Article: Beyond financials: Helping small and medium-size enterprises thrive

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Read Full Article - Published by McKinsey & Company

The article from McKinsey titled “Helping small and medium-size enterprises thrive” discusses the significant role of small and medium-size enterprises (SMEs) in economies worldwide1. In OECD countries, SMEs account for about 99 percent of firms and 70 percent of all jobs, and they contribute more than 50 percent of GDP in high-income countries1.

However, between February 2020 and April 2021, 70 to 80 percent of SMEs across 32 countries lost between 30 and 50 percent of their revenues1. Governments around the world have made supporting SMEs a priority throughout the COVID-19 pandemic through programs such as direct financial assistance, public guarantees on loans, and tax relief1.

While such financial support is beneficial, it does not necessarily set up firms to thrive in the long term and to combat the many converging challenges they’re facing, including pressure to decarbonize, internationalize, keep up with digitalization, and secure the right talent.

The article suggests that the most effective way to support SMEs is by pairing financial support with advisory services

One way to provide this dual support is through National Champion Programmes. Such programs typically work to identify SMEs with high growth potential and provide them with the one-on-one support they need to realize this potential over a defined period of time.

Support could include building capabilities (such as digital, marketing, and leadership skills), providing advice from experts on how to navigate the market, guiding transformation efforts, and arranging introductions and networking opportunities.