SINGAPORE, Feb 3 — Four out of five small- and medium-sized enterprises (SMEs) do not expect their business to grow this year, and half are banking on government support to ride out the pandemic.
These are the results of an annual survey of SMEs here by insurance firm QBE Insurance Singapore that were released yesterday.
It had surveyed more than 400 SMEs in the fourth quarter of last year, with the Covid-19 pandemic casting a shadow over the economy. The SMEs surveyed come from various sectors such as manufacturing, finance, arts and recreation, and health.
QBE said that 81 per cent of SMEs are expecting the overall size of their businesses to either stay the same or decrease this year, while 64 per cent expect business sales to stay the same or decline this year.
QBE added that 39 per cent of all the SMEs also expect to cut their manpower.
At the same time, half of the SMEs surveyed are counting on financial relief from the Government.
Among these SMEs that said they require government support:
● Seventy per cent stated a need for financial support in particular
● Thirty-seven per cent wish for enterprise development programmes
● Thirty-four per cent want general advice from the government
Only three per cent of all SMEs said that they are not intending to rely on government support.
However, not all who are aware of government support initiatives are taking them up.
The survey found that even though 95 per cent of SMEs are aware of government packages to help them weather the pandemic, only 61 per cent of them have taken them up.
The Government had unveiled four national budget packages last year to help businesses and workers cope with the crisis.
Among the slew of measures, some of them aim to provide help for SMEs. This includes enhancements to the Enterprise Development Grant, which provides companies with some for the cost of projects that would help them innovate, venture overseas or upskill their workers.
QBE added that the discrepancy in the number of SMEs who know of these measures and those that have taken them up “indicates a significant gap between awareness and action among these enterprises”.
Ronak Shah, chief executive officer of QBE Insurance Singapore, said: “As they rebuild their business models and strategies in a much-changed economy, SMEs also need to realise the wealth of support made available to them and ensure they act on them swiftly to bolster their chances of recovering strongly from the pandemic.”
What challenges businesses are facing
The survey found that:
● About three in 10 of the SMEs indicated that cost mitigation was the most significant challenge to their business last year
● Slightly more than half still expect to struggle with cost mitigation issues well into 2021
● About six in 10 indicated that cost control measures would be their primary approach to survival in 2021
● Four in 10 indicated that they are likely to resort to downsizing or streamlining their organisations in 2021 to keep afloat
Despite the headwinds, some of the SMEs were more positive about the economic climate in the year ahead than the year before, the survey found.
About six in 10 indicated that they anticipate the economic climate to either stay the same or improve in the next 12 months.
However, the firms said that any expansion or growth plans will still be put on the backburner over the next 12 months.
“This suggests that firms continue to remain cautious toward growing their businesses as the economy continues to suffer from residual effects of the pandemic,” QBE said.
How businesses are digitalising
Another finding from the survey was that SMEs have turned to digital technologies to sustain their businesses through Covid-19:
● SMEs have digitalised an average of 15 per cent of their business
● An average of 66 per cent of their business processes are now being conducted digitally
● Almost seven in 10 of the SMEs said that the pandemic had led them to digitalise quicker than they had originally planned
● Nine in 10 are investing further in technology or showing a willingness to do so
● About one in five are looking to invest in employee systems to optimise work-from-home environments.
However, 40 per cent of SMEs are concerned with the associated costs of digitalisation, due to the lack of funds and manpower with digital skills or expertise.
QBE said: “With digitalisation efforts becoming a lifeline for businesses this year, it is likely that more SMEs will look to gain financial support around digital initiatives to help their conduct of business amid current business conditions.”
Another aspect of going digital is the exposure to new cyber risks, yet many enterprises continue to operate without contingencies for such risks:
● Close to a quarter of SMEs indicated that they do not have any processes or protection against cyber risk, despite almost half of them stating that they are fully informed of cyber threats to their business
● About six in 10 said that they have not engaged in any cyber protection due to the unlikelihood of encountering cyber-related issues. This is “a potentially worrying statistic as more firms continue to work remotely in 2021”, QBE said.
Shah, its CEO, said that as firms navigate changing conditions and operate remotely, they need to be increasingly aware of the new threats and risks they face and make adjustments to their operations.
“Only then can we ensure the longevity and survivability of our SMEs, and therefore our economy, in the long-term,” he said. — TODAY