Challenges facing Singapore SMEs and the implications
There are many current challenges facing Singapore SMEs, and those challenges have big impact on the strategic business plans as well as employees. It is good for a company and its employee to understand what are the challenges and how they will affect the current work role and potential future roles, and to learn what competencies will the employee needs to develop to meet these challenges and prepare for the potential future roles.
2017 is a special year, there are many things happened in Singapore, good or bad, Singapore have to bear with them.
Challenges facing Singapore SMEs
Currently in Singapore, organizations like MNCs are facing the challenges of downsizing, restructuring, cost, staffing issues; and organizations like SME are also facing big challenges in terms of staffing, cost, competition and unclearly direction of future growth.
1) Unable to find locals for low paying service jobs
More than half of SMEs in Singapore say manpower shortages are tough. The reason is that locals often do not like to apply for low paying service-based roles. And there are strict employment quotas from the government, as such many SMEs quickly reach their manpower limit on foreign workers.
2) High labor cost
Due to high cost of living and inflation, the labor cost for SMEs are quite high, they are finding that wage expectations are high due to the growing demand for workers. Employees in the retail sector usually require annual wage increases of around 4-5% a year, otherwise they may switch jobs.
3) High rental
High rental often forces businesses shifting places from one to another. Overheads are always a big consideration for small businesses, especially rental. SMEs are required to be creative in the use of space , some SMEs often share their business spaces, or make their spaces for multi-purpose use.
4) Lots of competition
Singapore has a very small inland market, perhaps the biggest challenge faced by SMEs is the rising competition. Not only there are competitions with local firms, but also from international and online. Especially, ecommerce has created big challenges for a variety of businesses.
More than half of SMEs complaints local competition too high.
The digitization of business combined with fewer geographical restrictions has opened up many opportunities but has also meant that local companies are facing tough competition in these new online and offline spaces. The result has been lower costs and more choice for the consumer so SMEs have to be more creative to reach the same audiences.
Local SMEs have to wake up and equip them with all the necessary digital tools to fight the competition to survive.
5) Increased operational costs
Increasing high cost of living and high cost of regulatory compliances make the cost of doing business higher and higher. And increased costs of raw materials, imported goods and machinery squeeze further the profit margin of many small companies.
6) Customers’ power
At this information age, customers are getting more knowledgeable and confident in what they want than ever before. SMEs have to be creative and efficient in the way they work. Customers now can get information about anything very easy and fast online before even interacting with local company. As customers are equipped with more knowledge and insights, SMEs have to be strategic prepared to do business and work smart to attract customers to their shops over their competitor’s.
7) Pressurized to make their decisions
Now the questions for traditional SMEs is “To embrace the change or get cheese moved?”. If they are reluctant to embrace this change, they may be missing out the wave of digital economy.
With the above mentioned Challenges facing Singapore SMEs , SMEs need to be sure what direction they should move towards. Time is running fast, SMEs are pressurized to make their decisions with incomplete market information in hand, this is the biggest challenge for them to decide what direction they should move towards.
Impacts on strategic business plan
Within such kind of business environment in Singapore, companies like SMEs need to have a robust strategy to take consideration of market niche, cost ( both rental and operational cost), staff ( the right people and how to retain them), and the effective ways of executing the business plan ( A trustful, collaborative, and promising team to put the plan in to action and generate results, execution is always the key for every plan).
And most important the organization need to have the ability to deal with VUCA (Volatility, Uncertainty, Complexity and Ambiguity ) conditions and situations. Do engage a consultant if SMEs have difficulty to deal with such problem. DNE Singapore, a local management consulting firm can help SMEs resolve this problem and overcome the Challenges facing Singapore SMEs.
Current work and potential future role of employee
For employee, it is time to review your skill sets, and understand the company’s direction so that to make yourself still relevant in the changing business environment.
Also to think about your potential future role, what will make use of your expertise and experiences, and in what areas you would add value to companies in the near future.
Competencies need to develop for employee
In current digital age, following standard competencies are needed such as :
- Digital literacy
- Emotional Intelligence
- Global Citizenship
Other competences good to have such as:
- Ability to handle VUCA condition and situation, especially the ability and skills to deal with ambiguity and complexity situation;
- Interpersonal skills ;
- Culture building in the company and in the team;
- Networking skills;
- Skills of managing the emotions of others.