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Anyone who has ever tried to build their own company will likely tell you that they started with a dream to build and grow responsibly until one day change the world with their products and services.
While an admirable goal, many small or medium-sized business owners find it much more difficult to achieve than they might have originally anticipated. Global disruptions, economic instability and a dizzying array of technologies are just some of the challenges business owners face every day.
For the past two years, Payoneer has conducted rigorous research into global small and medium-sized businesses (SMBs) to better understand their ambitions, challenges and opportunities; how are they preparing for the future; and what the future might hold for them. of this year SMB Ambition Barometer today revealed three key themes shaping SMBs.
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1. Despite geopolitical uncertainty, SMBs are feeling good about the economy
The rise of global conflict has caused SMBs to try to plan for possible macro events that could affect their businesses, such as LODGING inflationproduct boycotts, trade wars, sanctions and more. In fact, more than 40% of SMBs feel unprepared to handle such challenges. And from leadership changes in Latin America to military conflict in Europe and the Middle East, macro events have already significantly impacted 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. Cross-border growth potential is partly the driver of this optimism. SMBs see international expansion unlocking access to new customers and high-quality vendors, as well as increasing innovation.
Through an improved ability to innovate and bring better products to more customers, in more countries, US SMBs are diversifying their revenue streams. Nearly two-thirds agree that having a diver global The vendor network helps protect against the threat of global disruption. SMBs surveyed in our research work with an average of 29 vendors, up from 21 two years ago.
2. More SMBs are pursuing international growth but are frustrated by archaic 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 customer bases and revenue, and this year nearly half (45%) of all US SMBs say that their customer base is now international – four percentage points more than in 2023. Europe stands out as the most cited destination where SMBs are looking to grow their customer base within the next five years. While SMBs are increasingly interested in cross-border expansion, sending payments globally remains incredibly complex.
This complexity, and the cost of navigating it, has historically locked smaller businesses out of the global marketplace and caused the financial sector to lag behind other industries in innovation. Cross-border and multi-currency services are not usually supported by local banks, but accessing these services through global banks is prohibitively expensive for smaller businesses. Meanwhile, most fintechs are focused on peer-to-peer (P2P) payments, not business use cases. Where does this leave SMBs? Despite the profound impact these businesses have on the global economy, society and their local communities, at least 80 million SMBs are deeply underserved by a financial ecosystem that still primarily serves large multinationals.
Inconsistent improvements in payment tools for SMBs also lead to missed opportunities. While cross-border payment capabilities among SMBs are growing, less than half of SMBs have capabilities for third-party electronic payments, real-time currency conversion, or website purchases. Fully 44% of SMBs report difficulty finding a solution that meets their needs, often relying on old-fashioned wire transfers. These barriers limit the ability of SMBs to participate in the global economy.
3. SMBs are excited to use AI, but are increasingly concerned about cybersecurity
Digital transformation is helping to level the playing field for SMBs, most of which see the pace of technological change as a driver for innovation. AI has emerged as a big one competitive advantagewith roughly two-thirds of SMBs across the globe reporting that they either plan to use AI or are already piloting AI to help support customer service, merchandising, inventory management, content creation and translations. Because of their smaller size and lack of organizational bureaucracy, these SMBs can often be more nimble than their larger counterparts, adapting more quickly to a rapidly changing marketplace. These advances also impact employment – 75% of SMBs prioritize hiring employees with emerging technology skills, increasing the demand for knowledge workers worldwide and creating new opportunities for entrepreneurs and freelancers.
But the astronomical growth of AI has also created new avenues for AI driven fraud. As large organizations crack down on cybersecurity risks, criminals and bad actors are becoming more sophisticated and targeting less well-resourced SMBs. More than one in three SMBs feel unprepared for potential cyber threats. As a result, reducing cybersecurity risk rose by 63% as a top business goal among SMBs.
Main prize
As the world becomes increasingly connected, more opportunities are created for entrepreneurs to take advantage of growing global trends in economic growth, international expansion and emerging technology. But while talent may be evenly distributed, opportunities are not. Despite the important role SMBs play in the global economy, they face an uphill climb 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 capital begins with simplifying cross-border trade, enabling the world's businesses to connect to a growing global economy.
The information herein and in the report is provided for informational purposes only and does not constitute professional, expert, 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 incurred in connection with the information provided.