increased online presence (30%), and strategic partnerships (28%). In addition, 34% of Italian medium-sized enterprises also believe raising additional capital will contribute to future growth, but no Italian micro businesses cited this factor.




17%

14%

23%

34%

34%

34%

29%

34%

31%

23%

13%

20%

22%

17%

18%

13%

30%

32%

30%

30%

21%

14%

0%

0%

7%

43%

21%

14%

50%

71%

16%

17%

19%

20%

22%

24%

28%

30%

33%

33%

0% 80%




RaisingaddiQonalcapital







ItalySMETotal

Micro

Small

Medium


Cash flow issues are a major challenge for many Italian SMEs. Overall, 43% of Italian SMEs said it was harder to manage cash flow today than it was a year ago, and just 12% said it was easier; 44% indicated it was about the same. Italian micro businesses appeared to be the more susceptible to cash flow challenges; 56% said managing cash flow was harder, and only 2% said it was easier.




14%

16%

2%

12%

46%

44%

42%

44%

39%

40%

56%

43%

0% 100%

Medium

Small

Micro

ItalySMETotal

Easier

Aboutthesame

Harder

Don’tknow


Slow receivables and low revenue are straining cash flow at Italian SMEs. Asked to select their greatest cash flow challenges over the past year, 32% of all Italian SMEs cited slower paying or non-paying customers; that issue was particularly prevalent for micro businesses. Other top cash flow concerns were lower revenue (31%) and taxes (29%). Medium-sized businesses felt that access to credit was impacting their cash flow—22% selected lower credit limits and 19% named difficulty in securing financing.




19%

14%

14%

16%

22%

17%

26%

28%

32%

26%

13%

17%

18%

13%

18%

18%

21%

27%

28%

29%

2%

10%

6%

18%

6%

16%

22%

34%

36%

52%

13%

14%

14%

15%

17%

17%

23%

29%

31%

32%

0% 60%



Risinginterestrates

Longersalescycle

Lowercreditlimits



Taxes

Lowerrevenues


ItalySMETotal

Micro

Small

Medium


A significant number of respondents were anxious that they don’t have a strong enough capital position to survive another downturn. Asked whether or not they felt they had adequate cash reserves to weather another financial crisis, 45% of Italian SMEs said they did not. Small businesses (10-49 employees) appeared the least anxious—52% agreed they had adequate cash reserves to weather another financial crisis.




13% 34% 9% 30% 15%

0% 100%

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree


Even under economic pressure, more than 40% of Italian SMEs said they secured all or most of the finance they sought over the past two years. This rate, however, was lower than other countries, and half that of SMEs in the U.K. Overall, 86% of SMEs in Italy said they applied for financing over the past 24 months. Of those, 12% said they secured the full amount, 32% secured most, 42% secured a little, and 14% received none.




14%

42%

32%

12%

0% 50%






Italian SME respondents said they’re seeing little easing of their financing markets. Just 20% said their ability to secure financing improved over the past year, while 35% said it worsened, and 45% said it remained about the same. The outlook for the next year is more positive: 28% of Italian SMEs anticipate their ability to secure financing will improve, 21% expect it to be worse, and 50% foresee no change.




24%

18%

50%

45%

18%

29%

3%

6%

0% 100%

12monthsfromnow

Today


Improved


Worsened


Notseekingfinancing

1%

1%

2%

4%


Secured bank loans are the most common form of debt financing Italian SMEs use today, and that will stay consistent over the next two years. Overall, the top forms of debt financing Italian SMEs use today are secured bank loans (39%), business credit cards (28%), secured bank overdraft (27%), and trade credit (25%). Those are also the main debt vehicles Italian businesses intend to seek over the next two years.




9%

15%

14%

12%

21%

11%

20%

18%

18%

21%

24%

26%

29%

8%

10%

10%

13%

14%

18%

18%

19%

24%

25%

27%

28%

39%

0% 50%

Corporatebondissue


Governmentgrants



Unsecuredbankloan



Personalcreditcards


Securedbankoverdrae

Businesscreditcards

Securedbankloan

Today

Overnext24months


Italian SMEs want to use debt and equity financing for domestic expansion and new technology. While SMEs in some of the other countries surveyed may be looking for working capital (as 48% of SME respondents in the U.K. indicated), few SMEs in Italy said that is why they are seeking financing. The top three things they expect to use debt financing for over the next two years are: domestic expansion (31%), new technology investment (30%), and expanding capacity (27%). Those seeking equity have similar goals.




