Doing more with less seems to be the resounding mantra for Singapore's SMEs, with just under half (46%) expressing a positive outlook for the year ahead, according to a survey of 615 Singapore-based SMEs (with revenue less than S$100 million) by United Overseas Bank (UOB).
In contrast, one in three SMEs (31%) said they have a negative outlook, while the remainder (23%) of SMEs are neutral.
Such an outlook for 2020 is driven by their sentiments around the continued slowdown in global demand (23%), the impact of ongoing US-China trade tensions (18%), and the strengthening of the Singapore dollar, which SMEs worry will impact their competitiveness (17%).
In line with this, the top priority for Singapore's SMEs in 2020 is implementing productivity measures (51%). This is followed by reducing costs (43%) and developing new sources of revenue (42%).
When looking across sectors specifically, companies in the business services sector are the most optimistic about their outlook in 2020. This may be due to the positive growth they experienced in 2019. In Singapore, the business services sector is made up of several diverse industries such as real estate, legal activities, accounting activities, business and management consultancy activities, architectural and engineering activities, business representative offices and other business services.
On the other hand, those in the wholesale and retail sectors have the least positive outlook, given the negative growth in the sector last year.
Mervyn Koh, Managing Director and Country Head of Business Banking, Singapore, UOB noted that factors such as trade tensions are weighing down on SMEs’ outlook.
He added: "One of the ways SMEs are planning to achieve their productivity goals is to increase their investments in technology, which not only helps with increasing efficiency but also enhances their competitiveness in the long term."
In the same vein as Koh's comments, the survey found that 65% of SMEs are already using digital solutions in at least one area of their business. The processes which SMEs have digitalised include accounting (46%), payroll (45%) and marketing (38%).
Going forward, the three areas where SMEs expect to continue to digitalise more processes are expense management (24%), customer relationship management (24%), and sales (23%).
Most SMEs have yet to prepare for the planned GST increase
Despite most SMEs being aware of the planned goods and services tax (GST) increase to 9% between 2021 to 2025, less than half (41%) have made plans to manage the increase.
Among small businesses, those with less than $20 million in revenue, only 24% reported they have started implementing measures such as investing in technology (66%), raising productivity (64%), and moving up the value chain (52%).
Photo / UOB
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