Why SMEs in Singapore must innovate to survive

Entrepreneurs are a unique breed of individuals. They are original thinkers with extraordinary toughness. Successful entrepreneurs are often lauded for the achievements, and behind that success is a lot of hard work – keeping on the right track can be difficult but the true challenge lies in staying relevant. This challenge requires innovation and also sometimes re-invention, aided by technology to stay relevant in this increasingly digital world.

However, SMEs in Singapore don’t always view innovation as a necessity to nurture success. Preoccupied with overheads, costs, people management, sales, and all the other basic day-to-day running of the business that takes up a bulk of their time, SMEs often see innovation as a supporting pillar but not a priority.

Online commerce has created both global opportunities as well as greater competition for local players, and SMEs from many sectors in Singapore face the pressures of a larger, more connected marketplace. Taking for example the greater mobile connectivity of consumers, businesses must adapt and explore opportunities to incorporate mobile payment options.

In addition, capitalising on digital payments also enhances business efficiencies in one way or the other. Most recently, traditional retailers in Singapore such as supermarkets and coffee joints have begun integrating mobile payment terminals, enabling them to serve ever increasing number of customers faster, with little or no increase in font-line staff.

Zeroing-in on innovation and technology – to scale and to expand
Innovation and technology are key tools for businesses to identify real competitive advantages and opportunities to grow beyond Singapore. Technology can be leveraged to access customers across geographies and create greater visibility amongst target segments.

Mastercard’s research on SMEs in Singapore found that SMEs that utilise technology more extensively in their businesses, e.g. digital payment systems, have a more positive outlook towards business growth and also give them a competitive edge over rival companies. Overall, SMEs that use technology more extensively expect their business to grow by 57.6% (vs. 20.5% with less extensive use of technology), use social media more extensively (63.9% vs. 23.5%), and are more likely to accept digital or card-based payment methods (53.7% vs. 39.4%).

Whilst setting up electronic payment systems is not often top of mind for SMEs, a good e-payment system can help a business pivot from a simple offline entity to a safe-and-secure integrated ecosystem consisting of online transactions, customer database system, inventory management, and customer engagement platform, giving businesses wings, so to speak – enabling them to reach not just its customers in Singapore but also grow a presence wherever else customers may be.

In addition, personalisation in engagement and customer relationships for both existing and new customers can be managed in a more efficient and targetted manner. The immense data that is captured using technology will allow SMEs to develop customer intelligence and subsequently optimise sales.

An example can be found in mobile Point of Sale (mPOS) solutions, which transforms smartphones and tablets into terminals that allow merchants to accept credit, debit, and prepaid card payments from customers anytime, anywhere. It is designed to meet the needs of mobile, traditionally cash-based small SMEs and startups. For example, in Singapore, an ice and beverage distributor that mainly transacts in cash upon delivery is now able to accept credit and debit card payments with ease using the mPOS, without the need to fumble with cash and can better track sales electronically.

In Singapore, government grants definitely come in handy when it comes to relieving high business costs. Beyond that, SMEs can also look at commercial credit solutions, such as an invoicing system as a means to help them better raise and manage funds. Having such solutions enable SMEs to extend their working capital life cycle, whilst helping them gain better visibility and control over new funds.

Staying ahead of the curve
SMEs account for nearly 99% of private sector companies and are vital to the Singapore economy. It is imperative that the sector continues to grow and thrive. Today, we operate in a global marketplace, and in this fast-moving, competitive space, SMEs need to innovate, develop new capabilities, and leverage technologies that simplify business processes and increase efficiency in order to stay ahead, whilst also helping them expand their footprint locally and globally.