SINGAPORE is ranked sixth on the list of global economies that entrepreneurs consider to present the best opportunity for starting and running a successful business. According to the 2016 BNP Paribas Global Entrepreneur Report, Singapore entrepreneurs are the most cautious relative to their peers regarding their corporate margins in the coming 12 months, with the lowest expectation at 20.9 per cent, compared to a global average of 29.0 per cent. They also had a tougher year relative to peers, with only 41.8 per cent experiencing a rise in profits over the last 12 months versus 48.2 per cent globally.
This experience has resulted in a reserved outlook for the year ahead with nearly a similar portion (43.9 per cent) anticipating a rise in profits, noted the report which polled almost 2,600 multimillionaire entrepreneurs in 18 markets. This is the second edition of the report, produced by Scorpio Partnership in cooperation with BNP Paribas Wealth Management. Last year's report focused on tracing the diverse paths to entrepreneurship and focused on the business owners' approach to success. The current report focused on how the lives of these entrepreneurs have developed over the past 12 months.
The sample population of 2,594 entrepreneurs spans the globe; the average turnover of the companies controlled by these individuals stood at US$6.5 million. They had an average net worth of US$6.6 million, excluding the value that they have embedded in their primary residence.
In terms of investment focus, the study found that Asia Pacific-based entrepreneurs are attracted to the Middle East. "This year it appears that the entrepreneurs are favouring some more adventurous allocations to earlier stage businesses and also in markets that are typically less well travelled by the mainstream investor," said the report.
Singapore entrepreneurs specifically were found to have invested US$3.4 million into Africa. Conversely, those active in the Asia-Pacific (including Japan) directed slightly less (US$3.1 million) into the region.
Cash constitutes the largest allocation of portfolios with Singapore entrepreneurs, showing relatively high liquidity levels with only 43 per cent of illiquid investments, compared to 51 per cent globally.
It was also found that investors in Singapore have a strong appetite for private equity (PE), with 43 per cent of entrepreneurs selecting PE as their preferred investment vehicle, compared to 28 per cent on a global level.
Looking at generational trends, millennials (born between 1980 and 1995) in Singapore are generally more optimistic than their baby-boomer counterparts - 58 per cent expect profits to increase next year (versus 35 per cent of baby boomer entrepreneurs); they are also almost twice as profitable with an average gross profit of 30 per cent versus 16 per cent.
Globally, the annual average turnover of businesses run by millennials outperform those by baby boomers by 43 per cent. The average target gross profit margins for millenials stands at 32.6 per cent, compared with 27.5 per cent for companies led by baby boomers.
Only 31 per cent of Singapore millennials define success as making a profit on their initial investment whereas 61 per cent of baby boomers peg this as a mark of success. Millennials attach higher priorities to business succession (19 per cent) and making a social impact (15 per cent).
The report also took into account the role female entrepreneurs play. On a global scale, the average turnover of businesses run by female entrepreneurs stood at US$7.1 million, 13 per cent higher than the average managed by male entrepreneurs. Looking ahead into the next 12 months, 61 per cent said they expect their business profits to increase.
In Singapore, 21 per cent of female entrepreneurs said they expect profits to decrease over the coming year, far above the global average of 6.1 per cent.