10%

19%

12%

20%

20%

14%

27%

17%

19%

28%

30%

27%

6%

15%

15%

16%

17%

19%

22%

24%

25%

27%

30%

31%

0% 40%

Workingcapital


Tradefinancing

AcquisiQons

Foreignexpansion


Plantandequipment


Customerfinancing



DomesQcexpansion

Debt

Equity


Italian SMEs in the survey said the recession essentially forced them to become better businesses. Overall, 71% said they are planning more effectively, and 57% agree they are smarter today about running their businesses than they were before the recession. 60% feel they are in a stronger position today than they were prior to the downturn.




13%

12%

14%

47%

45%

57%

13%

11%

9%

21%

24%

14%

6%

8%

6%

0% 100%



TherecentglobalrecessionputaddiQonalpressureonourbusinesstoplanmore

effecQvely

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree

Key findings: advice profiles






Compared to other countries, Italian SMEs are more likely to be either Community Networkers or Go-It-Aloners.


Methodology

The information in this report is based on the results of a survey conducted online in October 2010 by Forbes Insights in association with CNDCEC, ACCA, and CGA-Canada.

Forbes insights received responses from 266 owners and decision makers at small and medium-sized enterprises in Italy. In total, 1,777 responses were received from SMEs in six countries: Canada, China, Italy, Singapore, South Africa, and the U.K.

For purposes of this study, SMEs were defined as businesses having up to 250 employees. The sample included SMEs of three sizes: micro businesses (those with fewer than 10 employees) made up 19% of Italian respondents; small businesses (10-49 employees) were 45%; and medium businesses (50-250 employees) were 36%.


About the survey

In October 2010, Forbes Insights conducted a survey of small and medium-sized enterprises (businesses with 250 or fewer employees) in Singapore and five other countries (Canada, China, Italy, South Africa, and the U.K.). In total, 337 Singaporean SMEs participated in the survey, including representative samples of micro businesses (under 10 employees), small businesses (10-49 employees), and medium-sized businesses (50-250 employees). The survey was done in association with ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants; the Certified General Accountants Association of Canada (CGA-Canada); and CNDCEC, the professional body for certified accountants in Italy.




Of all SMEs in the survey, SMEs in Singapore were second only to those in China in revenue growth over the past year, and their future outlook is even brighter. Overall, 43% of Singaporean SMEs said current revenue was higher than it was a year ago, 20% indicated revenue was lower, and 37% said it was about the same. While in other countries most growing SMEs appeared to be unwilling to sacrifice profitability for revenue growth, nearly a third (32%) of the SMEs in Singapore that experienced revenue growth in the past year also saw their profitability fall. Looking ahead, 56% of SMEs in Singapore expect higher revenue in the next year, 7% anticipate lower revenue, and 37% expect it to stay about the same.



8%

10%

6%

5%

14%

13%

23%

21%

37%

19%

46%

27%

33%

31%

37%

42%

24%

43%

28%

28%

16%

29%

13%

15%

9%

10%

4%

5%

3%

2%

0% 100%

U.K.

SouthAfrica

Singapore

Italy

China

Canada

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower



12%

6%

44%

37%

37%

37%

5%

16%

2%

4%

0% 100%

12monthsfromnow

Today

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower

*



Despite growth, SMEs in Singapore are concerned about the economy and its impact on margins. Asked about their top concerns over the past year, Singaporean SMEs, cited economic uncertainty (26%), increased competition (25%), maintaining/maximizing profit margins (25%), and finding new customers and prospects (25%). Micro businesses (with fewer than 10 employees) were the most concerned with their customer pipeline.




