Five Predictions for SME International Growth in 2016

It’s a mugs game, I know but I thought I’d start the year off by making a few early predictions and discussing what these might mean for the global SME community.

 Prediction 1:   A combination of uncertain oil prices, the FED slowly increasing interest rates in the US, political volatility in the EU caused by the refugee crisis and a weakening Chinese economy will cause large amounts of turmoil in the currency markets.  No-one will know what to expect and this will give rise to growing levels of uncertainty amongst mid-market companies with regard to their global strategies.  Should they stick or should they twist?  Should they retreat to the safe haven of their domestic markets or should they continue to look to grow through investing in new markets?

In the end, most companies will decide that their long-term plans cannot be derailed by temporary currency worries and will continue to push forward and expand their international footprints.  However there will be an increasing recognition that many SME’s lack the treasury expertise in-house to minimise these currency risks.  I therefore predict a bonanza year for specialist treasury and cash management boutiques as companies look to bring in expertise in these areas.

Prediction 2:  The threat of increased levels of cyber crime – whether it be criminal, terrorist or government sponsored – will make all companies re-look at their cyber security and how they manage their essential digital assets.  Hitherto, this type of digital asset management work has been the preserve of large corporations but as every business becomes more and more digitally based, smaller organisations will need to begin to invest more time in these areas.

 Unfortunately, the skills and knowledge base around effective digital asset management are in short supply so I predict that DAM experts will be in peak demand over the coming year and in the years to come.

Prediction 3:  The refuge crisis will not go away (although it may recede somewhat in the winter months) but will in fact continue to grow in scale and geographic remit.  Most attention in the West is focused on the Mediterranean area but there are also increasing tensions in South East Asia. 

One of the unheralded impacts of the refugee crisis is the pressure this places upon ship-owners who are often impacted by disruption to shipping routes and ports – not to mention the need to pick up refugees in trouble at sea, look after them and then take them to safe haven.  As the refugee crisis increases the pressure on freight shipping will also increase and this will inevitably lead to problems in global supply chain management.  Companies will be forced to re-evaluative their supply chain processes to take account of increased levels of volatility in the world’s transportation network (Air freight may also be impacted by increased levels of terrorist threat.)

My next prediction is that many companies will be forced to undertake a route and branch review of their global supply chain operations but will need support to help them understand the global implications of current events.

Prediction 4:  Most SME’s are alive to the need to look to new international markets as a key growth strategy but the world seems to become more complex by the day and therefore the need to develop a coherent global strategy is essential.  Is China still a good bet?  Is India living up to the promise of the Modi election hype?  Will Brazil pull itself out of the mire and find a new growth trajectory?   These questions need very care full analysis if global opportunities are to be realised and potential risks mitigated.

SME’s will cease to pursue a reactive internationalisation approach and look to develop a much more strategic plan.  Many CEO’s will be looking out at a world brim-full of potential but unsure of where and when to move.  I therefore predict that ‘global strategy workshops’ and global planning sessions will replace the ‘I met a guy at a Trade Show’ approach to global growth.

Prediction 5:  I think this is the most obvious of my predictions – it’s an unavoidable consequence of what is happening in the world and dominating the news agenda.

I predict that the world will become more unpredictable and challenging.  The concept of global convergence where all countries and cultures merge into one amorphous salad seem to be indefensible at the moment.  The world is a very varied place in which people think and act very differently.  There is no global ‘norm’; there are no globally accepted ideas around ‘what looks good’.

So my last prediction is that companies and organisations will increasingly realise that, if they are to succeed in the global economy, they need to develop much deeper levels of cultural awareness and fluency.  Leaders will stop thinking that they ‘know’ the answer in countries and cultures of which they have little or no understanding.

It will be interesting to hear what other people think of these predictions and to hear a few predictions from other people.