Startups and small businesses are crucial to the smooth running of the economy and the so-called creative destruction that drives innovation. While some sections of the economy have flourished during the Covid pandemic, others have struggled enormously as lockdown measures and other restrictions have significantly hampered business as usual.
A new report from the World Economic Forum aims to better understand the future readiness of SMEs and, indeed, to explore what it takes for them to be future-ready.
Becoming future-ready
About 90% of firms globally are considered a small- and medium-sized enterprise, with such firms representing around 70% of all jobs. The authors conducted an analysis of hundreds of studies and interviewed 300 leaders and founders of small businesses to better understand what is required to future-proof a business.
The analysis found that the biggest challenge faced by SMEs was around talent acquisition, with over half citing this as a major concern. The existential difficulties posed by Covid were also reflected, with 43.8% of respondents citing survival as a key challenge. There was then a gap to access to finance and a non-supportive policy environment.
“Our global assessment showed no significant differences of future readiness of SMEs at the regional or the industry level,” the authors say. “The key takeaway from these results is that SMEs are neither disadvantaged by their geographical location nor industry space in moving towards future readiness. What can set them apart is their ability to influence their internal processes (orientation and business model) and immediate external environment (networks) to ensure they remain future-ready.”
The authors were not able to identify any significant differences between firm performance at either industry or regional level, suggesting that their challenges are fairly universal. What’s more, this suggests that there are no real regional or geographical disadvantages to becoming “future-ready”, with one’s managerial approach and external network more likely influencers.
The report suggests that while the pandemic has undoubtedly been difficult for many, it also provides an opportunity to transform and become stronger, better businesses. Indeed, they argue that factors that might previously have disadvantaged SMEs can now help them to pivot towards new opportunities.
“This report aims to deliver a global assessment of the future readiness of SMEs and provide an understanding of the drivers of future readiness,” the authors conclude. “It is hoped this will inspire and encourage SMEs and mid-sized companies to harness their potential in becoming a major driver of sustainable and inclusive economic growth and innovation by focusing on several core dimensions of future readiness: sustainable growth, societal impact and adaptive capacity. We also hope it will bring additional insights to policy-makers in a context in which SMEs represent a key element of the post COVID-19 recovery.”
