Singapore is a business-savvy country. In 2020, 63,480 new enterprises opened, up from 61,573 in 2019. The pandemic hadn’t swayed entrepreneurs from realizing their dreams. The number of new enterprises was the highest since 2016 when nearly 65,000 startups were registered.
The first five months of 2021 saw 27,764 new businesses. It was 5,626 more than the same period in 2020. But closures had been rampant as well, which wasn’t surprising. Still, closures in 2019 were far higher than those in 2020. The businesses that shut down during the pandemic was only a little over 43,000, compared to over 47,000 in 2019.
According to analysts, the government’s support and relief schemes helped cushion the impact of COVID-19 on businesses. But still, some big-name companies succumbed to the pandemic, most notably Robinsons and Sportslink. For every big company, dozens or hundreds of small businesses are affected. Does it mean it’s time to grow your business or wait until the pandemic ends?
Since no one can see any clear end to this battle, it’s probably best to take steps to grow now. But consider these factors first:
1. The Numbers
The number of small enterprises in Singapore indicates tough competition. Small and medium enterprises (SMEs) make up 99 percent of all businesses and support 72 percent of employment. Locals own 81 percent of SMEs. On the other hand, whole foreigners own 18 percent.
If you’re in retail, you’re probably one of the 9,000 new retail businesses that opened in 2020. New manufacturers soared as well, reaching a 17 percent increase. Manufacturing is the top industry in Singapore, alongside ownership of dwellings and construction.
An expansion is possible is a positive development for your business. But it doesn’t mean you should proceed with it immediately. An expansion also requires a comprehensive business plan, as if you’re starting over again. As you make your plan, that’s when you may realize whether you’re ready to grow or not. What can you offer that your competitors can’t? Why should you stand out among 60,000+ startups? If you can answer these questions positively, you’re likely ready to expand.
Growing a business isn’t cheap. If your expansion only involves releasing new products but not building new branches, that might be feasible. If there is a demand for the products you want to release, you already have a market. But again, consider the numbers or competition. Suppose another business already sells the product you want to add to your offers. What makes your brand better than theirs? Your products should always have a unique quality, even if it’s a commodity.
Consider where to source your new product as well. You’ll face hefty shipping costs if you’re getting them from an overseas manufacturer. Not to mention, the pandemic has been disrupting the supply chain. This may affect the turnover of your products.
If you run an e-commerce brand that you’d want to expand internationally, shipping costs will also matter. Can you handle custom fees and other payments? Those will reflect on the international shipping costs of your product, affecting its retail price. What if the customers aren’t pleased?
Focus on domestic expansion if going international will hurt your pockets. A new product or service line will be easier to manage than international laws.
Say you’re ready to expand, and you decided to get a loan to finance it. Where are you getting the loan? Though there are numerous banks and other financial institutions in Singapore, it might be challenging to get an SME loan.
An SME loan, a.k.a. business loan or commercial loan, assists with short-term funding needs for operational costs or new equipment. In some cases, they also help fund salaries or supplies used in the manufacturing process. That said, if you want to branch out, a loan can help you cover the operational and logistical costs involved in it. But there may be some restrictions.
Business loans in Singapore are often granted to SMEs that have been around for at least six months. Obviously, you need to be an established business, but you need to prove it. Lenders may ask for proof of your annual revenue before lending you money. Credit scores also matter, both of the business and its owners. Hence, if your credit score is low, the lender may deny you a loan.
The application and approval process typically lasts for two weeks. Throughout that period, you’d have no way to know if you will be approved or not. So prepare the requirements, and ensure that your financial track record is impressive. It’s the only way to increase your likelihood of being approved. And, of course, the only way to grow your business successfully.
With these factors considered and planned, you set up your small business to reach new heights and hit more remarkable milestones.