In Singapore, small and medium-sized enterprises (SMEs) are widely regarded as an essential and critical component of the economy and a vital facet of Singapore’s financial output.
However, many Singaporeans often do not understand the challenges and difficulties of running an SME. Are you an SME business owner or thinking of starting your own business?
Here, we will look at both the challenges and advantages of local SMEs, as well as things you can do to boost your business.
Singapore’s economy is rapidly undergoing digitalisation, which is further sped up by the Covid-19 pandemic.
With these changes, there is a need for SMEs to digitalise their businesses, as they contribute significantly to the local economy.
However, many SMEs may encounter difficulties when doing so. Such difficulties may include cybersecurity threats, a lack of understanding of digital skills, and a lack of manpower who possess the relevant skills to help in the digitalisation efforts.
One of the main issues faced by SMEs in Singapore is monetary issues. These problems may stem from poor financial management, increasing costs, and lack of funding. The finances of an SME may also be affected by economic factors such as supply and demand, rising inflation rates, and business cycles.
Even though SMEs may constantly face budget issues, there will always be solutions to those problems. These solutions can come in the form of credit lines and loans from banks and licensed money lenders, among other financial institutions.
When running a business, it is always important to invest in the right manpower, as this will help to ensure that the company stays profitable. However, hiring and retaining the right people is always a tedious task for businesses, especially SMEs.
Most fresh graduates will prefer to work for a multinational company (MNC), as they perceive that such a company will give them better opportunities and benefits, as compared to SMEs.
When trying to retain staff or bring fresh blood into the business, an SME will have difficulties trying to match the opportunities and benefits offered by MNCs, as the former will have fewer resources as compared to the latter.
In Singapore, where SMEs account for the vast majority of all domestic companies, there is stiff competition due to several reasons.
For instance, due to favourable government policies which encourage the growth and establishment of SMEs, as well as the ease of setting up a company in Singapore, existing businesses may face stiff competition from new businesses.
One of the best advantages of SMEs is that usually, business owners are more on the ground compared to those of larger companies. When you deal with customers more directly, you create a bond with customers and this helps in customer retention in the long run.
Due to the smaller sizes of SMEs, they are usually more flexible to changes as compared to larger companies, as they tend to have less bureaucracy.
This means that they can make decisions more quickly and adjust to market changes more quickly too.
SMEs also tend to have smaller teams, which means it is easier to communicate among staff to work together as a team.
Despite the financial issues faced by SMEs, financial institutions such as banks and licensed money lenders can help you to mitigate your financial troubles, by extending loans and lines of credit to your business.
Besides assisting you with cash flow, borrowing can actually help your business in terms of accelerating your business expansion and growth as well.
But of course, before taking a loan, you need to consider certain important factors to ascertain if it is indeed suitable for you.
As one of the top licensed money lenders in Chinatown, Singapore, Soon Seng Credit helps SMEs with their financial worries by offering SME business loans with competitive interest rates, custom-made repayment plans, and fast approval.