The results from QBE’s latest SME survey are in, and after a difficult few years of Covid-19 restrictions, 2022 marked a turning point for SMEs in Singapore with 2023 expected to be a year of growth and opportunity.
While every business faces its own unique challenges, a majority of SMEs are positive about the new business environment, which includes an opening up of the wider Asia economy post-Covid.
Positive outlook tempered by concerns around inflation, energy prices and GST hikes
59% of respondents surveyed said that the economy improved in 2022, with 59% also expecting economic conditions to remain upbeat in 2023. This positivity for the wider economic outlook extends to SMEs’ views on their own business growth. In 2022, 55% of SMEs reported an increase in overall sales, with 58% of SMEs expecting an uplift in sales in 2023.
As a result, many SMEs are also prepared to increase their spending in the next 12 months: across capital (47%), staff training, and hiring (42%). These numbers are significantly up on the year before — what a difference 12 months can make!
While the overall mood among executives is positive, threats and challenges are, sadly, never far away.
The survey showed that Singapore’s SMEs are concerned about the impact of rising inflation (76%), higher energy prices (64%), and the rise in the goods and sales tax (GST) (63%), which kicked in at the beginning of January 2023. These three risks, and others that are likely to materialise suddenly, should be closely monitored and adapted to.
Imperative to ensure robust risk management and cost control
As firms grow, making sure risk management is robust will become even more important. Any growth plans will need to be balanced by having a close eye on cost control. Businesses should also constantly consider streamlining and improving processes with technology. With 44% of SMEs ready to downsize or streamline if necessary, these firms have learned that sentiment can quickly change and that business plans need to be as flexible as possible.
As my colleague Goh Shun Quan, QBE’s Head of Underwriting, Retail & SME, Singapore said: “SMEs can be cautiously optimistic about the year ahead with a majority expecting to expand their businesses. However, the threat of rising inflation, rising energy prices, and the GST increase are key risks which SMEs should be preparing for.”
We wish all of Singapore’s SMEs a successful 2023. The QBE team and I are more than happy to discuss any issues raised in this blog or any other matters on your mind. We would also appreciate any thoughts you may have about the year ahead which you can reach out to us below.
Ronak Shah, Chief Executive Officer, QBE Singapore