14%

14%

15%

15%

18%

19%

25%

25%

25%

26%

0% 30%

Findingfinancing

Customerservice





IncreasedcompeQQon



Economicuncertainty


Product/service innovation will fuel growth for Singaporean SMEs next year. Asked what factors they believe will contribute to their increase in revenue over the next 12 months, respondents turned to introducing new products/services (43%), increased sales of sales of existing products/services (43%), and increasing quality of products/services (35%). In addition to innovation, medium-sized SMEs in Singapore expect growth to come from strategic partnerships, and international expansion (not a surprise given the small geographic footprint of Singapore).




6%

22%

27%

19%

25%

27%

32%

28%

27%

40%

35%

32%

43%

8%

11%

6%

23%

24%

27%

24%

27%

30%

24%

41%

50%

56%

15%

4%

11%

13%

19%

15%

17%

26%

23%

38%

28%

47%

28%

9%

13%

15%

19%

23%

24%

25%

27%

27%

34%

35%

43%

43%

0% 60%














SingaporeSMETotal

Micro

Small

Medium


For Singaporean SMEs, solid growth can also signal cash flow concerns. Overall, 32% of SMEs in Singapore said it was harder to manage cash flow today than it was a year ago, and 17% said it was easier; 48% indicated it was about the same.




19%

16%

16%

17%

49%

48%

47%

48%

28%

35%

34%

32%

4%

2%

3%

3%

0% 100%

Medium

Small

Micro

SingaporeSMETotal

Easier

Aboutthesame

Harder

Don’tknow


Higher expenses and slower receivables are putting the greatest strain on cash flow at SMEs in Singapore. Asked to select their greatest cash flow challenges over the past year, 32% of all Singaporean SMEs cited higher business expenses. Other top cash flow concerns were slower paying or non-paying customers (25%), difficulty cutting expenses (22%), and lower revenue (22%). Trade credit issues—in the form of more stringent terms from vendors—affected the cash flow of medium-sized enterprises in Singapore.




20%

15%

12%

24%

17%

18%

21%

21%

23%

24%

11%

18%

16%

11%

16%

17%

24%

20%

24%

40%

15%

10%

17%

10%

15%

16%

21%

25%

30%

33%

15%

15%

15%

16%

16%

17%

22%

22%

25%

32%

0% 50%

Longersalescycle




Taxes



Lowerrevenues



SingaporeSMETotal

Micro

Small

Medium


Respondents in Singapore are less anxious that they don’t have a strong enough capital position to survive another downturn. While SMEs in China, Italy, and South Africa are particularly concerned about their cash reserves, SMEs in Singapore appear less so. Asked whether or not they felt they had adequate cash reserves to weather another financial crisis, 63% of Singaporean SMEs agreed that they did, while 30% believed they did not.




11% 52% 7% 23% 7%

0% 100%

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree


Even during the 2008-09 recession, SMEs in Singapore appear to have gotten the financing they sought. Overall, 86% of Singaporean SMEs sought financing over the past 24 months. Despite tighter global financing markets, the vast majority was successful in getting all or most of what they wanted. Of those Singaporean SMEs that sought financing over the past 24 months, 16% said they secured the full amount, 56% secured most, 22% secured a little, and 6% received none.




6%

22%

56%

16%

0% 60%






Singaporean SME respondents see easing of their financing markets. Overall, 35% said their ability to secure financing improved over the past year, while 12% said it worsened, and 49% said it remained about the same. The outlook for the next year is more positive: 49% of Singaporean SMEs anticipate their ability to secure financing will improve, 9% expect it to be worse, and 38% foresee no change.




7%

5%

42%

30%

38%

49%

7%

10%

2%

2%

4%

4%

0% 100%

12monthsfromnow

Today


Improved


Worsened


Notseekingfinancing


When it comes to debt financing, SMEs in Singapore today are using secured bank loans, but trade credit is also important. Overall, the top forms of debt financing Singaporean SMEs use today are secured bank loans (36%), business credit cards (29%), and trade credit from suppliers (27%). Those are also among the main debt vehicles they intend to seek over the next two years, although more anticipate seeking government grants.




