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5 recommendations for Singaporean SMEs seeking rapid growth
How can Singaporean SMEs remain successful amid the challenges of an uncertain economy? Based on a proposal outlined recently by the Singapore Business Federation to the government, these five measures will help.
The Singapore Business Federation recently published Position Paper for a Vibrant Singapore, noting that Singaporeans are at a new crossroads. Pointing to both internal and external pressures such as the ongoing economic restructuring, a rapidly shrinking and ageing local workforce, foreign manpower curbs and low commodity prices, the Singapore Business Federation warns that these difficult times will significantly affect local businesses. According to its research, for example, 46 percent of SMEs are classified as “high risk” based on their credit rating.
How can SMEs transition through this difficult period? Following the paper’s proposed recommendations, here are five tips to help Singaporean enterprises navigate future growth into the year 2020.
1. Expand your geographical boundaries
In 2010, the government set a target to produce 1000 globally competitive companies with revenues exceeding $100 million by 2020. To date, there are only 300 companies that have succeeded.
Indigenous companies will thus be encouraged to expand into the global arena, while anchoring their headquarters in Singapore in order to grow alongside foreign MNCs. A shift in mindset is needed – by focusing on our small domestic market, your company’s growth is limited. Look for and identify growth opportunities that allow your firm to compete in overseas markets.
2. Attract and nurture the right talent
In order to go global, you need to have talented staff who are motivated by mobility. Review your organisational structure and incentives in order to attract passionate workers who can help you expand overseas, and develop training programs for managers to enable them to operate across cultures and countries.
3. Advance international outreach through technology
The global megatrend of new technologies has lowered the entry barrier in many industries, giving small businesses unprecedented potential to compete with the biggest players. Startups should therefore not underestimate their ability to tap into an international market, and consequently they should be ready to take the step and go global. This is doubly true for e-commerce firms, as the nature of the internet means that they are already primed for internationalisation.
4. Leverage intellectual property (IP) as a strategic asset
In a knowledge-based economy like ours, IP plays an extremely important part in value creation for businesses. Local enterprises should therefore prioritise creating, managing and leveraging IP, such as by designing incentives to reward and encourage innovation. Protect your IP by filing for copyrights, patents and trademarks, and look for funding assistance to find resources to help offset your filing costs.
5. Seek opportunities for synergy
Local enterprises currently support MNCs as suppliers and subcontractors, instead of leading the charge. While this hub-and-spoke model has worked well in the past, local companies can strengthen their positions by collaborating with providers in adjacent industries to develop proprietary solutions.
SPRING Singapore already sponsors a Collaborative Industry Projects (CIP) initiative through which three or more SMEs can form a consortium to develop and deploy solutions. Approved projects will be eligible for up to 70 percent funding support for qualifying development and/or adoption costs.
Difficult times lie ahead, but Singaporean SMEs can enhance growth in our increasingly volatile environment by taking a proactive approach to shaping our future economy. The recommendations from Singapore Business Federation include:
- Shifting growth targets from a domestic to a global horizon, and maintaining a strong local base while expanding operations overseas.
- Grooming more international managers who can operate across different cultures and geographies, and revising the company structure and incentives in order for this to succeed.
- Capitalising on technology to pursue international markets.
- Encouraging innovation within your company and leveraging it for exponential growth.
- Collaborating with partners in different industries to develop original solutions that are mutually beneficial.
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