SINGAPORE (THE BUSINESS TIMES) - Stormy skies will loom over their businesses, despite the sun peeking out from behind the clouds in 2021, if you ask small and medium-sized enterprises (SMEs). Many are counting on the Government to shield them from the rain.
While they feel an increased positivity towards the economic climate in 2021, SME owners said in a survey by insurance company QBE that their own businesses are likely to remain a little under the weather.
Although more than six in 10 SMEs polled expect the economic climate to either stay the same or improve in the next 12 months, 81 per cent indicated that they do not expect their businesses to grow in 2021 and 39 per cent expect to downsize their workforce.
Only 3 per cent of SMEs polled do not require government support to weather the storm. Half of all SMEs are turning to the Government for economic relief, and out of those, 70 per cent stated a need for financial support in particular, 37 per cent would like to see enterprise development programmes and 34 per cent hope for general advice from the government.
However, many of those surveyed said that they would take a rain check on making changes to existing business plans, exhibiting a caution reflected in their adoption of training, upskilling and digitalisation.
While 95 per cent of SMEs are aware of the funds allocated to these initiatives under the four Budget packages last year, only 61 per cent have applied to take them up, highlighting the divide between awareness and action.
In addition, while over nine in 10 SMEs are currently engaged in or intend to invest in digital technologies, an average of 66 per cent of SME businesses' processes are now being conducted digitally. High costs of investment in digitalisation have acted as a barrier for 40 per cent, which lack funds and expertise.
Cyberthreats also continue to pose a risk, something which many SMEs have yet to adequately equip themselves to handle.
Carrying forward a trend from 2020, 62 per cent of SMEs indicated that cost control would be their primary business approach this year.
"SMEs are noticeably and expectantly treading with caution this year, with many approaching business plans and changes with considerable apprehension," said Mr Ronak Shah, chief executive officer of QBE Insurance Singapore.
"As they rebuild their business models and strategies in a much-changed economy, SMEs also need to realise the wealth of support made available to them and ensure they act on them swiftly to bolster their chances of recovering strongly from the pandemic."
This sixth iteration of the QBE SME Survey was carried out by Engine Insights in Q4 2020 among 407 SMEs across various industries in Singapore.