Asmore individuals make an entry into the Singaporean business world, small andmedium scale enterprises have grown in number. While it’s remarkable that moreSMEs are coming on board, these businesses encounter their own uniquechallenges in their quest for survival in this Asian Country.
Challenges Facing SMEs inSingapore
IfSMEs are to be supported to grow the Singaporean economy, an understanding ofthe struggles they face while going about their business could guide thoseconcerned in the right direction. Below are some of these challenges:
Asmore and more SMEs enter the scene, the financial constraints become even moreglaring. Most of the challenges faced are not solely founded on funding problemsas poor management of financial resources has been fingered as the source ofthe problem in many troubled SMEs.
Likemany emerging markets, manpower appears to be in short supply in Singapore. More than 50% of SMEs inSingapore saythey find it difficult recruiting people who share their enthusiasm abouttaking their businesses to a higher level. This has been shown to have aproportionate effect on SMEs in the Asian country as many of these businessesdepend on technology and innovation to make any sort of headway. As theavailability of willing employees dips, wage demands go higher, and many SMEshave to bear the brunt.
Absence of an EntrepreneurialMindset
Manyof the SMEs in Singapore appear to be living in the past. They would rathermake use of archaic methods in their businesses. While the rest of the world isgoing digital at a geometric rate, they have remained static without imbibingthe use of technology to help their trade. Failure is often the outcome as isthe norm with any business that fails to keep up with the trend.
Surging Running Cost
One ofthe many challenges to the progress of SMEs around the globe is a bulgingoverhead. There has been a gradual increase in rent forprime offices in Singaporeover the last 4 years, and this only makes life tougher for SMEs in theSoutheastern Asian country. Apparently, small businesses are doomed toimprovising and managing whatsoever space they get.
SMEsare considered the driving force of the Singaporean economy. More than 90% of enterprises inthe Asian country fall within this category. As the government introduces stellar policies tosupport this category of businesses, startups become even more rampant. Many ofthe new entries have one singular objective – to dislodge existing competitorsusing distinct strategies. While competition is healthy, it’s not a rosy pathto follow. Conquering the Singaporean Market requires a lot of effort, determination,and consistency. With the dawn of the digital era, a myriad of options are opento consumers leaving many small businesses struggling to survive. Many of theseSMEs learn this the hard way as a lot of them shut-up shop within a few years.
Failure to EmbraceTechnology
Ourworld as we know it is changing. And technology is measuring up. Singaporehasn’t been left behind in this transition, but some of its SMEs clearly didn’tget the memo. With the digitization of the business scene, failure to embracetechnology and its accompanying tools is considered entrepreneurial suicide.Many of the SMEs in Singapore that are culpable have complained of theresources and manpower required to extinguish the possibility of going into oblivion.
Inadequate Cash Flow
Everybusiness requires cash flow to perform at an optimum level. If there is anydecline in the flow of cash, the affected business stutters greatly. Sincethere are more SMEs than envisaged in Singapore, customers have become cunning.Many of these customers would stockpile debts with SMEs and would threatenthese businesses with an end to their patronage if they put up any resistance.By having a substantial amount of money trapped in customer debts, many smallbusinesses find it impossible to meet their obligations with their suppliers.Undesired friction and broken business relationships are the results.
More Money, More Problems
Surprisingly,many SMEs are afraid of evolving into something bigger. Those with this phobiabelieve that growth can put the strong footing of their operations intodisrepute. There’s that strong sense of mistrust which entrepreneurs inSingapore have for their hired hands. They believe if they scale-up theirbusiness, employees at the center of operations can sabotage their effortleaving them in ruin.
Whilegovernment policies are attempted at supporting SMEs, the rising inflationdoesn’t help. And as inflation rears its ugly head, interest rates from thefinancial sector follows the trend, and small businesses at the receiving end.One of the repercussions of this situation is the dwindling cash flow availableto SMEs. To stay afloat under such crippling conditions, businesses have tothink outside the box and be one step ahead of the pack.
Anentrepreneur might have all the right ideas to make his business grow. He coulddo all the hard work to make his dream a reality. But if customers are notforthcoming, he is considered to have failed. Many SMEs in Singapore fail notfor any fault of theirs. The modern-day customer is smarter, but this doesn’tcommensurate to a higher purchasing power. Currently, customers in Singaporeare no longer cutting their cloth according to size but budget. This has leftmany small businesses in limbo especially as customers are not patronizing themenough for their establishments to break even.
Whilehiring a capable employee is considered a challenge in Singapore, finding onethat is super motivated about his job is even more difficult. The problem withhaving an unhappy employee is the lackluster effort he brings to the table andthe stress he adds in the overall management of the business. The situation isakin to pouring water into a basket. Regardless of the approach you take, itwouldn’t just hold. While having core values are efficient at putting employeesin sync with what you stand for, making them happy is a more effective way ofgetting the best out of them.
Regardless of the challenges which SMEs face in Singapore, the survival of small businesses isn’t apocalyptic. By embracing the use of technology and coming to terms with their environment, small and medium scale enterprises can evolve into conglomerates in the nearest future.
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(By Molly Joshi)