Small Businesses Are Cautiously Optimistic About The Future, Research Says – And 3 Global Trends You Should Know

Anyone who has ever tried to build their own company will probably tell you that they started with a dream to build and grow with a commitment to one day change the world with their products and services.

Although it is an admirable goal, many small or medium business owners find that it is more difficult to achieve than they initially expected. Global disruptions, economic instability and a bewildering array of new technologies are just a few of the challenges business owners face every day.

Over the past two years, Payoneer has conducted rigorous research on small and medium-sized businesses (SMBs) around the world to better understand their aspirations, challenges and opportunities; how they prepare for the future; and what the future holds for them. This year’s SMB Ambitions Barometer revealed three key themes shaping SMBs today.

Related: 63 Small Business Ideas to Start in 2024

1. Despite the geopolitical uncertainty, SMBs feel good about the economy

The rise in global conflicts has left SMBs struggling to plan for major events that may impact their businesses, such as inflation, boycotts, trade wars, sanctions and more. In fact, more than 40% of SMBs feel unprepared to face such challenges. And from leadership changes in Latin America to military conflicts in Europe and the Middle East, major events are already having a major impact on local businesses and their supply chains.

Despite this uncertainty, SMBs are optimistic about their prospects. In the US, 86% of SMBs are confident in their organization’s ability to grow revenue, and 85% expect the health of their local economies to improve. Growth potential at the border is partly driving this optimism. SMBs are seeing international expansion that opens up access to new customers and high-quality vendors, as well as increased innovation.

With an improved ability to innovate and deliver better products to more customers, in more places, US SMBs are diversifying their revenue streams. About two-thirds agree that having a diverse network of vendors around the world helps hedge against the threat of global disruption. SMBs polled in our survey averaged 29 vendors, up from 21 two years ago.

2. Many SMBs are pursuing international growth, but are frustrated by outdated payment systems

Unlike today, international growth is at the forefront of business owners’ minds. Last year, Payoneer found that 72% of SMBs see cross-border expansion as a way to grow their customers and revenue, and this year nearly half (45%) of all US SMBs say their customer base is now global – four. more than 2023 points. Europe stands out as the most cited destination for SMBs looking to grow their customer base over the next five years. Although SMBs are increasingly interested in expanding borders, sending payments around the world remains incredibly complex.

This complexity, and the cost of navigating it, has long locked small businesses out of the global market and led the financial sector to lag other industries in innovation. Cross-border services and currencies are often not supported by local banks, but accessing these services through international banks is more cost-effective for small businesses. Most fintechs, on the other hand, are focused on peer-to-peer (P2P) payments, not business use cases. Where does this leave SMBs? Despite the huge impact these businesses have on the global economy, society and their local communities, at least 80 million SMBs are seriously underserved by a financial system that still favors large multinational corporations.

Irregular improvements in payment tools for SMBs also lead to missed opportunities. Although cross-border payment capabilities among SMBs are increasing, less than half of SMBs have electronic party payment capabilities, real-time currency conversion or website checkout. A full 44% of SMBs report difficulty finding a solution that meets their needs, often relying on old-fashioned wire transfers from banks. These barriers limit the ability of SMBs to participate in the global economy.

3. SMBs are excited about using AI but increasingly concerned about cyber security

Digital transformation is helping to shape the field of SMBs, many of which see the pace of technological change as a driver of innovation. AI has emerged as a major competitive advantage, with nearly two-thirds of SMBs worldwide reporting that they plan to use AI or are already exploring AI to help support customer service, sales, inventory management, content creation and translation. Because of their small size and lack of organizational red tape, these SMBs can often be smaller than their larger peers, adapting quickly to a rapidly changing market environment. This development is also impacting employment – 75% of SMBs prioritize hiring employees with emerging technical skills, increasing demand for skilled workers worldwide and creating new opportunities for startups and freelancers.

But the meteoric rise of AI has also created new avenues for AI-driven fraud. As large organizations grapple with cybersecurity risks, hackers and bad actors are becoming more sophisticated and targeting under-resourced SMBs. More than one in three SMBs feel unprepared for potential online threats. As a result, reducing cybersecurity risk rose by 63% as a top business goal among SMBs.

Related: Small Business Owners, Don’t Run Away From Technology – Embrace It. Here are 5 Strategies for Success.

The key to take

As the world becomes increasingly connected, there are more opportunities for entrepreneurs to take advantage of the growing global trends in economic growth, international expansion and emerging technologies. But while talent is not evenly distributed, opportunity is not. Despite the important role SMBs play in the global economy, they face an uphill battle to grow and succeed. Understanding the challenges and opportunities these entrepreneurs face can help address gaps in the currently underserved SMB market.

But the first step to creating real equality begins with facilitating cross-border trade, enabling global businesses to connect to the growing global economy.

The information contained herein and in this report is provided for informational purposes only and does not constitute professional, technical, financial, tax, or legal advice. In no event shall Payoneer or its representatives be liable for any loss or damage including, without limitation, indirect or consequential loss or damage, or any loss or damage whatsoever incurred in connection with the information provided.