Faced with dwindling customer demand and increased competition, small businesses are focusing on cost reduction. That’s according to a newly released survey by Switzerland-based Zurich Insurance Group (VTX:ZURN).
The report titled “Biggest Opportunities for Small and Medium Enterprises (SMEs) in 2016” (PDF) reveals 44 percent of small businesses perceive cost reduction as the most critical business opportunity.
Biggest Opportunities for Small and Medium Enterprises
Other than cost reductions, small businesses are focused on new customer segments (36 percent) and new sales channels (33 percent).
Interestingly, businesses in the U.S. have twice the potential to grow by exploring new sales channels.
What’s more unlike their global counterparts, U.S. businesses consider foreign market expansion as a worthwhile opportunity.
Risks for Small Businesses
It’s also worth mentioning that small businesses are more aware of the risks facing them today.
Small business owners say they are challenged by high competition and lack of consumer demand. In addition, technology failures and vulnerabilities are a major risk factor.
“Advances in technology straddle the line between both risks and opportunities for medium-sized businesses. In an increasingly sluggish growth environment, they are leaning on technological improvements to tighten their supply chains, reduce software development, and condense testing processes,” said Craig Fundum, Head of Commercial Markets for Zurich North America. “At the same time, a reliance on technology opens medium-sized businesses up to cybersecurity concerns and technological failures or glitches that can offset productivity gains.”
Fundum also highlighted the risks involved in global market expansion. To avoid challenges, he advises businesses “to understand and manage carefully before moving cross-border.”
Twenty-six hundred small and medium businesses owners from different parts of the world were surveyed for the report.
Scissors Costs Photo via Shutterstock
I think that cost cutting should not only be done if you are losing money. If you can save some money on the side, then that’s great as it will help you get more money later.
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