17%

19%

15%

16%

20%

18%

19%

29%

26%

19%

27%

27%

41%

9%

11%

12%

13%

16%

18%

19%

21%

23%

24%

27%

29%

36%

0% 50%



Corporatebondissue




Unsecuredbankloan

Governmentgrants

Securedbankoverdrae

Personalcreditcards


Businesscreditcards

Securedbankloan

Today

Overnext24months


Staffing, technology, and capacity will be the targets of Singaporean SMEs’ use of debt and equity financing. Asked what they will use debt financing for over the next two years, 34% of Singaporean respondents cited hiring additional staff, and 34% also mentioned investing in new technology. Following those two was expanding manufacturing/service capacity (29%). Those seeking equity have similar goals.




13%

14%

16%

16%

18%

16%

27%

23%

28%

31%

30%

34%

11%

13%

13%

20%

20%

20%

22%

24%

27%

29%

34%

34%

0% 40%

Tradefinancing


AcquisiQons

Customerfinancing

Plantandequipment


Foreignexpansion

DomesQcexpansion

Workingcapital




Debt

Equity


Singaporean SMEs in the survey said the recession essentially forced them to become better businesses. Overall, 73% said they are planning more effectively, and 73% also agree they are smarter today about running their businesses than they were before the recession. Three-quarters (75%) feel they are in a stronger position today than they were prior to the downturn.




12%

11%

9%

61%

69%

63%

3%

4%

5%

20%

14%

20%

4%

2%

3%

0% 100%




Stronglyagree

Agree

Don’tknow

Disagree

StronglyDisagree







Compared to other countries, Singaporean SMEs are most likely to be Community Networkers.


Methodology


Forbes insights received responses from 337 owners and decision makers at small and medium-sized enterprises in Singapore. In total, 1,777 responses were received from SMEs in six countries: Canada, China, Italy, Singapore, South Africa, and the U.K.

For purposes of this study, SMEs were defined as businesses having up to 250 employees. The sample included SMEs of three sizes: micro businesses (those with fewer than 10 employees) made up 26% of Singaporean respondents; small businesses (10-49 employees) were 36%; and medium businesses (50-250 employees) were 38%.


About the survey

In October 2010, Forbes Insights conducted a survey of small and medium-sized enterprises (businesses with 250 or fewer employees) in South Africa and five other countries (Canada, China, Italy, Singapore, and the U.K.). In total, 261 South African SMEs participated in the survey, including representative samples of micro businesses (under 10 employees), small businesses (10-49 employees), and medium-sized businesses (50-250 employees). The survey was done in association with ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants; the Certified General Accountants Association of Canada (CGA-Canada); and CNDCEC, the professional body for certified accountants in Italy.




Cash flow is a major concern to South African SMEs. Cash flow issues appear to be haunting SMEs in South Africa more than in other countries surveyed (other than the U.K.), and may be hampering them as they try to move past recent economic turmoil. Asked about their top concerns over the past year, 40% of SMEs in South Africa cited managing cash flow/maintaining cash position, followed by finding new customers and prospects (36%), and maintaining or maximizing profit margins (30%).




13%

15%

15%

16%

17%

18%

28%

30%

36%

40%

0% 50%



IncreasedcompeQQon



Findingfinancing

Economicuncertainty





Revenue growth for South African SMEs has been inconsistent over the past year, but the outlook is much brighter. Overall, just 31% of South African SMEs said current revenue was higher than it was a year ago, 38% indicated revenue was lower, and 31% said it was about the same. Micro businesses were the least likely to have grown; in fact, 49% said their revenue was lower. Looking ahead, 72% of South African SMEs expect higher revenue in the next year, just 6% anticipate lower revenue, and 22% expect it to stay about the same.



8%

10%

6%

5%

14%

13%

23%

21%

37%

19%

46%

27%

33%

31%

37%

42%

24%

43%

28%

28%

16%

29%

13%

15%

9%

10%

4%

5%

3%

2%

0% 100%

U.K.

