5 trends that will drive SME success
What small business owners need to know about market changes and industry trends to stay ahead in the coming year.
The past 20 months have been a period of make-or-break for many small and medium-sized enterprises (SMEs). Those that have emerged stronger and wiser have a good foundation with which to continue growing in the coming year.
But even as life is starting to regain a sense of normalcy and recovery is starting to stabilise, emerging trends and market movements are throwing up new challenges. What’s more, the current inflationary pressures are not expected to let up any time soon, meaning that SMEs need to be extra cautious and strategic about where they invest their resources in the months ahead—business owners need to watch their costs like a hawk and cut down on expenditures where they can.
What can SMEs do to make better business decisions in the coming year? Here are five of the most significant trends that will shape the SME landscape in 2022, and what business owners can do now to get ahead of the curve.
1. Supply chain disruptions will persist
Did you know the U.S. is currently facing a cream cheese crisis? Just another in a long list of victims of global supply chain disruption. Southeast Asia, in particular, has been badly hit, a result of reduced manufacturing volumes and a lack of shipping containers due to the pandemic. And there’s no sign of it easing any time soon.
For small businesses, supply chain disruptions can be potentially devastating—which is why many are investing heavily in supply chain resilience. Improving supply chain visibility is one strategy, as companies can now adopt blockchain-powered solutions to digitise trade and supply chain transactions, minimising cost and risks while increasing transparency. Some businesses are also optimising their inventory management and stocking emergency backup inventory, while others are looking to increase supply chain diversity. It’s always best not to put all your eggs in one basket, so take a good hard look at your vendor database and make sure you have a supply chain contingency plan in place.
2. Cybersecurity shoots to the top of business agendas
With hybrid and remote work here to stay, SMEs cannot afford to neglect cybersecurity. If you think your business is too small to be enticing to cybercriminals, think again. In 2020, an estimated 43% of cyberattacks targeted SMEs, with the average cost of each attack amounting to USD 184,000. That’s a huge financial and reputational blow—which also explains why some 60% of small businesses close shop within six months of a cyberattack. And with the growing prevalence of cloud-based services and internet of things, and the increasingly common use of personal devices to access company data, points of vulnerability are increasing.
As an SME business owner, don’t leave yourself open to the legal, financial and reputational repercussions of a cyber breach. Always ensure compliance with data privacy regulations, keep your staff trained in security hygiene, and adopt a Zero Trust strategy when it comes to data security—that means “never trust, always verify”.
3. Employees are seeking more empathetic workplaces
In what has been dubbed the ‘Great Resignation’, a record number of employees left their jobs in 2021. Around 20 million workers in the U.S. resigned between March and September alone, and in Singapore, 56% of employees said they were actively looking for new job opportunities in 2021, while 36% were passively looking.
But why are employees leaving en masse, and during such challenging times? According to NUS Business School Senior Lecturer of Management and Organisation Dr Wu Pei Chuan, poor relationships with leaders is one key reason why employees resign, and this has been brought to the forefront with COVID-19. She explained in an article that “nine in 10 employees said [in a Michael Page survey that] their leaders have communicated with them during the pandemic crisis, but many felt that top management lacked sincerity in delivering their messages, nor did they understand or care about what their employees have encountered or suffered in the crisis”.
With that in mind, small business owners that want to attract and retain top-quality staff in an already-tight labour market need to focus on building an emotionally intelligent workplace. That means walking the talk when it comes to empathy. If you ask, “How are you doing?”, mean it, genuinely listen, and make changes if necessary.
4. The war for talent will heat up
Korn Ferry believes that talent shortage will become a chronic problem in 2022, exacerbated by a ‘resignation tsunami’, a shifting talent pool, and high competition for certain skills. To attract top talent and retain existing ones, SMEs need to re-evaluate (and if necessary, redesign) their HR policies to focus on employee experiences.
But in what way? It seems there’s been a disconnect between what employers think their employees want, and what their employees actually want. McKinsey found that when deciding whether or not to stay in their current job, employees prioritise relational factors (how well I feel valued by my manager, sense of belonging in the organisation, and potential for advancement). On the other hand, companies tend to focus on transactional factors, with many believing that their employees left due to inadequate compensation, better opportunities elsewhere, or poor health.
5. Purpose is overtaking product
Leading brands aren’t just competing based on their products and prices—they’re excelling in their markets because they have a clearly defined purpose. According to Deloitte, purpose is now a competitive advantage—high-growth brands are 66% more likely to see purpose as a means to guide employee decision-making, with 93% indicating that they peg KPIs to their purpose statement. This means that having a strong purpose should be seen as a key business priority, especially given that 73% of employees who work for a purpose-driven company said they felt more engaged. Greater employee engagement leads to increased productivity, loyalty and retention rates.
SMEs can start putting purpose into action by defining their internal values, and aligning them with shareholder interests. No business is too small to make a positive impact, whether it’s on the environment or local communities. Dig deep to find what drives your business and your brand, and you’ll find that growth will follow.
The best path to success is to expect the unexpected
As much as we’d like to be able to predict the future, the best we can do is make educated conjectures based on past events. But as 2020 has shown, a black swan event can pop up any time, with no warning.
While you can minimise your business risk with thorough research and robust contingency plans, it’s important to be ready to pivot if circumstances change. Agility will be the critical differentiator in resilient SMEs in 2022, so make your plans, but be nimble and prepared to change as the year unfolds.
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