Running a business is challenging, growing one in the current macro environment is even more so. Soaring energy prices, disruptions in global supply chains, and stubbornly high global inflation are amongst the many headwinds businesses have been facing this year.
In the months to come, businesses are bracing for another season of financial uncertainty, where a global recession could unfold. Although Singapore’s economy is expected to continue expanding, its GDP is forecasted to only grow between 0.5% to 2.5% this year according to the Ministry of Trade and Industry's projection released in November 2022. This figure marks a sharp decline from the 3.8% GDP growth in 2022 and the 7.6% GDP growth in 2021.
However, it is not all doom and gloom for businesses. To help tide over this challenging period, local Small and Medium Enterprises (SMEs) can tap into an array of government initiatives. For example, the Energy Efficiency Grant that offers funding support to SMEs from the food services, food manufacturing, and retail sectors looking to adopt energy-efficient equipment; the increase of the SME working capital loan to $500,000; and the extension of the Jobs Growth Incentive (JGI) which supports employers in hiring locals.
These initiatives are useful in alleviating cash flow pressures, but they serve only as a band-aid solution. To unlock long-term sustainable growth, SMEs are encouraged to invest in: (1) innovation and digitalisation as well as (2) human capital development, and leverage (3) business mentorship.
Innovation and Digitalisation
According to a 2021 study, small businesses that readily adopt new technology enjoy an average of 120% higher revenue and 106% higher productivity than small businesses that do not. Innovation in business does not mean cooking up a revolutionary idea. It can be as simple as implementing novel ideas that improve the operational and cost efficiency of a business. Digitalisation is a prime example.
Consider Chicken Pie Kitchen, a once old-time brick-and-mortar restaurant. After adopting a finance and accounting digital solution, it reported enjoying manpower savings of about 75%. When it implemented a new human resource management system along with a digital payroll solution, processes that previously used to take 3 to 4 days were streamlined down to within an hour.
The time and cost savings gained from improved efficiencies can, in turn, be used to drive long-term business growth by rechanneling them to areas such as marketing, human capital development, and harnessing other digital technologies like Artificial Intelligence (AI), the Internet of Things (IoT), and Data Analytics. When AI and IoT are used in conjunction, operational data involving machines can be collected and automatically analysed to generate actionable insights that can be used to make more informed business decisions.
In addition to improving efficiencies, digitalisation also enables businesses to stay abreast of consumer behaviour trends. Consumers are increasingly flocking to digital because of its convenience. Grocery runs? Almost a thing of the past. Medical consultations? Online. Exercise classes? Virtual. Food? Delivery.
As consumer preferences shift to digital, consumer expectations of businesses have also shifted in tandem. Businesses are increasingly expected to have an omnichannel approach while 74% of Singapore consumers are more likely to patronise businesses that enhance the shopping experience with technology such as self-service kiosks and Augmented Reality (AR) and Virtual Reality (VR) try-on tools. To stay abreast of consumer behaviour trends, innovation and digitalisation are key in both retaining existing customers and acquiring new customers.
Human Capital Development
As the saying goes, a company’s greatest asset is its workforce. Developing human capital translates into more capable workers to drive business growth. Furthermore, research has found that companies with a strong human capital development culture are more likely to have engaged workers. The benefits of an engaged workforce are plenty. For example, engaged workers deliver higher quality work, are happier at work, more productive, and less likely to quit.
Nowadays, the majority of Singapore workers view career learning and development opportunities as one of the most important employee value propositions. COVID-19 has instilled a greater sense of importance for career agility, while the workforce is increasingly made up of Millenials and Gen Zs, cohorts that place greater emphasis on professional development and career growth. Investing in human capital development helps businesses not just raise their bottom line, but also gain an edge in the war for talent.
Investing in human capital development is what local SMEs like Pave System, a supplier of audio and visual systems for performing venues and corporate spaces, pursued to drive its long-term growth. With offices already in Vietnam, Malaysia, Indonesia, and Thailand, Pave System believed that in order to drive further expansion and establish itself as the market leader in its business category, it needed to “invest and develop in its people”. It did so by implementing a framework that promoted “employee engagement and talent development for an increasingly diverse team”.
