SME Optimism Wanes With Global View | PYMNTS.com

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Small business optimism takes a sharp turn for the worse the further from home they get.

New analysis from American Express and foreign exchange firm OFX reveals stark contrasts in SME optimism at home versus abroad. The two published their perspective reports on Wednesday (May 17).

According to American Express in its 2017 OPEN Small Business Monitor, small business optimism in the U.S. is on the rise. It’s hardly a surprise: SME optimism has dominated headlines, with analysts linking the trend to President Donald Trump’s administration and plans to strengthen the national economy and focus on small business growth.

Nearly three-quarters of small businesses told American Express they have a positive outlook on both the economy and their own businesses over the next six months — up from 64 percent in 2016.

Growth plans are now SMEs’ top priority, the report declared. A fifth said their companies are already growing, and 82 percent said they feel confident they can access the capital they need to invest in future growth. Nearly half are looking to invest in new hires, and fewer business owners are concerned about their ability to save for retirement.

“In this economy,” said American Express President of Global Commercial Payments Susan Sobbott, “there’s a clear correlation between business owner optimism and plans for growth. As they look to grow, business owners plan to increase capital investments, hire staff and increase usage of low cost methods like social media to attract new customers.”

There has been some debate over whether the small business optimism of today will culminate in actual growth and investment tomorrow. But analysis from American Express and others is clear: SMEs are feeling pretty good about the domestic environment.

Looking abroad, however, shows a very different story.

Research released from OFX concluded that while small business optimism about doing business overseas remains “strong” at 57 percent, that figure is still a “significant dip” compared to levels in 2016, during which optimism about doing business across borders reached as high as 96 percent.

In its second annual SMB Confidence Indicator, OFX’s survey of 500 U.S. small businesses revealed nearly two-thirds said their international growth is either “good” or “booming.” Further, OFX found that small businesses do, indeed, have plans to expand internationally. Expansion into new markets ranked as the most common goal for SMEs when discussing their specific plans for international growth this year, followed by the addition of international suppliers to their supply chain and hiring skilled workers from overseas markets.

Already, small businesses are quite active overseas. Two-thirds said they have suppliers outside the U.S., and more than half said they remain confident about overseas operations.

Despite this, OFX still concluded that optimism in cross-border business is at a lull.

“New technologies continue to open doors to international expansion in ways not previously possible, and SMBs are one of the largest groups taking advantage of these new ways to work,” said OFX Head of Payment Solutions David Nicholls in a statement. “But with every new opportunity comes challenges, especially when we constantly hear about global instability. The fact that SMBs are still optimistic about operations abroad, are growing and expect to grow more tells us that SMBs might hold the key to economic stability on a global scale.”

Nearly two-thirds of SMEs aren’t selling to customers outside the U.S., the data revealed.

The research from American Express and OFX follows a recent speech made by U.S. Small Business Administration Head Linda McMahon, who spoke to the United Nations last week urging U.S. small businesses to step out onto the global stage.

“Businesses that export are less likely to go out of business and more likely to grow faster,” she told the Small Business Knowledge Summit. “That’s because 96 percent of all the world’s consumers and over three-quarters of the world’s purchasing power are outside the United States.”

“Yet right now, only 1 percent of all America’s small businesses are exporters.”

OFX’s research suggests that 1 percent statistic may not be accurate, however, and reports did not indicate the origin of McMahon’s data. Regardless, analysts seem to agree that, while cross-border expansion is a challenge, it is critical for the vitality of the U.S.’s small business community.