The World Economic Forum (WEF) and the National University of Singapore Business School say 67% of executives from small and medium-sized enterprises (SMEs) cite survival and expansion as their main challenges amid warnings of a global recession.

Low margins, the challenge of scaling their businesses and expanding to new markets, as well as difficulties with clients and consumers, have been cited as main pressure points in a report titled ‘Future Readiness of SMEs and Mid-Sized Companies: A Year On’, which looks at companies emerging from the pandemic.

The report was developed in collaboration with the National University of Singapore Business School, as well as with expert contributions from UnternehmerTUM, Aston Business School, TBS Education, the Aspen Institute, Asia Global Institute and the International Chamber of Commerce.

The report builds on the analysis of more than 200 peer-reviewed articles and the quantitative and qualitative surveying of about 800 leaders and executives from SMEs.

In the report, business leaders cite talent acquisition and retention, at 48%; culture and values, at 34%; funding and access to capital, at 24%; and unfavourable business policy environments, at 22%, as the biggest challenges.

The report also identifies pragmatic ways for smaller companies to embed future-readiness into corporate strategies and highlights sustainability and digital transformation as two overlooked challenges. It focuses on how smaller companies can boost their resilience through stronger business frameworks.

“The business community is stepping up to tackle the biggest issues facing the world. SMEs . . . are key enablers in this pursuit. This report sheds light on some key opportunity spaces for SMEs and mid-sized [businesses] to do exactly that,” says WEF president Børge Brende.

The report highlights how these business’s high levels of agility can benefit the development and implementation of a strategic approach to talent management, a staged approach to digital transformation, and a specific sustainability measure that depends on the company’s level of maturity in this space.

While smaller companies can increase their future readiness, the wider policy environment – such as the infrastructure for digital trade and finance – has a direct and important impact on their ability to thrive, according to the report, which states that it is, therefore, key for policy-makers, investors and other stakeholders to do what is in their capabilities to contribute to building the future readiness of this segment of the economy.

“SMEs . . .  have unique strengths in their ability to pivot their business models to be more future ready and, by hiring and developing the right talent, they can mobilise positive internal and external change faster than larger companies. However, to fully realise their potential, they also need the support of policy-makers in recognising their credentials as well as in rewarding sustainability initiatives,” National University of Singapore professor and co-lead author of the report Rashimah Rajah says.

The WEF says it will be leveraging the insights generated in the report to further support SMEs and mid-sized companies in becoming future-ready.

This will be done through the creation of additional resources, including the continuous development of the WEF’s self-assessment and benchmarking tool on future readiness, as well as through the creation of a space for informal peer-to-peer learning between companies, as well as meet-ups with key experts.

The WEF says it aims to amplify the voices of purpose-driven mid-sized businesses.