CPA Australia recently released their 10th Small Business survey, which reported that the overall conditions especially business confidence for small business were slightly weaker in 2018 than in 2017. It appears that the main reason for this weakening in confidence is the increase in global trade tensions, particularly between the US and China.
It is also likely that this weakening of business conditions and business confidence will continue in 2019.
Participants were required to be an owner, a senior manager (defined as being a director, a principal, a CEO, a CFO, a senior manager or a managing director) or a qualified accountant of a business with fewer than 20 employees.
Although the overall business conditions softened in 2018, some country’s small business sectors improved during 2019. The survey found that businesses that are growing strongly are much more likely to have the following features:
• they focused on improving the customer experience
• they used online channels to –
a. engage with and improve the understanding of customers
b. sell products and services to their customers
• they are continuing to innovate by releasing new products and services and improving processes
• they improve their management skills and the strategy of the business.
Businesses identified key factors that had the most impact on their business as –
1) customer loyalty - 39.8%
2) improving customer satisfaction – 33.4%
3) good staff – 30%
4) cost control – 26.6%
It is interesting to note that these 4 factors have remained constant over the past 3 years.
A key factor driving expected growth in Vietnam’s small business sector is exports, with 29.4 % of respondents expecting their revenue from overseas sales to increase strongly in 2019. This result is significantly down from 2017 (51.2 % expected their exports to grow strongly). This decrease probably reflects concerns with the China / US tariff issue and other global trade tensions.
Another key driver to Vietnam’s strong growth is high levels of innovation – nearly 34% of respondents advising that they would introduce a new product or service or improve a process in 2019. This innovative trend not only improves the immediate impact on the competitiveness of the company but will have a lasting impact as the whole small business sector and the economy in general, will be more competitive and stronger in the future.
Technology is playing a key role in innovation and competitiveness of Vietnam’s small business sector. A staggering 76% of respondents stating that their investment in technology in 2018 was already profitable. These results, will only encourage further investments in technology which will further propel Vietnam’s small business sector to higher levels of global competitiveness and success.
Much of this investment in technology, was financed by external sources. 78.% of those surveyed accessed external finance in 2018 – the second highest result of the markets surveyed. Unfortunately, Vietnam’s small businesses continue to find it difficult to access external finance – 34% reporting that it was difficult or very difficult, compared with the 28% that found it easy.
With the increase levels of technology exposure to the online transactions, nearly 66% of Vietnamese respondents believe that a cyberattack on their business is likely in 2019 – the highest result of the markets surveyed. These concerns lead to increased vigilance where Vietnamese small businesses were the most likely of the markets surveyed to review their cybersecurity.
The Vietnamese Government’s policy to increase electronic payment options for small business is gaining traction. While cash still remains the most popular payment option, new payment technologies such as MoMo are increasingly popular with a majority of businesses advising that electronic payments now makes up over 10 per cent of their sales.
While Vietnam’s survey results are overwhelmingly positive, the small business sector also reported challenges. The 2 significant barriers to growth were increasing competition and increasing costs. Ironically, these challenges are a by-product of a dynamic and growing economy. These challenges should focus businesses’ attention on improving the management of their business and continuing the drive for innovation.
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