GLOBAL BUSINESS MONITOR 2017 CONTENTS INTRODUCTION Introduction ...............................................................................3 In 2016, Bibby Financial Services published its inaugural Global Business Monitor report, providing unique insight into the opportunities and challenges facing small and medium sized enterprises (SMEs) across Asia, Europe and Research Highlights ................................................................4 North America. International Analysis .............................................................6 Amid geopolitical change and rising economic uncertainty, the But despite green shoots of confidence, findings highlight age-old study highlighted specific issues facing such businesses, including concerns that continue to hinder growth. Just 7% cite international Challenges and Growth Opportunities .............................8 rising input costs, the burden of government regulation and trade as their greatest opportunity over the year ahead and one in ongoing cashflow management. five attribute this to concerns over managing currency fluctuation. Unlike their larger counterparts that are seen to embrace new International Trade ................................................................10 Though issues keeping business owners awake were predominantly technologies, just 5% of SMEs see digital technologies as their close to home, there was undoubtedly concern over the global greatest growth opportunity. Payment Practices ................................................................. 12 economy following a series of events shifting the international tone towards isolationist and trade-restrictive policies. Though payment times vary - ranging from 23 days in the U.S. to 45 days in Poland and Hong Kong - more than half (55%) cite issues Access to Finance .................................................................. 13 Twelve months is a long time in economic terms and a year on, the surrounding the collection of payment from customers as a cause only thing constant is change. Market Analysis ......................................................................14 for concern. Furthermore, a third have suffered from bad debt due In July, the International Monetary Fund (IMF) maintained its earlier to customer non-payment or insolvency. global growth forecast at 3.5% for 2017 and 3.6% for 2018. While its Canada ...................................................................................................................14 Findings of the study demonstrate important differences in relation growth forecast remained the same, expected sources of growth to the types of challenges facing SMEs in different parts of the were markedly different from previous estimates. The IMF asserted Czech Republic ..............................................................................................16 world. More importantly, however, the research highlights the that improved growth in the Eurozone, China and Japan would intrinsic characteristics that bind SMEs together, irrespective of compensate for slower growth in the UK and U.S. France ......................................................................................................................18 location. In the first quarter of 2017, the UK and U.S. were the slowest The International Organization for Standardization (ISO) estimates growing G7 economies based on quarter-to-quarter GDP, Germany ..............................................................................................................20 than nine in ten of all businesses worldwide are SMEs. Such expanding by 0.7% and 1.2% respectively. In contrast, during businesses are, therefore, a key barometer of past, present and the same period, and powered by a buoyant energy sector, the Hong Kong .........................................................................................................22 future performance. Canadian economy expanded by 3.7%. While confidence amongst SMEs seems to be in rude health, Ireland .....................................................................................................................24 Growth in China has continued at a steady pace in 2017 with challenges persist that continue to threaten SMEs’ true economic imports rising in August for the first time in two years. Japan, hot contribution. Netherlands .......................................................................................................26 on the heels of its new trade deal with the European Union, has seen its longest economic expansion in more than a decade. As the world continues to shape itself following a time of extraordinary change, it is those economies that build a supportive Poland .....................................................................................................................28 In the face of much political debate, the Eurozone has performed and thriving environment for SMEs that will be best placed to grow remarkably well. Unemployment has fallen and output has risen. As in 2018 and beyond. Singapore ...........................................................................................................30 a result, GDP growth increased to 0.6% in the three months to June, representing the bloc’s seventeenth consecutive quarter of growth. UK ...............................................................................................................................32 Germany is no longer the sole driver of Eurozone growth. Instead, a combination of accelerated growth in Ireland, the Netherlands and U.S. .............................................................................................................................34 Spain, and strong manufacturing output in Germany and France have contributed to this expansion. Conclusion ................................................................................36 Whether, as growth figures suggest, we are witnessing an economic DAVID POSTINGS changing of the guard remains to be seen. However, our Global Methodology ...........................................................................38 Global Chief Executive Business Monitor for 2017 does reflect a changing mood among Bibby Financial Services SMEs. Contacts ...................................................................................40 September 2017 More than half (55%) are expecting sales to increase in the year ahead. While down from 95% in 2016, nine in ten (91%) SMEs still plan to invest in their business before the end of the year. Staff training and development, IT and recruitment form an almost unanimous top three in relation to investment intentions. 2 GLOBAL BUSINESS MONITOR 2017 3 RESEARCH HIGHLIGHTS ECONOMY BUSINESS SENTIMENT German SMEs are most SMEs in Hong Kong SMEs in Hong Kong (46%) Canadian SMEs are confident about the local (28%) and UK (22%) are and Singapore (39%) are most confident about economy with 81% saying least optimistic about the least positive, following a future sales, with 70% their national economy is future performance of decline in sales over the expecting growth performing well their local economy past 12 months CHALLENGES AND OPPORTUNITIES INTERNATIONAL TRADE The greatest challenge 19% of SMEs in Ireland see 38% of businesses are Singapore is top for SMEs is a lack of expanding domestically as exporting, while 30% for both import (62%) skilled staff (49%) their biggest opportunity are importing and export (61%) 49% PAYMENT PRACTICES ACCESS TO FINANCE SEE A LACK OF SKILLED STAFF AS THEIR GREATEST 33% CHALLENGE OF SMEs HAVE WRITTEN OFF U.S. SMEs are paid almost Overall, a third (33%) Canadian SMEs are most Just over one in ten (11%) MONEY AS three weeks quicker of businesses have likely to say the availability SMEs are expecting to (24 days) than those in experienced bad debt of finance is good or apply for external finance BAD DEBT France (45 days) excellent (52%) in the next 12 months 4 GLOBAL BUSINESS MONITOR 2017 5 7 2017 2016 INCREASE NET: DECLINE NET: NET: GOOD NET: POOR NET: UK UK Singapore Hong Kong Hong Kong France Singapore Singapore Canada Canada Canada Czech Republic U.S. U.S. Netherlands Netherlands Netherlands UK Germany Germany Hong Kong Czech Republic Czech Republic U.S. Ireland Ireland Germany France France Ireland Poland Poland Poland TOTAL TOTAL TOTAL 80% 70% 60% 50% 40% 30% SALES EXPECTATIONS FOR THE YEAR AHEAD EXPECTATIONS SALES 80% 60% 40% 20% 0% SME PERCEPTIONS OF THE DOMESTIC ECONOMY OF THE DOMESTIC SME PERCEPTIONS 100% 75% 50% 25% 0% CONFIDENCE INDEX German and Dutch SMEs are most confident about their respective economies, with businesses in Hong Kong (21%) and France (22%) least (21%) and France economies, with businesses in Hong Kong about most confident their respective German are SMEs and Dutch home today. at about the economic picture positive over in their domestic conditions economies will improve that believe to most likely are (47%) in the Netherlands (56%) and France SMEs 12 months. the next the past 12 months, with expectations over equally weighting SME sentiment on sales performance is compiled by The Confidence Index ahead. year the coming over and Singapore is highest amongst German, confidence Business in Hong Kong shows and Irish SMEs. owners Dutch Index This composite about most confident sales prospects Canadian businesses sales performance. are and anticipated historic to in relation least confident are increase. to volumes expecting 12 months, with 70% the next over UK The German Election The political