Global SMEs: A majority of small and medium-sized enterprises around the world are optimistic about their growth prospects in the next two years even as they suffer from the dwindling availability of finance, according to a new study by the Economist Intelligence Unit, sponsored by the UK's Association of Chartered Certified Accountants (ACCA) and its counterparts in Canada and Australia. Financing conditions are unlikely to improve before 2011.
Nearly 55% of SME executives surveyed for the report said they expect revenue to rise in the next 24 months, albeit at a slower pace than in 2007. Just 15% of them forecasted a drop. Respondents from Asia-Pacific, the Middle East and Africa were the most optimistic while those from eastern Europe were the least, with only 46% of them expecting to see revenue growth.
SMEs, however, are being restrained in their plans by tightening credit conditions. Around half the respondents said accessing finance has become more difficult and costly over the past two years and they don’t expect conditions to improve before 2011. Funding constraints are forcing many SMEs to put their investment plans on hold. Seven out of 10 executives also said they are cutting costs and focusing on working capital to preserve cash.
"Small and medium-sized businesses have felt the full force of the credit crisis," says Rob Mitchell, editor of the report."Nevertheless, most businesses in our survey remain optimistic about their prospects. There are undoubtedly challenges ahead and to achieve their objectives SMEs will need to take a disciplined approach to cash management and major investments."
Report: Surviving the drought: Access to finance among small and medium-sized enterprises
Key findings of the report include:
- 54% of firms have seen a deterioration in the availability of finance over the past two years. This trend is strongest in Europe, where 65% of respondents report a decline in availability.
- Bank lending is the source of finance that has been cut back most severely. Within that, unsecured lending is the area that has suffered the most, with 53% respondents pointing to a reduction in availability.
- Around 32% of SMEs have cut pay and benefits while 29% have reduced their workforce. Transport, travel and tourism, and property are among the industries most likely to have cut jobs.
Surviving the drought: Access to finance among small and medium-sized enterprisesis an Economist Intelligence Unit report sponsored by the Association of Chartered Certified Accountants (ACCA), the Certified General Accountants Association of Canada (CGA-Canada) and CPA Australia. The research is based on a survey conducted by the EIU in August 2009 of 730 senior executives from SMEs worldwide. All respondents represent companies with annual revenue below US$100m. Over 40% of respondents are CEO or managing director level, and the remainder are other managers and senior executives.