SouthAfrica

Singapore

Italy

China

Canada

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower



13%

10%

59%

21%

22%

31%

5%

28%

1%

10%

0% 100%

12monthsfromnow

Today

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower

*



Product/service innovation and domestic expansion could fuel revenue for South African SMEs that anticipate growth next year. Asked what factors they believe will contribute to their increase in revenue over the next 12 months, SME respondents turned to sales of existing products/services (54%), introducing new products/services (51%), and increasing quality of products/services (47%). In addition, medium-sized businesses also seemed to be focused on geographic expansion within the South African market.




13%

22%

22%

22%

24%

36%

44%

53%

58%

60%

13%

17%

18%

17%

27%

30%

33%

46%

43%

49%

12%

17%

12%

21%

29%

36%

24%

43%

60%

57%

13%

18%

18%

19%

26%

33%

34%

47%

51%

54%

0% 70%











SouthAfricaSMETotal

Micro

Small

Medium


South African SMEs are struggling with cash flow. Overall, 56% of South African SMEs said it was harder to manage cash flow today than it was a year ago, and just 10% said it was easier; 34% indicated it was about the same. South African medium-sized businesses may be having the hardest time; 67% said cash flow management is harder today.




8%

11%

9%

10%

24%

41%

29%

34%

67%

48%

62%

56%

1%

0% 100%

Medium

Small

Micro

SouthAfricaSMETotal

Easier

Aboutthesame

Harder

Don’tknow


Slow receivables are putting the greatest strain on cash flow for South African SMEs. Asked to select their greatest cash flow challenges over the past year, half (50%) of all South African SMEs cited slower paying or non-paying customers. Other top cash flow challenges they cited were higher business expenses (38%), difficulty in cutting expenses (25%), and loss of loyal customers (20%).




14%

14%

6%

13%

10%

12%

14%

22%

19%

44%

53%

9%

13%

13%

16%

17%

20%

20%

22%

30%

33%

45%

22%

11%

20%

13%

11%

13%

16%

15%

24%

42%

56%

13%

13%

13%

14%

14%

16%

17%

20%

25%

38%

50%

0% 60%



Longersalescycle


Taxes

Lowerrevenues






SouthAfricaSMETotal

Micro

Small

Medium


Over half of South African respondents are anxious that they don’t have a strong enough capital position to survive another downturn. Asked whether or not they felt they had adequate cash reserves to weather another financial crisis, 52% of South African SMEs said they did not, while 45% agreed they did. Micro businesses in particular appear worried, with 64% anxious about cash reserves.




10% 35% 3% 35% 17%

0% 100%

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree


Even during the depths of the 2008-09 recession, more than two-thirds of South African SMEs said they secured all or most of the finance they sought. Overall, 79% of SMEs in South Africa said they applied for financing over the past 24 months; but micro businesses might have been discouraged from applying as just 60% sought financing. Of South African SMEs that applied, 25% said they secured the full amount, 43% secured most, 25% secured a little, and 7% received none.




7%

25%

43%

25%

0% 50%






South African SME respondents said they’re seeing little easing of their financing markets. Just 14% said their ability to secure financing improved over the past year, while 28% said it worsened, and 49% said it remained about the same. The outlook for the next year is much more positive: 47% of South African SMEs anticipate their ability to secure financing will improve, 7% expect it to be worse, and 35% foresee no change.




5%

3%

42%

11%

35%

49%

7%

24% 4%

11%

9%

0% 100%

12monthsfromnow

Today


Improved


Worsened


Notseekingfinancing


Trade credit is crucial for South African SMEs. Overall, the top forms of debt financing South African SMEs use today are trade credit (31%), secured bank overdraft (31%), and business credit cards (30%). Trade credit has been particularly important for medium-sized enterprises in South Africa. Those are also the main debt vehicles South African businesses intend to seek over the next two years.




5%

9%

7%

10%

15%

10%

12%

17%

26%

21%

30%

30%

28%

3%

5%

7%

7%

13%

15%

16%

17%

25%

26%

30%

31%

31%

0% 40%


Corporatebondissue

Unsecuredbankloan

Governmentgrants





Securedbankloan

Personalcreditcards

Businesscreditcards

Securedbankoverdrae


Today Overnext24months


South African SMEs want to use debt and equity financing for working capital. Given the number of South African businesses that are voicing cash flow concerns, it is not a surprise that these enterprises are looking for ways to smooth their cash position. The top three things they expect to use debt financing for over the next two years are: working capital (44%), expanding capacity (36%), and new technology (36%). Those seeking equity have similar goals.




