Small- and medium-sized enterprises (SMEs) and mid-sized companies represent 90% of all companies and are responsible for close to 70% of jobs and GDP globally, and yet, according to a recent report released by the World Economic Forum, they are often the most affected by economic shocks and turbulence.

“In times of crisis, organizations require an excess of financial and social resources, termed slack resources. Compared to larger companies, smaller companies tend to have limited access to finances, skilled labour and infrastructure to help them stay afloat during crises. Smaller companies tend to have fewer and more direct communication channels between departments and leaders. This allows them to react more effectively and quickly, pivoting to better cater to the current needs of the market.”, the report shows.

Future readiness is defined as a set of capabilities and orientations that enable companies to thrive in the future. The report recommends a three-pillared approach, which allows SMEs and mid-sized companies to increase their resilience while exploiting their natural agility as a competitive advantage in times of uncertainty. 

1. Long-term growth: Ability to generate lasting financial strength driven by innovative business models, products and/or services.

2. Societal impact: Ability to not only address both positive and negative potential externalities but most importantly, its business outcomes affect society positively in line with environmental, social and governance (ESG) goals.

3. Adaptive capacity: Ability to develop high levels of resilience and agility, enabling the company to bounce back in difficult times and to identify and seize opportunities as they emerge, and to create disruption in business models for the future.

The World Economic Forum informed hopes to make use of the insights generated by this report to provide assistance to SMEs and mid-sized companies on their journey to becoming future-ready.

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Source: World Economic Forum