For SMEs that seek to invest in human capital development but require funding or guidance support, they can tap into a wide array of government initiatives. For example, the Enhanced Training Support for SMEs (ETSS) which supports up to 90% funding of SkillsFuture courses and the Enterprise Development Grant (EDG) which covers up to 70% of costs involved in various areas of human capital development such as job redesign, internal mobility, as well as learning and development.
Many SMEs flounder when it comes to deepening their digital capabilities or investing in their own people. Without adequate experience, businesses may have misgivings or misunderstandings about the cost-effectiveness of new approaches. Why invest in your own people when you can just hire? Why innovate and digitalise when what is in place is not broken?
On top of that, should SMEs be keen on innovating or investing in their own people, how should they even begin? The lack of know-how becomes an acute problem. The sheer magnitude of options out there on the digital front also causes decision paralysis. A simple Google search for ‘Payroll Software’ returns pages upon pages of payroll software, with each vendor proclaiming largely overlapping benefits. Not to mention the tendency of vendors to be opaque in their pricing.
This is where business mentorship can prove to be a lifesaver. Qualified business mentors are able to plug these gaps in knowledge, bolster the confidence of SMEs, and guide them in devising and executing strategic growth plans.
Tiong Lian, a meat supplier, is an example of an SME that has benefitted tremendously from receiving business mentorship. Mr. Larry Teo and his brother Mr. Kelvin, owners of Tiong Lian, wanted to capture new markets, especially millennials, and pivot their business from mainly serving enterprises to retail customers by launching new Ready-to-Eat and Ready-to-Cook product lines. Under the guidance of their mentor, Dr. Brian Heng, Director, Centre for Continuing and Professional Education, SUSS, the Teos gained invaluable insights that refined their strategic growth plan, key contacts that helped with the implementation of their plan, and confidence in it.
For SMEs that want to up the ante in unlocking long-term sustainable growth, they can take a page from the Teo brothers’ book and enrol in business mentorship programmes such as the Enterprise Leadership for Transformation (ELT) programme by SUSS.
The ELT, which supports up to 90% funding of programme fees, is a one-year programme that connects SMEs with highly qualified mentors and industry practitioners, delivers at least 54 contact hours of multi-faceted training that is vital in unlocking business growth, and provides the opportunity for an overseas immersion trip that empowers SMEs with the contacts and knowledge needed to regionalise.
Existing business headwinds are expected to persist into 2023, with the possibility of a global recession. Tapping into solutions like business mentorships helps enterprises strengthen their capabilities and create a strategic growth plan for achievable and sustainable long-term growth.
This article is an adaptation of the Business Times article, ‘SMEs unlock long-term business growth with help of skilled mentors’. The article shares how SUSS’ Enterprise Leadership for Transformation (ELT) programme has helped Singapore’s enterprise leaders build capabilities as they transform their businesses for a new economy.
 The Straits Times (Jan 2023) – Singapore’s economic growth slows to 3.8% in 2022; outlook darkens for 2023
 The Straits Times (AUG 2022) – SMEs in food, retail can apply for $30,000 energy efficiency grant from Sept 1
 Ministry of Finance – $1.5 billion Support Package to Provide Targeted Relief for Lower-Income Households and Vulnerable Groups
 Xero – Behavioural research by Xero uncovers barriers to small business technology adoption
 The Business Times – Start Digital initiative for SMEs to be extended for 3 more years
 SMEhorizon – What Singaporean consumers want in the post-pandemic world
 SMEhorizon – Singaporeans’ high standards for retailers demand continual innovation
 Gallup – 4 Factors Driving Record-High Employee Engagement in U.S.
 Gallup – What Is Employee Engagement and How Do You Improve It?
 Randstad – 91% of Singaporeans want career learning and development opportunities: workmonitor 2022 report.
 Forbes – 74% Of Millennials & Gen Z Think They Can Build Better Skills At A New Job
 The Business Times – SMEs unlock long-term business growth with help of skilled mentors
 SkillsFuture Singapore – Enhanced Training Support for SMEs
 Enterprise Singapore – Human Capital Development