Failure of SME in Singapore
Despite making up to 98% of businesses, small medium enterprise (SME) have not been viable due to many factors. You may be willing to start a small business, and like most other owners of SMEs in Singapore, you may possess the knowledge, relevant skills and confidence required to forge ahead. The issue here is, with the failure of 84% of such businesses, why are they failing?
Reasons for SME failure in Singapore
Competition. Except you create something ingenious, new and unique, you are likely going to meet stiff competition from producers of similar products and services. Because of this you may soon fizzle out of business. SMEs in Singapore for instance, have had to constantly battle with products emerging from China and online services. This is particularly visible in the retail sector.
High cost of production
With double digit inflation figures, small businesses in Singapore are being choked by the constant rise in the prices of assets, either fixed or variable. This is largely due to the huge foreign exchange gap in the international market. SMEs failure is basically premised upon the fact prices of raw material are increasing and customers are often not willing to pay more.
Inability to access fund or grants
Financial Institutions in Singapore are rigid and operate in a way that favors big businesses. The growth of a small business enterprise depend largely on the availability of fund. This will provide breathing space for expansion and for the execution of long term goals. Where funds are available, owners of SMEs in Singapore are not well informed. Furthermore, they do not know how to access it. The rigid nature of accessing funds also makes it unattractive.
Absence of feasibility studies
The reasons for failure of SMEs in Singapore can be associated with the absence of proper feasibility studies. Enterpreneurs go into business without having a background knowledge of the business environment they are venturing into. Starting a business involves examining the best and worst case scenarios. In addition, you also have to understand the risks involve and strategically outlining ways of mitigating against such risks.
Lack of Innovation/creativity
The survival of SMEs is directly linked to the capacity to produce new and unique contents. This is for both products and services to the market. The inability to access fund has imparted negatively on SMEs. Many SMEs have not been able to transform their businesses to meet up with the demands of an ever changing market. Reasons for failure of small business enterprise in Singapore is not because business owners are unwilling to bring new innovations, they only lack the capacity to do it.
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