A little extraordinary report on SMEs and trends:
In 2014, we saw the largest first-round seed funding in a Singapore start-up, GNum, a company that created a free online chat service that makes it possible for users to contact one another via any electronic device through a simple URL. In mid-October, Tembusu Partners made a S$7-million investment into the company. With this funding, the company hopes to expand its business into regional markets such as Thailand, Indonesia, Philippines and more.
GNum is not the only Singapore company that caught the attention of venture capitalists. Some other interesting start-ups that received funding in 2014, include ClearBridge Biomedical, DocDoc, RedMart, ApexPeak, HipVan.
What we learnt: We applaud the start-ups’ great ambition to want to launch into the region. Regionalisation is no longer the game of the big boys, a day 2 ambition or a growth alternative for a mature company. It is important and accessible to young companies and, for some, the story begins with going regional. The growth in the region and this development offers companies in Singapore a good competitive advantage in the region. Investors are eager to support the grand ambition.
Regionalisation and digitalisation are the new growth platforms. Relevant and effective digital service allows SMEs to penetrate traditional and niche business, with swift and cost advantages. Companies such as RedMart, registered good growth rate that attracted $23 million series B funding. Other interesting digital services such as FlagAHero, HipVan and ApexPeak offer new digital ways to do things better to improve how consumers and businesses are served.
What are your views about the region? What service can you scale out of Singapore? Is there inefficiency in the way services are offered in your industry and which you can work on? If you are to start your business all over from today, where will you set your sights? How do you design a small experiment to get some views on regionalisation and digitalisation?
Forget the basket and the long check-out lines. Singaporeans are now spoilt for choice when it comes to their sources for grocery shopping with online services such as RedMart and GoFresh.
To date since January, RedMart has raised a total of $35 million in investments from Garena and Facebook co-founder Eduardo Saverin, among others. Its business has been seeing a month-on-month revenue growth of 20 percent. Joining the game on online-groceries in mid-2014, Groupon Singapore co-founders Karl and Christopher Chong, along with two other partners kick started GoFresh, offering fresh gourmet selections to customers in Singapore.
What we learnt: There are still opportunities for businesses to seek out niche areas to serve in a big enough market. While there are larger players such as NTUC’s own online store, the market potential is a huge $5.9 billion. Even with a 1% market share, that works out to almost $60 million!
From groceries, wine, dog sitting or home chef, the changing lifestyle of the consumers is leading innovative new services in the many industries. Some businesses recognised the trend earlier than others, and gain the first mover advantage even in a matured industry – look at what Uber or GrabTaxi have done to change not taxi services, but the booking of taxi services in the region.
Popular local establishment Kay Lee Roast Meat Joint cooked up a storm in a multi-million dollar deal for its coveted recipe. The 32-year old restaurant which boasts the island’s best char siew (roast pork) was sold for $4 million (that’s $500,000 more than its original asking price) to conglomerate Aztech Group in October 2014. Kay Lee, which turns in a four-figure daily profit, will continue its brand name under Aztech and it sights on opening at least 10 more outlets in the next two years.
What we learnt: This was certainly one of the tastiest stories in the past year. How a decades old business was sold, and saved, in a multi-million dollar transaction. What a wonderful exit story! Entrepreneurs do eventually retire too. There are many things business owners leave behind, whether a brand, a strong team, a loyal client base, even a secret recipe. What they leave behind is a legacy that customers do recognise, and will continue to support.
What are the key strengths of your company? When you choose to retire what will the industry give most valuation to? Your brand? Your operation process and network? Your team? Besides the P&L, building these assets to be distinctive in the industry can increase the value of your company.
Good news for SMEs wanting to pilot new technological solutions to deliver services to citizens and communities! Establishing innovative solutions such as smart queue systems to better activate logistics vehicles, or employing automation through the use of robots in daily operations is now easier to realise.
As part of Singapore’s plan to build the world’s first Smart Nation, a $500-million ICT for the Productivity Growth (IPG) programme has been incorporated into the Enhanced iSPRINT by the Infocomm Development Authority of Singapore (IDA), so companies wishing to apply for grants to boost their productivity can do so with ease.
What we learnt: With rising costs of operations, businesses cannot ignore the need to upgrade their operations with technology. We’ve met businesses that are struggling with their processes, and seen how they’ve transformed themselves with technology for better results and growth. For example, Timbre Group, a Singapore restaurant, is planning to deploy flying drones to automate the process of serving their guests in some of their outlets. This is probably to address the labour crunch that came with the introduction of hiring restrictions by the government. Perhaps 2015 is the year for more of you to adopt technology for better business outcomes.
Finally, SMEs will be heartened to know that for the second year running, Singapore has been ranked the most SME-friendly by the Global SME Performance Review for 2013/2014.
With the continued support of the government in pushing for SME sector growth, more and more grants and assistance schemes have received injections of new funds to extend the programmes into the next few years. The high level of support provided to SMEs is evident particularly in the area of providing grants and tax benefits for training purposes. Two other countries that were ranked highly after Singapore for their government support were the were the United Arab Emirates and the United Kingdom.
What we learnt: We’ve all read or seen in the news how the government is constantly building up the SME segment by introducing more assistance in the forms of policy changes, grants and assistance schemes. It’s clear that your businesses are vital for our economy. We expect to see more ways that the government will invest in SMEs, and businesses should take full advantage of these schemes.
It is never easy running a small business and it takes an extraordinary person with focus and determination to fulfil the dream of becoming an entrepreneur. Today, SMEs provide a strong contribution to our economy, producing 50% of our GDP and hiring 70% of our workforce. These are truly amazing people doing amazing work!
Wherever you see a successful business, someone once made a courageous decision
– Peter Drucker.
Let’s give a cheer to all the SMEs here at myBusiness. Thank you for your courage.