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Singapore SMEs digitalised, leveraged data at higher rates than global peers amid pandemic
AS they tackled challenges arising from the Covid-19 pandemic, small and medium-sized enterprises (SMEs) in Singapore digitalised their businesses and leveraged data at higher rates than their peers in Australia, New Zealand, North America and Canada.
This is according to a study of more than 1,000 SME owners and 1,000 SME customers across the five markets, commissioned by Xero, a cloud accounting platform that focuses on small businesses. The study titled "The Next Chapter For Small Business: How To Thrive In A Changed World" was conducted by Forrester Consulting.
About 62 per cent of the Singapore SMEs surveyed used online business solutions during the pandemic, as they sought to manage operations more efficiently and better engage with customers. This yielded a 30 per cent increase in overall cloud adoption from 2019, the largest increase among the five markets surveyed.
Singapore SMEs were more likely to leverage customer data analytics than instinct to inform their strategy, with 37 per cent using data while 20 per cent said they relied on instinct. In contrast, 34 per cent of their global peers said they relied more on instinct, compared to 27 per cent that made use of customer data analytics.
In Singapore, businesses used data-driven insights to tackle the top two challenges during the pandemic, which were retaining existing customers (38 per cent) and attracting and retaining new customers (36 per cent).
When making important decisions, 43 per cent of Singapore SMEs said they made such decisions based on customer feedback, the same as the percentage that said they relied on advice from business associations and communities.
Only 28 per cent said they based decisions on advice from trusted business advisers such as accountants and bookkeepers, but they also claimed that doing so was the most effective out of all the initiatives measured in the survey. This could represent a missed opportunity for small businesses that did not consult business advisers, Forrester Consulting noted.
The survey also found that consumers in Singapore are more price-sensitive than their global peers, as 51 per cent said they purchased from SMEs because of lower prices. This was significantly higher than in the other regions and the global average of 24 per cent.
However, 41 per cent said they would buy more goods and services from SMEs to support their community during this period, slightly higher than the global average of 39 per cent.
The majority of Singapore SMEs (92 per cent) leveraged government support, with the top three types being wage subsidies (56 per cent), government assisted loans (39 per cent) and rent subsidies (36 per cent).
Forrester Consulting said that while most small businesses leveraged some sort of government support, this varied greatly from country to country, with small businesses less likely to leverage the support in countries where programmes were difficult to access and apply for. Singapore had the highest rate of SMEs using government support out of all the markets surveyed.
Kevin Fitzgerald, managing director for Asia at Xero, noted that Singapore SMEs are at a crucial juncture, facing a challenging economy and business environment ahead.
"Digitalisation of business operations coupled with generous government support has been a key enabler for many businesses through the peak of the pandemic and 'circuit-breaker' initiative," said Mr Fitzgerald. "With government initiatives set to taper off over the coming months, there is growing urgency for SMEs to leverage data-based insights, adopt cloud-based digital tools and consult with trusted business advisers on strategy to build resilience and position themselves for growth."