Singapore small and medium enterprises (SMEs) are finding it increasingly difficult to know what their customers need and see the inability to innovate as a significant risk factor.
The conclusions come from a recent Aon Inpoint's 2019 SME Insurance Survey that studied the challenges faced by over 300 SMEs in Singapore.
The survey defined SMEs as enterprises with annual revenues of less than SGD 100 million and a workforce of fewer than 300.
Singapore SMEs see failure to innovate and meeting customer needs being their first worry, the survey noted. It is followed by reputational risk to the brand (ranked second) and increasing competition (ranked third).
Surprisingly, economic slowdown and cash flow were ranked fourth and fifth respectively.
The ranking changes in the near future that highlights changing concerns.
When asked to name their top risks in the next two years, the respondents ranked increasing competition as number one. Failure to innovate and meeting customer needs came in third, making it a critical issue for the years to come.
When asked for the reason for their struggle to innovate and understand the customer, the primary reason cited was lack of capital. More than 60% of SMEs sought external financing to help with late payments, said the press announcement.
“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,” said Andrew Hare, managing director, Aon Inpoint, Asia.
While not their first concern, workforce shortages are beginning to challenge SMEs. Ranked as the number seven risk, it underscores Singapore's struggle to compete with a small population of 5 million and balance foreign and local talents at the workplace.