8%

8%

14%

16%

20%

29%

26%

31%

31%

39%

30%

41%

8%

12%

15%

16%

18%

22%

22%

25%

31%

36%

36%

44%

0% 50%

Tradefinancing


Foreignexpansion

Customerfinancing



AcquisiQons

DomesQcexpansion

Plantandequipment



Workingcapital

Debt

Equity


South African SMEs in the survey said the recession essentially forced them to become better businesses. Overall, 83% said they are planning more effectively, and 82% agree they are smarter today about running their businesses than they were before the recession. 74% feel they are in a stronger position today than they were prior to the downturn.




15%

26%

28%

59%

56%

55%

2%

4%

2%

21%

12%

13%

3%

2%

2%

0% 100%




Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree







Compared to other countries, South African SMEs are most likely to be Confidence Seekers.


Methodology


Forbes insights received responses from 261 owners and decision makers at small and medium-sized enterprises in South Africa. In total, 1,777 responses were received from SMEs in six countries: Canada, China, Italy, Singapore, South Africa, and the U.K.

For purposes of this study, SMEs were defined as businesses having up to 250 employees. The sample included SMEs of three sizes: micro businesses (those with fewer than 10 employees) made up 21% of South African respondents; small businesses (10-49 employees) were 49%; and medium businesses (50-250 employees) were 33%.


About the survey

In October 2010, Forbes Insights conducted a survey of small and medium-sized enterprises (businesses with 250 or fewer employees) in the U.K. and five other countries (Canada, China, Italy, Singapore, and South Africa). In total, 341 U.K. SMEs participated in the survey, including representative samples of micro businesses (under 10 employees), small businesses (10-49 employees), and medium-sized businesses (50-250 employees). The survey was done in association with ACCA (the Association of Chartered Certified Accountants), the global body for professional accountants; the Certified General Accountants Association of Canada (CGA-Canada); and CNDCEC, the professional body for certified accountants in Italy.




Cash flow is a major concern to U.K. SMEs. Cash flow issues appear to be haunting SMEs in the U.K. more than in other countries, and may be hampering them as they try to move past recent economic turmoil. Asked about their top concerns over the past year, 41% of SMEs in the U.K. cited managing cash flow/maintaining cash position, followed by finding new customers and prospects (39%), and maintaining or maximizing profit margins (34%).




12%

13%

13%

14%

17%

25%

25%

34%

39%

41%

0% 50%

IncreasedcompeQQon




Findingfinancing


Economicuncertainty





Revenue growth for U.K. SMEs has been inconsistent over the past year, but the outlook is brighter. Overall, just 31% of U.K. SMEs said current revenue was higher than it was a year ago, 37% indicated revenue was lower, and 33% said it was about the same. Small businesses were the most likely to have grown—40% said revenue was higher but 36% said it was lower. Looking ahead, 49% of U.K. SMEs expect higher revenue in the next year, 9% anticipate lower revenue, and 42% expect it to stay about the same.



8%

10%

6%

5%

14%

13%

23%

21%

37%

19%

46%

27%

33%

31%

37%

42%

24%

43%

28%

28%

16%

29%

13%

15%

9%

10%

4%

5%

3%

2%

0% 100%

U.K.

SouthAfrica

Singapore

Italy

China

Canada

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower



11%

8%

38%

23%

42%

33%

8%

28%

1%

9%

0% 100%

12monthsfromnow

Today

Significantlyhigher

Higher

Aboutthesame

Lower

Significantlylower

*



Product/service innovation could fuel revenue for U.K. SMEs that anticipate growth next year. Asked what factors they believe will contribute to their increase in revenue over the next 12 months, SME respondents overwhelmingly turned to sales of existing products/services (69%), and introducing new products/services (45%). These factors were fairly consistent among the micro businesses, small businesses, and medium-sized businesses.




