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4 Reasons Why 2021 Will be the Year of the SME

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In today’s interconnected and technology-reliant society, digital tools are not only accepted but required for efficient communications and project management in business. Especially in the manufacturing and supply chain, the push to automate and consistently innovate will open up significant opportunities for smaller, more nimble, and agile companies to adapt to rapidly changing markets. This year, small and medium-sized enterprises (SMEs) are in a unique position to adopt new innovative tools that will allow a level of growth that has never been possible before. In fact, a recent study found that small businesses who used apps to help them manage their business – i.e. to streamline finances, monitor cash flow in real-time, etc –  before COVID-19 saw a 12 percent smaller revenue decline than those who didn’t.

Below are my top four reasons why I believe SMEs are poised to rise above the challenges of 2020 by using the right innovative strategies to dominate the next year and beyond.


Reason 1: SMEs are more adaptable and can react quickly to market changes

Bigger isn’t always better. Due to their small size and simple structure, SMEs inherently possess a greater capacity to quickly adapt to new market conditions. Reduced layers of red tape also allow direct relationship building with customers and important stakeholders. This allows decision-makers to understand market variations before their larger competitors who are often hindered by multiple complex layers of management.

In most large enterprises, decisions that impact innovation and strategic direction can often take longer due to the higher number of people required for signoff and rigid processes in place. In contrast, decision-making in most SMEs typically falls to one person or a few key leadership members. This inherently increases agility by making faster resolutions than large enterprises that “… often require complex decision-making mechanisms involving a lot of people and teams.”


Reason 2: Communication is easier for both internal partners and employees, as well as external clients

Within a smaller organization, company stakeholders are able to more easily and efficiently communicate across the company. This allows for new ideas and innovations to flow freely and for collaborative problem solving to happen within internal teams. Cross-functional working groups, who rely on subject matter experts to share tasks, allow for increased performance and improvements with teamwork.

Greater proximity to management and maintaining a broader strategic vision of operations allows both external and internal stakeholders to better understand and connect with organizational objectives.

This has been proven to both increase motivation as well as productivity with internal partners as well as employees though stronger trust-based relationships.


 Reason 3: Small and medium-sized businesses are better for the economy

SMEs are big accelerators for local economies. With lower investment costs, smaller organizations have been found to “… lower poverty in communities by offering meaningful employment to locals in addition to enhancing the standard of living.” Investing in innovation, local technologies, and developing new products or services can also contribute to the prosperity of surrounding areas through increased employment opportunities.

By creating jobs that employ local talent, SMEs better ensure prosperity remains within communities aiding in the improvement and/or stabilization of local economies amid global economic uncertainty.


Reason 4: More opportunities for expansion and growth

SMEs can often scale faster than large enterprises by adopting proven technologies and processes of larger organizations. Small, nimble startups are often important sources of innovation due to their entrepreneurial culture and innate adaptability. A July 2020 study found, “because they [SMEs] are unhindered by legacy systems and outdated strategies, new market entrants are often able to rethink established practices and cut through traditional industry boundaries.”

Innovative SMEs will often also have a greater capability to both detect and satisfy customer needs quickly. Market segments that have particular pain points may be overlooked by larger organizations due to a niche customer base being perceived as too small to be profitable.

 In Conclusion

In 2021, an SME’s high level of adaptability, communication strengths, ability to invigorate their local economy, and room for substantial growth will give them the advantage over larger, less nimble enterprises. I also believe that, by implementing a foundation of technology into SME supply chains, smaller manufacturers and retailers alike can more easily create intelligent strategies that will allow them to grow in ways they’ve never seen before.


Author Biography

Dan Lionello is the Chief Executive Officer and Co-Founder of Omnae Technologies Inc.

Dan’s wealth of manufacturing intelligence is grounded in more than three decades of hands-on experience in outsourced and in-house manufacturing.

Throughout his executive career, he has led teams in business development, marketing, innovation, and customer journey optimization. Dan has built, operated, and strategically advised multiple businesses from early-stage to multi-million dollar scale.

He has held seats on over a dozen global Entrepreneurs’ Organization boards for 25 years where he serves as a mentor and leader.

About Omnae

Omnae is a collaborative cloud-based Supply Chain Management (SCM) platform that empowers businesses to organize their supply chains, simplify their processes, and continuously improve product quality.

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