SME White Papers Reveal Challenges and Recipes for Success

White Paper on Small and Medium Enterprises in Japan / White Paper on Small Enterprises in Japan
2022 Edition Part 1 / Part 2
Left: Ability to Achieve Transformation in Readiness for the New Era
Right: Business Reviews and Regional Collaboration in Readiness for the New Era
 

Two new whitepapers cast light on how small and medium enterprises can stay resilient despite the impact of global issues including the ongoing COVID-19 pandemic, soaring crude oil and raw material prices and supply-chain disruption. The 2022 White Papers on Small and Medium Enterprises and Small Enterprises compiled by Japan’s Small and Medium Enterprise Agency (SMEA) feature trends in SMEs and small enterprises as well as real-life business cases regarding efforts that are needed in addressing these new challenges and becoming stronger than ever.

SMEs who Adapt are Reaping the Benefits

The COVID-19 pandemic is forcing SMEs to adapt by restructuring their businesses to ensure business continuity and ongoing growth. Restructuring efforts range from offering new products and services to rethinking business fundamentals. The white paper surveys reveal that some restructured companies are seeing an improvement in sales and synergies between their new and existing businesses.

Over 30% of SMEs who restructured their businesses say they have already seen an impact on their sales

 

This year’s white papers identify investment in intangible assets as an important effort that can drive growth for SMEs. Investment in intangible assets range from building brands with unique value and pricing power to investing in human capital by developing human resources.  

As the graph above shows, more than half of SMEs that invest in building   their own brands are seeing their brand contribute to the prices of their products. 
 

Companies that carry out planned on- and off-the-job training are seeing the highest sales growth
 

Small Enterprises' Business Reviews and Regional Collaboration

While small enterprises are actively reviewing their businesses, they face challenges such as lack of in-house expertise and know-how, difficulty in finding and securing clients, and in securing funding and attracting human resources. Support organizations (e.g., public support organizations, financial institutions, legal counsel and other professional services) can play a critical role in providing advice on matters such as human resources and business transactions.

Small enterprises face a variety of challenges, including lack of expertise and know-how, and difficulty in finding and securing clients
 

In a positive trend, the survey shows that some companies are teaming up with other organizations to solve regional issues. Increasingly, small businesses are expected to play a central role in solving local issues such as community activities and promotion of industrial revitalization. Partnering with other key stakeholders, while relying on a professional support network for guidance, is proving to be an effective strategy for many companies.

Fair Trade, Digitalization and Accompanying Support as a Common Foundation to Support SMEs and Small Enterprises

This year’s white paper analysis shows that fair business practices, digitalization, and accompanying support form a “common foundation” that promises to support business continuity and growth for SMEs and small enterprises. One major finding regarding fair business practices revealed that companies who created opportunities to negotiate prices with their customers were more likely to be able to pass on cost increases through higher prices. Secondly, the number of companies leveraging digitalization to increase operational efficiency has risen since the start of the COVID 19 pandemic. Lastly, our research shows the importance of dialogue with and accompanying support from third-party support organizations to help company executives transform their companies.

The number of companies driving operational efficiency gains through digitalization (stage 3) has steadily increased since around the time the pandemic started
 

Embracing Change is Key to Surviving & Thriving for SMEs and Small Enterprises Today

Changing business environments and an increasingly unclear future mean companies need to transform themselves now more than ever. The SME Agency hopes that these white papers will empower SMEs and small enterprises to understand and overcome current obstacles so they can continue to grow and tackle new challenges.

Related links

• 2022 White Papers on Small and Medium Enterprises and Small Enterprises Released (April 26, 2022)