Optimism Image by Gerd Altmann from Pixabay Sage has published a report based on an extensive survey of 12,000 SMB leaders across seven nations. The data shows that SMB leaders are optimistic (84%) about the long-term future, compared to 2022 (69%). The confidence level is high, despite the rising costs those leaders face. 60% have seen rising costs in 2023, up 35% from 2022.

However, the picture is not all roses, and the optimism may be slightly misplaced. Last year leaders expected revenue growth of 7.2%. They only achieved 2.4%; this year’s revenue growth is expected to be 8.1%. However, was that figure inflation adjusted? Is the optimism misplaced? 71% are confident about success, and 84% expect to be confident in 12 months. Importantly for the economy, they also plan to increase employee numbers (6.1%) after a measly growth of only 0.1% in 2022.

Technology is key to growth, with 53% expecting to increase investment in technology during 2023. That is on the back of the results from previous investments. 78% of leaders polled were satisfied with productivity increases compared to 2022 (68%). Perhaps surprisingly, only 1 in 5 saw themselves adopting AI technology, despite the recent hype around generative AI and other applications.

Steve Hare, CEO, Sage
Steve Hare, CEO, Sage

In the foreword, Steve Hare, CEO, notes, “Looking at these statistics and the trends reflected within them, I see a diverse, resilient, and capable community of business owners that is feeling positive and thinking big.

“We will continue to use our voice to highlight the barriers facing SMBs and call on governments to adopt a pro-tech, pro-enterprise approach so SMBs are supported to innovate and grow whilst reaching a basic level of digital maturity. I’m proud to be leading a company serving these businesses, and as we have always done at Sage, I look forward to doing our bit to power their success in the coming year and beyond.”

What is in the report

The report is divided into eight sections, with an appendix detailing the methodology for the survey Strand Partners conducted. The report is based on data from over 1,000 responses from Canada, France, Germany, Ireland, Portugal, Spain and South Africa. There were more than 2,000 responses from SMB leaders in the UK and the US.

The initial four sections are brief:

  • A foreword by Steve Hare
  • SMB outlook: findings at a glance: a brief and selective look at the data
  • Research Overview
  • Summary Page: The executive summary

The next three sections contain the meat of the findings and analysis. The structure consists of graphics illustrating the data and a small amount of analysis. There are no quotes by business leaders from Sage and none from respondents or customers.

Adaptability – the seven keys to confidence in 2023

This section highlights the top seven key productivity improvements compared to 2022 that lie behind the optimism felt by business leaders. It found that the more productivity benefits seen, the higher the confidence level of the business leaders.

The top three were:

  • Investing in equipment, up 114%
  • Adopting new technology, up 84%
  • Hiring more staff, up 67%

Technology is central to the story of adaptability and productivity

The section studies the importance of technology and the benefits gained by that investment. The top four of which are:

  • Saving time
  • Making tech work better
  • Cutting costs
  • Increasing productivity

Only 8% of organisations expect to cut technology investment in 2023. It might have been interesting to have asked why they were going to cut investments. A qualitative element to the survey might have found deeper insights into this and other questions. Depending upon how people interpreted the question, the respondents may cut the budgetary amount in technology investment, but the percentage might have increased overall. The budgets around tech investment constrain 38% of SMBs.

On emerging technologies, 5G (30%). AI or VR (22%) and the metaverse (16%) are the most popular areas likely to see investment.

Generation COVID

This is not about the age group but around those startups born during the pandemic. Often these firms invest strongly in technology (25% compared to 16% of others). They have subsequently seen greater revenue growth (4.5%) compared to the average (2.4%) and lower cost increased (4.8% compared to 6.3%). However, predicted revenue growth is 7.2%, compared to the average of 8.1%. Does this mean that at least some of those firms are struggling now some conditions are returning to pre-pandemic norms? Again a qualitative element might have shed light on this.

Country breakdown

This untitled section is a series of sections that highlights a snippet of the results from each country surveyed. The report does not detail the response for every question, merely highlights the response to a subset of the questions, highlighting a key difference from the rest of the countries.

For example, firms in the US are more confident (33%) than the rest of the world (26%) in their business. This may be because costs have fallen for 21% of leaders compared to 14% globally. However, there are challenges, with 52% of businesses struggling to hire employees (45% globally).

In the UK, the key findings were:

  • 40% predict they will feel ‘very confident’ about the success of their business at the end of 2023
  • 22% expect a decrease in their costs
  • 46% expect an increase in revenue
  • 49% expect to increase their workforce
  • 92% plan to maintain or increase their tech investment
  • Only 13% of UK SMBs plan to increase investment in technology (Europe 18%)

Sage Group CEO Steve Hare commented, “SMBs are the backbone of the UK economy and too commonly overlooked. They have emerged resilient from a difficult 2022 and have ambitious goals of scaling their businesses. The Government and the private sector must now work together to make this possible.

“The government has rightly set out an ambitious vision for the digitalisation of the UK economy. We see strong appetite amongst SMBs for an acceleration of investment and adoption of new tech solutions, but the UK lags behind in the level of tech investment they anticipate committing. 

“To support SMBs and drive economic growth in the UK, the Government needs to take a bolder approach towards tax, to incentivise digital investment. This is essential for millions of SMBs to have the resources they need to compete on a global scale, and to make the UK an advanced digital economy.”

Enterprise Times: What does this mean

This is a positive piece of research that follows from last year but fails to ask some key qualitative and quantitative questions. The report does not mention recession, which other surveys have shown is likely to be delayed rather than avoided in 2023. The report has some interesting insights, and the trend information compared to last year is better than many other reports seen by Enterprise Times.

The report highlights that technology is critical for SMBs to survive and thrive in 2023. There is general optimism, but a sceptic might fear it is misplaced. Technology investment increases, but it would have been interesting to see the trends in emerging technology compared to previous years. The ambition for emerging technology spend is often hyped and reduced in subsequent years. One suspects that spending on AI will increase, and with more solutions using AI coming to market investment may increase significantly more than VR or the metaverse.

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