Macroeconomic Challenges for SMBs and How They Are Responding

Macroeconomic shocks are traveling the world, but the impact on SMBs vary greatly by region
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The buzzwords frequently used to depict today’s turbulent business landscape—inflation, supply chain woes, recession, rising energy costs and political unrest—paint a cautionary picture for all businesses around the world.  But for small and medium-sized companies, today’s rocky business terrain is particularly concerning.  

Many SMBs do not have a deep well of reserves to sustain their businesses for years during tough economic times. And that makes it critical for them to apply technology smartly and zero in on efficiency, cost savings, productivity and automation—and fast—to weather today’s economic storms.

But what are SMBs grappling with, specifically, from the long list macroeconomic woes circling the globe today? The answer, IDC finds, depends on where an SMB resides. New IDC research into the macroeconomic challenges of SMBs across the globe, unveiled through our BuyerView Cloud Pulse program, illustrates that while SMBs worldwide are dealing with intensified macroeconomic issues, the specific concerns vary greatly by region.

The research is based on a May survey of IT decision makers, developers and line of business cloud influencers at companies that had already, or are planning in the near future, to adopt cloud technologies. Respondents had to prove familiarity of cloud infrastructure and applications and be familiar with their organization’s cloud strategy.  More than half of all respondents—742—were small- to medium-sized businesses with 1-999 employees.

The survey findings show that APAC SMBs are highly concerned about economics such as inflation, exchange rates and low economic growth. North American and European SMBs, meanwhile, rank energy costs as top concerns. Supply chain concerns rank high in North America. While SMBs in Europe and APAC note that the conflict in Ukraine is causing more business and IT supply chain disruptions. And, SMBs in the U.S. and APAC are more likely to be impacted by their customers losing business/sales than SMBs in Western Europe.

Our study also evaluated the impact of COVID-19 across global SMBs and found that while COVID is still impacting SMBs worldwide, the COVID impact is 20 percentage points greater in APAC than other regions as lock-downs prompted APAC SMBs to consider new ways of reaching customers and carrying out work.

By size, smaller SMBs say supply chain issues are leading to a lack of IT equipment/materials. This is likely because the smallest SMBs use fewer cloud technologies and rely on more basic and physical IT, such as laptops, mobile devices, printers and servers. Therefore, the material and hardware shortages are impacting them directly.

SMBs on the larger end report that supply chain disruptions are extending the time it takes to complete IT projects. Larger SMBs are likely using a mix of cloud and on-premise/in-house IT and are suffering directly from supply chain issues, including higher costs and longer delivery times for hardware. But many are also impacted indirectly as major cloud suppliers pass on increased data center energy, hardware component and employee costs to them. A common global thread across all SMBs is inflation. Two-thirds of global SMBs report that they are currently impacted in some way by inflation.

When we asked about the technology improvements and enhancements SMBs made in the 12 months leading up to Q1 of 2022 to boost resiliency, the results showed SMBs lag behind their enterprise counterparts. SMBs ranked behind enterprise businesses in eight of 12 areas where we asked about investments to improve business resiliency. One caveat: a greater percentage of SMBs invested in ecommerce capabilities than enterprise companies, suggesting SMBs are working to meet the wants and needs of today’s more digitally savvy consumers—a trend induced by COVID, and one that we believe is here to stay.

So how can tech suppliers connect with and sell to leery SMBs hamstrung by a range of macroeconomic challenges? They must communicate that now is the time — a time when many SMBs aren’t clamoring for air to keep up with staggering growth — for them to stop and rethink their approach to technologies and boost business resiliency. SMBs should take this unique time to pause and investigate the wide array of technology offerings on the market that can help them be more efficient and productive.

SMBs need to boost resiliency and to move to technologies that will power their businesses for growth — before they get so large that change becomes highly complex, and before they become entrenched with legacy systems and processes that are difficult to replace. The SMBs that take these steps now will weather today’s economic storms—and continue to grow once they pass.

I encourage you to read our research covering macroeconomic challenges at global SMBs. It’s a topic we will monitor closely as the business landscape and headwinds continue to evolve. 

Katie’s core research coverage includes identifying and supporting the unique, evolving needs of the Very Small, Small and Medium Business technology buyer. Katie has a strong, SMB-focused research and writing background, having covered SMBs in the retail and ecommerce space for over 12 years. Most recently, her primary coverage area was researching the technology needs of SMB retailers and analyzing the vendor offerings on the market to meet those evolving needs.