The Covid-19 pandemic has hit several small and medium enterprises (SMEs) hard. Without having a large capital to survive through the pandemic, SMEs have a bleak outlook for their businesses in 2021, while expecting the government to help them survive a dip in results through the pandemic economy.
This is according to the sixth edition of QBE Insurance’s annual survey of Singapore SMEs conducted in 4Q2020 when the Covid-19 effects had already taken hold. Over 400 SME decision-makes in Singapore were surveyed.
The survey found that SMEs are counting on the government to weather the storm and support their recovery efforts, with half of all SMEs polled indicating that they are looking to the government for relief measures to tackle adverse economic conditions.
Of those that indicated reliance on government measures, a majority (70%) stated a need for financial support in particular. Other areas that SMEs expressed a need for support included enterprise development programmes (37%) and general advice from the Government (34%). Only three per cent of SMEs polled indicated that they did not need any support from the government.
Already, the Singapore government has dished out a series of four Budget packages in 2020 to help SMEs tide through the pandemic, including initiatives towards training and upskilling their workers and digitalising their businesses. And with Budget 2021 coming up, SMEs want more.
SEE: Singapore SMEs positive on expansion this year, but less keen to digitise: QBE survey
However, despite 95% of all SMEs stating that they are aware of these measures by the government, only 61% have applied to take them up, indicating a significant gap between awareness and action among these enterprises.
According to Ronak Shah, CEO of QBE Insurance Singapore, this could be because SMEs are treading with caution, with many approaching business plans and changes with considerable apprehension.
“As they rebuild their business models and strategies in a much-changed economy, SMEs also need to realise the wealth of support made available to them and ensure they act on them swiftly to bolster their chances of recovering strongly from the pandemic,” he adds.
Overall, SMEs are generally more positive about the economic climate in the year ahead, with 62% indicating they anticipate the economic climate will either stay the same or improve in the next 12 months. But despite a positive economic outlook, the SMEs are not as confident in their business, as they shared that any changes to existing business plans will likely be put on hold over the next 12 months.
These findings come off the back of firms encountering severe challenges to their business throughout 2020, with 37% of SMEs polled indicating that cost mitigation was the most significant challenge to their business last year.
It may be a new year, but the challenge is not over as more than half of SMEs (54%) still expect to struggle with cost mitigation issues well into 2021. However, despite challenges in this area, they are still turning to cost control measures to ensure survival, with 62% indicating that this would be their primary approach in 2021, while 40% of SMEs indicated that they are likely to resort to downsizing this year to keep afloat.
Last year may have been a trying year, but it has placed the spotlight on the need for businesses to digitalise to stay relevant. QBE’s survey found that SMEs have digitalised an average of 15% of their business processes further through the pandemic, with an average of 66% of SME business processes now being conducted digitally.
It is no doubt that Civid-19 fast tracked the adoption of digitalisation, as 68% of SMEs admit that the pandemic caused them to digitalise quicker than originally planned, while 91% are currently engaged in or showing willingness to invest further in technology.
