SME Outlook on Remainder of 2018
Posted on July 06, 2018 by Stephan Yeong
SMEs in Singapore Outlook and Trends
SMEs in Singapore are the main driving force of the economy and contributes significantly to growth of the nation. According to the latest Government Budget Review, two thirds of the workforce in Singapore accounts for half of the GDP in Singapore. In the recent media release by Singapore Business Federation, there is optimism for SMEs in the remanding of 2018 especially in the F&B sector.
In this article we will look at the overview industry performance outlook and the performance expectations of the various sectors from 2015 to 2018. The data is based on the collection over 3600 SMEs operating in Singapore during the period of April and May 2018.
This article will cover 3 segments related to business in areas of
– Sales and Revenue Outlook,
– Profit Expectation
– Hiring Expectations
Market Outlook Across Sectors in Singapore
According to the general outlook across the sectors, there is a general decline in the commerce and trading sector. Construction and Engineering business are fairly optimistic in the remainder of 2018. However, this is slightly dampen by the roll out of government measures in the residential market on additional buyer stamp duty and lowering of loan financing allowance.
F&B business owners are experiencing better outlook and this can be due to the increasing adoption of online delivery complimented with major sporting events. Also, higher confidence towards the last quarter as business approaches the end year festive seasons.
Sales Outlook for SMEs Singapore (Period of 2015 – 2018) -The stability of sales can be seen in the year of 2018 after bottoming out in 2017 and gradually increasing across the industry sectors for SMEs in Singapore. The sector benefiting the most in terms of growth is the Business services sector, consisting of consultancy services and training services. This is fueled by the support of incentives in training by the government and higher emphasis on skills development. The next trending sector in revenue can be seen under the Retail and F&B sector. This is strongly attributed to the sporting season and returns from the adoption of growth and expansion strategies.
Profit Outlook for SMEs Singapore (Period of 2015 – 2018) – The highest growth in profit can be seen in the Business services sector, this is mainly due to the low cost structure of setup and low operating cost model enabling higher margins relative to the other sectors. Retail and F&B sector emerges next in term of profitability growth compared to the other sectors, a key contributing factor is brought about by higher consumers spending and higher cost efficiencies obtained from the growth and expansion efforts on operations. The Construction sector is generally on the uptrend since 2017 but is begins flat-lining in the later 2 quarter of the year in 2018 due to cooling down measures by the government and lower expectation due to weaker market sentiments.
Hiring Outlook for SMEs Singapore (Period of 2015 – 2018) – There is a slight increase in hiring among business in Singapore since the end of 2016 and this is followed by a normalization between 2017 and 2018. The sector deriving the highest growth is from the Retail and F&B sector, with the increase in hiring to support the expansion and growth. Under the Commerce and Trading sector, there is a decline in the later of 2018 as pressures are mounting from the increasing conversions between physical and online purchasing behaviors patterns of the market. External influences from a potential fall out of a potential trade war out between US and China further weights on expectation of hiring for 2018 for the trading sector.
Market Expectations for the future
Businesses in Singapore can expect a reasonable growth in the near future based on overall market performances and expectations. However, there is a need to better safeguard and prepare against negative cross border influences such as trade tensions between China and US and the eminent intervention of market disruptors affecting the way businesses operate. Businesses can better equip themselves by keeping up with the market trends, plan the use of their resources effectively by project wisely on their cash-flow and business funding needs.
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