As an expat it may come as a surprise that despite being known as an international hub for finance and being a place where many multinational corporations (MNCs) have set up their headquarters, Singapore’s economy relies on local businesses that form the backbone and stability the country depends on. At least 99% of the island’s economy thrives on small and medium enterprises, otherwise known as SMEs.
SMEs are the very reason Singapore was able to survive the crunch that came from the pandemic and they continue to be a strong reason for its perseverance in this post-pandemic era. According to a report by CPA Australia - Singapore’s small businesses actually proved to be way more resilient than their other Southeast Asian counterparts. A large chunk of these businesses mentioned that this is due to the government’s support for them during the pandemic in 2020.
Broadly, the definition of an SME is a local enterprise that has less than SGD 250 million annual turnover, or less than 200 employees.
SMEs have done whatever they can to weather through the pandemic, many were supported by families and friends to tide them through. And now that the most challenging parts of the pandemic are behind us, these SMEs must now rebuild and even restructure in order to be prepared for further challenges that lay ahead in order to be a dependable, resilient core for Singapore.
Challenges Faced By Small Businesses in Singapore
Slow Adoption of Digitisation
Small businesses in Singapore are still struggling to innovate and adopt digital solutions and practices. Many companies are supposedly still utilising manual systems and processes which affect their efficiency and output. The government has launched a SMEs Go Digital Program that will give these businesses 70% subsidy on the tools and software necessary to support cyber security and artificial intelligence needs. The program will also aid businesses with the necessary training required to implement digital solutions.
Increasing Competition
Certain markets that are getting saturated and small businesses are struggling with the competition and constantly trying to rise above. Regional expansion can help them expand and survive but this is not something that is easily achieved. It is difficult to expand in a scalable way with a focus on new regions while business owners are focused on the challenges of day-to-day operations. In this aspect, SMEs require help to think beyond Singapore’s shores for their business growth.
Capital and Funding Requirements
Securing good funding requires effort and time and most times, because the business owners do many things themselves, that they are unable to find the time to look seriously into these areas to help them grow. This lack of capital is what limits their ability to adapt and innovate, and this ironically creates a vicious cycle of lack of “something” every step of the way. More avenues need to be created to stabilise liquidity and cash flow for these businesses.
Celebrating and Supporting Small Businesses
SMEs are what has kept Singapore’s economy alive during an obvious global crisis. It is important that these local business heroes are celebrated to keep their spirit alive and in a virtuous cycle of paying forward with local businesses supporting local, companies like Pan Pacific Leasing (Pan Pac) have started to incorporate more initiatives to help fellow business owners. One such scheme they implemented was quick financing solutions and hassle-free vehicle maintenance, so that business owners may spend precious time on key business operations instead of worrying about their vehicles, which is Pan Pac’s main line of business.
In this manner, it is also interesting to note that SMEs have started to embark on the idea of outsourcing to professionally managed services, very much like what the MNCs are doing with shared or consolidated services for their global offices.
In addition to catering their services to their SME clients, Pan Pac also champions the individuals who have helped Singapore tide over the difficult pandemic months. On such client they helped was Tiffanie of E-Beve LLP, a local seafood seller in the wet markets, who started live streaming and needed help to deliver the products to her customers. In the past, the customers would cash and carry their purchases, but the pandemic did not allow this, and thankfully, the internet allowed businesses to explore online sales avenues which helped them stay afloat. In E-Beve’s case, E-Beve now has a new delivery service which they did not provide before, mainly due to the fact that the Pan Pac team truly desired to help E-Beve and they quickly facilitated the leasing agreement and a vehicle for E-Beve to use.
Another brand that was helped by Pan Pac was Wanpo Tea Shop SG. Pan Pac’s flexible leasing model helped the company moderate their needs according to business demand, which was crucial in maintaining cash flow for the organisation, to survive the crisis.
Despite the challenges that SMEs face, it is heart-warming to see locals helping locals and working through challenges together and we look forward to Singapore growing from strength to strength, post-pandemic, and many more stories to share.
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