Almost half of local SMEs are optimistic about their growth prospects for 2023 (49%), while over 60% cited first-time overseas expansion and exploring additional new markets as key business priorities, compared to 75% who ranked these as lowest priority last year.
The business owners continued to place high priority on ensuring consistent cashflow and managing cost. They were most concerned about rising global interest rates, labour costs and availability, and inflation. These were the results of DBS’ annual SME Pulse Check survey.
With the persistent challenging business environment, ‘ensuring consistent cashflow and managing cost’ (62%) remained the SMEs’ top business priority.
Exploring additional new markets for their businesses (33%) and first-time overseas expansion (31%) were ranked next, encouraged by the reopening of borders along with support from government schemes such as the enhanced Enterprise Financing Scheme announced at Budget 2023.
This was followed by ‘hiring, retaining and upskilling manpower’ (29%), sustainability and greening their businesses (25%) and digital transformation and innovating new business models (21%).
To achieve these goals, SMEs are looking for strong banking partners. The majority of SMEs (58%) ranked a ‘trusted and reliable banking partner with a long track record of supporting businesses’, as most important. Only 1% of SMEs preferred a ‘purely digital banking partner’. The banking partner’s presence and infrastructure was ranked most important (42%) for SMEs’ expansion into new markets.
The SMEs ranked ‘rising global interest rates’ (50%) and ‘labour costs and availability’ (43%) as their top concerns, followed by ‘inflation’ (36%), GST hike (26%) and ‘supply chain disruptions’ (25%).
The majority of SMEs said return on sustainability (35%) was the main challenge in building a sustainable/ green business, followed by 27% and 19% who cited ‘cost of deployment’ and ‘lack of government incentives/ funding’, respectively. 16% of the SMEs said they did not know how to start building a sustainable/ green business, and only a small number do not intend to build a sustainable/ green business (4%).
Koh Kar Siong, Group Head of SME Banking, DBS said, “SMEs are the backbone of our economy and have weathered different business and economic challenges over the last few years. They are resilient and optimistic as our survey has shown. As they explore new markets and expand overseas with borders reopening, I am confident that our connectivity across the region with our rich ecosystem of partners, together with the respective Singapore government schemes, will provide the necessary support to propel them to the next level of growth.”
He cautioned that continued headwinds from rising global inflation and high interest rates will add to SMEs’ operating expenses so managing cashflow and liquidity needs, along with effective credit risk management, will be critical to their success.
DBS ran its regular SME Pulse Check Survey with 116 SMEs across a broad spectrum of industries to better understand the needs and concerns of the SME community.