Strategy & Practice Management
UOB reveals priorities for SMEs as they prepare for an uncertain business environment in 2020
SMEs in Singapore are said to be planning to focus on boosting productivity as they grapple with a mixed business outlook this year, according to a survey conducted in November 2019 by United Overseas Bank.
After implementing productivity measures, which 51% reported as a top priority, the survey by United Overseas Bank (UOB) revealed that their other top priorities for 2020 include reducing costs (43%) and developing new sources of revenue (42%).
Their emphasis on ensuring profitability is set against varying expectations for the year ahead. 46% of six-hundred and fifteen SMEs surveyed said that they hold a positive outlook for their business for 2020, while 31% reported a negative outlook, and the remainder of neutral opinion.
The top concerns driving sentiment in 2020 are the continued slowdown in global demand, named by 21% as a top concern, the impact of ongoing US-China trade tensions (18%) and the strengthening of the Singapore dollar, which SMEs worry will impact their competitiveness (17%).
When looking across sectors specifically, companies in the business services sector are the most optimistic about their outlook in 2020. This may be due to the positive growth they experienced last year.
Those in the wholesale and retail sectors have the least positive outlook, given the negative growth in the sector last year, according to the UOB press release.
Mervyn Koh, Managing Director and Country Head of Business Banking, Singapore, UOB, said “Our
survey results indicate that factors such as trade tensions are weighing down on SMEs’ outlook. As such, they are focused on prioritising productivity improvements for better performance against an uncertain macro environment. One of the ways SMEs are planning to achieve their productivity goals is to increase their investments in technology, which not only helps with increasing efficiency but also enhances their competitiveness in the long term.”
The survey found that SMEs across all sectors are taking the need to digitalise seriously, with 65% already using digital solutions in at least one area of their business. The processes which SMEs have digitalised include accounting (46%), payroll (45%) and marketing (38%).
While good progress is already being made in the digitalisation journeys of SMEs, 38% said they would continue to digitalise more processes in 2020. The top three areas where digital solutions will be implemented are expense management (24%), customer relationship management (24%) and sales (23%).
Koh added, “We can see from the survey results that more SMEs have started integrating technology into their business, especially for internal processes such as accounting and payroll. In particular, as SMEs increase the use of technology to digitalise their business processes, they should also consider electronic invoicing which provides an added benefit of helping the entire payments value chain. By doing so, businesses will not only become more efficient but also benefit from the ability to invoice their customers more quickly for better cash flow.”
SMEs have also said that they were looking at how they could improve the sustainability of their business operations. This focus was given higher importance by those in the business services, info-communications and technology and transport and logistics sectors.
To enhance their business’ sustainability, SMEs indicated that they have either implemented or plan to incorporate the more efficient use of resources (47%), clear operational policies and processes for better governance (43%) and energy-efficient equipment and technologies (40%) within their business operations.
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