In Singapore, small and medium-sized enterprises, or SMEs in short, are widely regarded as an essential and critical component of the economy. There are approximately 219,000 SMEs in Singapore, which makes up 99% of all domestic companies and contributes 50% of national Gross Domestic Product, or GDP in short.
While SMEs are considered by many people to as a vital facet of Singapore’s financial output, a considerable amount of Singaporeans do not understand the challenges, difficulties of running an SME in Singapore. In this article, we will be examining the challenges and difficulties faced by local SMEs.
Singapore’s economy is rapidly undergoing digitalisation, which is further sped up with the onset of the COVID – 19 pandemic, which created massive structural changes to financial systems all over the world. In Singapore, these changes are more significant due as our economy is connected to the global economy as compared to other countries.
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 are 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 budgetary issues, there will always be solutions to solve those problems. These solutions can come in the form of credit lines and loans from banks and licensed money lenders, among other financial institutions.
A credible and well reputed licensed money lender to borrow from is Soon Seng. They offer some of the best small business loans that are available in the market, as they are collateral free and have simplified requirements, which makes it easily accessible to businesses of any sizes, especially SMEs.
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 multi-national company, or MNC in short, 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 in 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 less resources as compared to the latter.
These manpower issues are further exacerbated by the COVID – 19 pandemic, which affected SMEs badly. To save their business, SMEs may be forced to retrench staff and halt the recruitment of new employees to reduce costs and financial overhead, so as to ensure the survival of the company.
In Singapore, where SMEs account for the vast majority of all domestic companies, there is stiff competition among them, due to a number of reasons, such as government policies and the ease of setting up a company in Singapore.
Due to favourable government policies which encourage the growth and establishment of SMEs, existing may face stiff competition caused by those new businesses. This is further exacerbated by the ease of establishing a business in Singapore, due to digitalisation.
With difficulties come opportunities and advantages
Managing an SME may be difficult, but the challenges and difficulties faced will help your business be resilient and better prepared when it comes to future setbacks. Opportunities could also be found in those obstacles, which will allow your company to bounce back and soar to greater heights if exploited properly.
When it comes to solving these issues, there is also help available. For example, financial institutions such as banks and licensed money lenders can help you to mitigate your financial troubles and worries, by extending loans and lines of credit to your business.
One such licensed money lender is Soon Seng money lender, which genuinely wants to help SMEs with their financial worries by offering SME business loans that have low interest rates, custom made repayment plans and fast approval.
Contact us via email at [email protected] or via phone at 6292 5693 to discuss how we can help your business!