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Budget 2018: Small businesses need right mindset to embrace digital future
TECHNOLOGY has the potential to help catapult business growth but many companies are still behind the curve when it comes to embracing new digital solutions. This is why government funding aimed at helping Singapore companies to incorporate technology into their business would best be accompanied by outreach efforts and on-the-ground operational advice, according to participants at a post-Budget roundtable.
Small business leaders respond to Budget 2018
Convened by leading online accounting platform Xero, the roundtable sought to discuss the impact of Budget 2018 on small businesses.
Panellists lauded the Budget's focus on helping small and medium-sized enterprises (SMEs) adopt off-the-shelf tech solutions. The new Productivity Solutions Grant, for instance, will provide funding for up to 70 per cent of qualifying costs.
"The Budget is a natural continuation of the Singapore government's thoughtful and deliberate long-term approach to growing the economy and helping small businesses," says Alex Campbell, Xero's managing director for Asia.
"Incentives drive behaviour and it's important that SMEs have access to funding that can help them adopt tech solutions. As a subscription-based online platform, we do everything we can to reduce those costs for SMEs. In the past, companies had to buy expensive software involving large upfront costs, but we're hoping to change that model over time," he adds.
The hurdle of changing mindsets continues
Fellow panellist Professor Julian Wright, who heads the economics department at the National University of Singapore, praised the move to streamline government grants and make it easier for SMEs to access funding.
Besides funding issues, however, changing mindsets can be a tougher hurdle to overcome, he notes. "The challenge is to get the SMEs who are less forward looking to open their minds and start adopting some of these technologies - that's a critical step and a key bottleneck. Just because the grants exist, it doesn't mean companies will apply for them or use them in a productive way."
Lynly Fong, a director at Spirit Sports, which distributes sporting gear, swimwear and footwear brands including FitFlop, agreed SMEs can be wary of change. But firms have to adapt or risk losing their edge, she notes, adding that these transformations should be driven by business innovation. "The Budget only just came out, but we set a lot of big changes into motion within the company late last year," she says. "The funding is a bonus."
Ms Fong, who runs her company on Xero, first started the company in Hong Kong before setting up in Singapore about a decade ago. The company's distribution network - which already covers its own retail stores and major department stores - is now going omni-channel. It has 59 staff and logged an average annual turnover of S$17.5 million over the last five years across Hong Kong and Singapore.
The need to focus on digital technologies
Fellow Xero customer and panellist Lelian Chew, the founder of couture floral design house The Floral Atelier, said the company invested in a solid online accounting platform from the beginning to lay the foundations for future growth.
"I recognised the importance of having the right systems in place right from the onset. Even when the business was small I didn't want to rely on Excel or paper. I wanted to ensure that when we get bigger we wouldn't have to waste precious time playing accounting catch up."
This focus on implementing digital technologies across various aspects of the business has helped the company boost productivity, reach out to customers all over the world and ramp up growth, says Ms Chew.
"Our retail collection is predominantly sold online, via a robust e-commerce website. Our non-retail designs are highly customised and largely managed offline but we are continually seeking ways to make these available to a wider audience online," she adds.
The Floral Atelier is the sister company of The Wedding Atelier, a luxury wedding planning and design firm which Ms Chew set up five years ago in Hong Kong, and two years later in Singapore.
A call for deeper education
In discussing whether there are ways to further improve the use of government funds aimed at the adoption of digital solutions by small firms, Prof Wright says it might be more effective to channel government resources towards better information and training about the ways digital solutions help SMEs, rather than direct funding.
"Companies also need support on the ground when they go out in the region, to help them navigate foreign laws and regulations, and connect them with other Singaporean companies. Spending money in those ways might be more effective," he notes.
"It's not obvious how to change mindsets. Sometimes it happens with disruption - new players come in, whole sectors get wiped out and companies are forced to change. Hopefully, the government's drive to get firms adopting digital technologies can minimise the impact by getting more SMEs ahead of the curve."
Mr Campbell says the government's approach to transformation has become increasingly focused and industry-specific, compared with a more broad-based approach in the past.
Xero aims to offer a one-stop shop of digital solutions for SMEs, he adds. These include technologies that work alongside Xero and serve different needs for small businesses, as well as links to advisers and consultants who can help companies implement these solutions.