Singapore SMEs are struggling to meet customer needs, according to a study conducted by Aon, a leading global professional services firm providing a broad range of risk, retirement and health solutions. Aon Inpoint’s 2019 SME Insurance Survey incorporates insights from over 300 SMEs in Singapore.
Failure to innovate tops the list of risks faced by Singapore SMEs. The adoption of technologies such as Artificial Intelligence, drones, and advanced robotics have made SMEs vulnerable to new threats. With the speed of change in the global economy, these risks are becoming more unpredictable and SMEs find it difficult to prepare for them.
In addition, there is a clear link between the failure to attract and retain top talent and the ability to deal with increasing competition (risk number three). Workforce shortage is the number seven risk as organisations look to fuel growth through people. This becomes more pronounced as companies strive to hire high performers and strike a balance between local and foreign talent.
The top 10 risks for Singapore SMEs are:
1. Failure to innovate / Meet customer needs
2. Damage to reputation / brand
3. Increasing competition
4. Economic slowdown / Slow recovery
5. Cash flow / Liquidity risk
6. Major project failure
7. Workforce shortage
9. Corporate governance / Compliance burden
10. Loss of intellectual property / data
When asked to predict the impact of these risks in two years’ time, SMEs selected ‘Increasing competition’ as their top concern — with ‘Failure to innovate / Meet customer needs’ coming in at number three.
Since Singapore is a mature economy with only five million people, up to 50 percent of SMEs are considering internationalisation; that is, venturing into overseas markets. Over 60 percent of SMEs seek external financing via bank loans to power their growth plans and help with cash flow management due to delayed payments from customers.
According to Andrew Hare, Managing Director, Aon Inpoint, Asia: “Given the extent of Singapore’s market size, SMEs must seek to achieve growth on a regional and global scale. However, with this comes the need to mitigate new risks in new territories — and the ability to employ insurance and financing to boost their expansion plans.”
Richard Tan, Head of Sales, Aon Singapore says, “As SMEs look to innovate and internationalise, they must have the right corporate governance structure and risk management process in place. In addition, the On Demand economy has brought about issues around consumer and worker safety, consistency in service quality, and data privacy. Having a deep appreciation of these evolving risks and taking appropriate measures quickly could make or break their business ventures.”
The study surveyed over 300 SMEs in Singapore and provides key insights about their business priorities, top risks faced and how they buy and use insurance to reduce volatility and drive growth.
SMEs are defined as enterprises with annual revenues of less than SGD 100 million and a workforce of fewer than 300. This was sub-segmented into Micro SMEs (