Half of SMEs expect lower revenue for Q1: survey

Its economics faculty asked 437 SMEs nationwide from March 7-11 about their perspectives on the economy and their performance.
When asked about the economy in the first quarter of 2016 compared with the last quarter of 2015, 0.7 per cent said the economy performed much better, 11.0 per cent better, 36.4 per cent about the same, 41.6 per cent worse and 10.3 per cent much worse.
On their expectation of the economy in the second quarter compared with the first quarter of this year, 0.9 per cent said it would perform much better, 11.0 per cent better, 46.4 per cent about the same, 25.8 per cent worse and 5.1 per cent much worse.
Those who said “worse” and “much worse” in the first quarter were a combined 51.9 per cent. This fell to 30.9 per cent in the second quarter, indicating that SMEs were optimistic about the economy in the second quarter.
When asked about their revenue in the first quarter, 9.2 per cent said higher than expected, 23.5 per cent about the same, 57.8 per cent lower than expected and 9.5 per cent were uncertain.
On average, those who said their income was higher than expected enjoyed a revenue increase of 18.4 per cent. Those whose revenue fell below their expectation would, on average, experience a plunge of 28.9 per cent.
On the factors that boosted their revenue above expectations, 66.7 per cent said the ability to find new markets or expand existing markets for their products and services, 14.3 per cent new technology that improved competitiveness, 4.8 per cent business restructuring, 2.4 per cent cost reduction and 11.9 per cent other reasons such as new marketing plans, access to high-quality inputs and product development.
Factors that accounted for the decline of revenues below expectations were 70.4 per cent domestic demand, 15.1 per cent increased competition, 5.0 per cent slow growth of international markets and 4.5 per cent higher cost of doing business.
The remaining 5.0 per cent cited other reasons such as lack of qualified staff, insufficient access to finance and lack of an effective distribution network.
The five most important factors in the first half of this year are the overall condition of the Thai economy, insufficient demand, increased competition, higher wages and the global economic situation.
When asked about their most important initiatives in the second quarter, 28.2 per cent said reducing costs, 27.1 per cent increasing the use of online marketing, 14.6 per cent taking more aggressive marketing moves, 13.2 per cent solving liquidity problems, 10.4 per cent expanding markets and 6.5 per cent other initiatives such as finding alliances and developing products.
Kiatanantha Lounkaew, dean of economics, said yesterday that while SMEs expected to see an improvement in the economy in the second quarter, their initiatives indicated that they were still on the defensive side, focusing primarily on cost-saving.
This short-run survival strategy was understandable. However, used for too long, it could be detrimental to the long-run competitiveness of SMEs.