In the initial pandemic, some SMEs grew - surprisingly. Many managed rapid digitisation and enjoyed greater business volumes as a result. Research shows that companies are still growing year-on-year on average. Certain business trends, including the successful adoption of technology, have a big part to play creating the foundations for business success.

Pipedrive’s customer research, The State of Sales and Marketing, points to how SMEs have been managing their businesses, and despite everything, staying positive. 80 per cent of the professionals surveyed were optimistic or very optimistic. Several interesting angles underpin how SMEs in particular are turning their positivity into sustained results.

SMEs can grow

Although the majority (63%) of respondents claimed that the companies they work for grew more in 2022 than in 2021, the percentage of year-on-year growth has decreased from 71%. Given the growth of sales when people were free of mandatory lockdowns, this tracks. Smaller companies were particularly affected, with the data showing a correlation between company size and employee success.

The data clearly demonstrated that the decision to cut budgets or the workforce comes at a cost to future growth and colleagues’ confidence. Employees facing budget cuts or team reductions were concerned about their and their employers’ futures. The right support has an outsized influence on productivity: Employees who get support from their colleagues and managers are 20% more likely to hit their sales targets. Good culture and people processes really pay back on the bottom line.

This is vital. Supporting high performance leads to better business outcomes. Last year, salespeople continued to thrive even amid the economic recession. 86 per cent reached their regular sales quota regularly, usually or always. 60 per cent reached their personal annual sales target last year, only down 4 percentage points compared to the year before and higher than in 2020.

The smaller the business the more significant the impact on both employee and company performance. The data shows that those who worked in companies with under 11 employees were 14 percentage points less likely to reach their personal annual sales target and 10 percentage points less likely to see the revenue of their company grow compared to the average.

Those in large companies were 8 percentage points more likely to always hit their regular sales quota. This suggests that the smallest companies face a tougher fight to grow - and could be the most in need of digital support to close the gap.

A positive outlook and proactive planning

Businesses were six times more likely to invest more in tech last year than to lower investments. Only 5 per cent were cutting back on their investments, with 32 per cent increasing tech spending. Tech looks set to stay a priority in the emerging AI age. Those working in companies investing more in tech were 18 percentage points more likely to expect company growth in this year.

These investments have been mainly focused on boosting efficiency to help employees with increasing workloads. And employees at companies that weren’t investing in tech were twice as likely to worry about their workload. These concerns might likely grow with the blooming of GenAI tools.

Those who can’t access new labour-saving solutions will lose productivity - and likely morale - as they get stuck with legacy-like jobs as their industry changes around them. But the good news is that many proven SaaS tools exist and don’t need any integration to bring into users’ hands. Many are so consumer-ready that they don’t need any set-up or training.

A YouGov survey for Barclays supports the findings above, showing UK SMEs committing 48% of their revenue to tech. They are doing this to future-proof their business (44%) and increase productivity (45%), hedging against rising costs and interest rates.

Some sectors are leading the way, understanding that digitalisation and emerging AI are likely to create clear winners and laggards. Pipedrive’s report shows that 93 per cent of retailers know that harnessing data is key to their future success. The past year saw retailers actively investing in cutting-edge technologies to enhance operations such as data analytics (18%) and artificial intelligence and machine learning (12%).

Creating optionality

SMEs investing in technology with a clear purpose are creating optionality. They look to position the business to be able to deal with whatever happens. If recent history has shown anything, it’s that being both prepared for the unexpected and flexible enough to adapt is critical to growth.

Agur Jõgi is Chief Information Officer at Pipedrive.