11%

4%

19%

15%

21%

28%

30%

26%

43%

70%

3%

14%

13%

19%

16%

20%

19%

28%

53%

75%

5%

11%

14%

18%

16%

21%

29%

20%

38%

61%

6%

10%

15%

17%

17%

23%

25%

25%

45%

69%

0% 80%











U.K.SMETotal

Micro

Small

Medium



16%

10%

6%

9%

48%

40%

42%

43%

36%

50%

52%

48%

0% 100%

Medium

Small

Micro

U.K.SMETotal

Easier

Aboutthesame

Harder



15%

16%

15%

18%

21%

19%

19%

22%

24%

41%

17%

11%

10%

10%

20%

22%

17%

23%

29%

49%

8%

13%

17%

14%

17%

15%

25%

25%

31%

42%

12%

13%

14%

14%

19%

19%

21%

24%

28%

44%

0% 60%


Longersalescycle







Lowerrevenue


U.K.SMETotal

Micro

Small

Medium



8% 48% 5% 28% 11%

0% 100%

Stronglyagree

Agree

Don’tknow

Disagree

Stronglydisagree



1%

16%

40%

43%

0% 50%






U.K. SME respondents said they’re seeing little easing of their financing markets. Just 10% said their ability to secure financing improved over the past year, while 22% said it worsened, and 50% said it remained about the same. The outlook for the next year is more positive: 19% of U.K. SMEs anticipate their ability to secure financing will improve, 10% expect it to be worse, and 54% foresee no change.




2%

17%

8%

54%

50%

9%

19%

17%

18%

0% 100%

12monthsfromnow

Today


Improved


Worsened


Notseekingfinancing

2% 1%

3%


When it comes to debt financing, U.K. SMEs today are using business credit cards and secured bank loans, but trade credit is also critical. That financing mix will stay consistent over the next two years. Overall, the top forms of debt financing U.K. SMEs use today are business credit cards (28%), secured bank loans (25%), and trade credit from suppliers (24%). Those are also the main debt vehicles U.K. businesses intend to seek over the next two years.




8%

10%

10%

14%

11%

17%

21%

23%

24%

27%

6%

7%

12%

14%

16%

18%

22%

24%

25%

28%

0% 30%




Unsecuredbankloan

Personalcreditcards

Securedbankoverdrae



Securedbankloan

Businesscreditcards

Today

Next24Months


U.K. SMEs overwhelmingly want to use debt and equity financing for working capital. Given the number of U.K. businesses that are voicing cash flow concerns, it is not a surprise that these enterprises are looking for ways to smooth their cash position. The top three things they expect to use debt financing for over the next two years are: working capital (48%), domestic expansion (20%), expanding capacity (18%), and plant and equipment (18%). Those seeking equity have similar goals.




6%

5%

11%

11%

17%

20%

22%

11%

20%

18%

23%

49%

5%

7%

10%

12%

15%

15%

16%

16%

18%

18%

20%

48%

0% 60%


Tradefinancing

Foreignexpansion

Customerfinancing

AcquisiQons





Plantandequipment

DomesQcexpansion

Workingcapital

Debt

Equity


U.K. SMEs in the survey said the recession essentially forced them to become better businesses. Overall, 80% said they are planning more effectively, and 74% agree they are smarter today about running their businesses than they were before the recession. 62% feel they are in a stronger position today than they were prior to the downturn.




7%

10%

15%

55%

64%

65%

8%

7%

5%

27%

17%

13%

3%

2%

2%

0% 100%




Stronglyagree

Agree

Don’tknow

Disagree

StronglyDisagree







Compared to other countries, U.K. SMEs are most likely to be Confidence Seekers.


Methodology


Forbes insights received responses from 341 owners and decision makers at small and medium-sized enterprises in the U.K. In total, 1,777 responses were received from SMEs in six countries: Canada, China, Italy, Singapore, South Africa, and the U.K.

For purposes of this study, SMEs were defined as businesses having up to 250 employees. The sample included SMEs of three sizes: micro businesses (those with fewer than 10 employees) made up 42% of U.K. respondents; small businesses (10-49 employees) were 33%; and medium businesses (50-250 employees) were 24%.


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