SMEs confident on growth prospects of businesses this year

Smaller firms are less upbeat following the great deal of challenges they faced in the past year.

About 82% of business leaders of small and medium-sized enterprises in Singapore expressed optimism on the growth prospects of their businesses in the next 12 months, although smaller firms were less confident than their bigger counterparts, according to a recent survey.

Employment Hero’s new survey showed that a third of the respondents were feeling extremely confident on their business outlook despite the ongoing uncertainties globally, although micro and small enterprises remained wary about their future.

“We are seeing green shoots in a lot of areas. SMEs in Singapore are starting to feel more confident having gone through some challenging years,” Kevin Fitzgerald, managing director for Asia at Employment Hero. “By staying ahead of the curve, SMEs can hopefully respond swiftly to changing market dynamics as needed,”

Around 61% of the respondents expect Singapore’s economy to perform well this year, although leaders of smaller companies were likely to be more pessimistic. 

Their gloomy outlook mirrors their overall experience last year, with only 47% of micro and small business leaders rating their company performance in 2023 as “good,” compared to 76% for those running medium-sized enterprises.

Respondents pointed to rising costs and high inflation, as well as lower revenues and fewer customers as the main reasons for the weak performance of their companies last year.

For the next 12 months, business leaders agreed that the biggest growth drivers lie in digital transformation, adoption of artificial intelligence as well as automation. They also acknowledge the importance of forming partnerships, embracing flexible working conditions and strengthening supply chains.

SME leaders identified rising costs, employee retention, cash flow and staff upskilling as some of the top challenges they have to face this year.

The survey polled 510 business leaders of small and medium businesses across the city-state in November to measure the business sentiment currently.