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MEDIA CONFERENCE 6 October 2008 SME DEVELOPMENT SURVEY 2008 - Conducted by DP Information Group Enhancing Business Competitiveness Among Singapore’s SMEs. SME Development Survey 2008 - Survey Objectives. Understand & highlight following issues relating to SMEs:

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MEDIA CONFERENCE 6 October 2008 SME DEVELOPMENT SURVEY 2008 - Conducted by DP Information Group

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Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

MEDIA CONFERENCE

6 October 2008

SME DEVELOPMENT SURVEY 2008

- Conducted by DP Information Group

Enhancing Business Competitiveness Among Singapore’s SMEs


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Survey Objectives

Understand & highlight following issues relating to SMEs:

  • Business strategies & challenges faced locally & overseas

  • Extent of internationalization & contribution to Singapore economy

  • New financing requirements in next 1 year

  • Rate & benefits of technology adoption & innovation

  • IT spending in next 1-2 years

  • Staff development & succession planning


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Characteristics of Respondents

5% increase in participation from SME Community

  • 1,656 companies

    responded to this

    year’s survey

    (last year: 1,206

    respondents)

  • 23% repeat

    respondents from

    last year’s survey


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Characteristics of Respondents

Respondents by Paid-Up Capital

7% increase in participation from SMEs with smaller capital

  • 7% increase in smaller

    SMEs with paid-up

    capital of no more than

    S$0.5m

  • Percentage of SMEs with

    >S$1m in paid-up capital

    reduced from 39% to

    33%


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Characteristics of Respondents

  • More experienced SMEs

    responding to survey:

    - 76% in business for

    >10 yrs (4% increase)

    - Continued decline in

    Start-up participation

    from 6% to 2%

  • No. of companies

    experiencing accelerating

    turnover growth increasing

    but at slower pace

  • Mature & Decline companies

    on the rise

  • Stages of Development

  • Start-up: First 3 years of operation

  • Accelerating Growth: turnover growth of > 10% p.a.

  • Moderate Growth: turnover growth of up to 10% p.a.

  • Mature: Zero turnover growth

  • Decline: Negative turnover growth


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Characteristics of Respondents

SMEs registered stronger profitability

  • Further drop in no. of

    loss-making companies

    from 21% to 13%

  • Almost a quarter (24%)

    generated profit >S$1m

  • Upward trend in

    respondents generating

    >S$0.1m in after-tax profit


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Business Strategies

SMEs looking more to expansionary plans to grow

sales in locally & overseas

  • Improve Cost Efficiency /

    Productivity remain top

    strategy but accorded less

    emphasis

  • Increasing emphasis on

    expansion:

    - New overseas market

  • - New products/ services

  • - Expand local distribution

  • channels

  • Growing importance :

    - Improve Customer Service

    (key strategy for those in Retail)

    - Branding


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Challenges to Growth

Increasing operating costs foremost in minds of SMEs

  • Increasing operating costs

    (58%) overtook Increasing

    competition (49%) as top

    obstacle

  • Manpower remains one of top

    3 concerns; more so for SMEs

    in Start-up (42%) &

    Accelerating Growth (50%)

    stages

  • Concerns regarding Cash flow

    & New Financing have

    fallen; Cash flow more of a

    concern for those in Start-up

    (37%) & Decline (28%) stages

  • Downward trend continue

    for Difficulty in accessing biz

    opportunities & Market size constraint


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Challenges to Growth

  • Increasing Labour cost key cost

    component affecting SMEs’

    profitability in next 1-2 yrs

    Most affected are those in

    Information & Communications

    (73%), Construction (68%) &

    Services (63%)

  • Increasing Cost of sales ie. raw

    materials will continue to have

    major impact on SMEs’ profitability;

    SMEs in Construction (82%),

    Manufacturing (81%) & Wholesale

    (59%) greatly affected

  • Rental costs remain a challenge for

    most SMEs

  • More SMEs reducing their

    expenditures on optional cost factors

    Advertising & Promotion less regarded

    as key cost component


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Overseas Expansion

Export growth to Asian region reached an unprecedented level – All Top 10 overseas countries from Asia

  • Upward trend in SMEs serving

    China & India markets

  • China overtook Indonesia &

    catching up with Malaysia as

    most favoured destination

  • Japan & Korea did not get into

    the top 10 last yr, but overtook

    Australia & USA to emerge

    among the top 10 this yr

  • At least three-fifths of SMEs

    that ventured to Middle East

    are serving Saudi Arabia & UAE

  • Cambodia, Myanmar & Taiwan

    increasing in popularity


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Financing/ Funding

  • Local Enterprise Finance Scheme

    (LEFS) remains the most popular

    scheme but SMEs accessing down 10%

  • More SMEs accessing :

    - Microloan (up 3%)

    - Loan Insurance Scheme (up 1%)

    - Internationalisation Finance

    Scheme (up 2%)

  • Start-up Enterprise Development

    Scheme (SEEDs) assisted 5% of

    respondents in Start-up stage

  • Low take-up rate (1%) for

    Internationalisation Finance Scheme

    (IFS) among those in Accelerating

    Growth stage


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Financing/ Funding

Majority of SMEs are sufficiently funded

  • 70% do not see the need

    to seek new financing in

    the next 1 yr

  • Among those who seek

    new financing, majority

    (60%) looking at

    >S$0.5m in new financing


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Information Technology & Innovation

Majority reported an improvement in actual turnover or profit through technology innovation.

  • 2 most prominent benefits reaped

    from technology innovation:

    - Increased Productivity

    - Improved Cost Efficiency

  • Good opportunity to share with

    SME community especially since

    Improving Cost Efficiency will be

    adopted by 26% as top business

    strategy in the next 1 year


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Information Technology & Innovation

More than half of respondents plan to adopt technology innovation in the next 1-2 yrs

  • Among those who have

    already adopted technology

    innovation, a high majority

    (88%) plan to further embrace

    technology innovation in the

    next 1-2 yrs

  • Half of those who have not

    adopted technology innovation

    are considering making their

    first attempt in the next 1-2

    yrs


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Information Technology & Innovation

SMEs have very little budget for technology innovation

  • 51% who intend to adopt

    technology innovation in

    next 1-2 yrs do not wish to

    incur any costs on such

    adoption

  • Only 12% willing to spend

    beyond S$100,000 on

    technology innovation


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Training & Management Development

SMEs are willing to invest in training

  • 79% find it useful to send

    their staff for training

  • Majority looking for training

    to upgrade Technical / Job

    Related Skills

  • With more SMEs identifying

    Improve Customer Service as

    their key business strategy in

    next 1-2 yrs, Customer

    Service is the 2nd most cited

    area where training is needed

    Note: Technical / Job Related Skills and Customer Service were not provided as options on last year’s survey


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Training & Management Development

Though SMEs are supportive of staff training, close to half (46%) set aside <1% of staff budget for training

  • Available training options may be

    limited for those who budget <S$100

    per employee for training

  • Only 55% set aside training budget

    of >S$300 per employee

  • Respondents from Manufacturing have

    set a lower budget for staff training

    compared to other business sectors

  • 34% not willing to spend >S$100

    per staff


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- DP Credit Ratings

SMEs have demonstrated an improved credit risk profile

  • Increase in Investment

    Grade (DP1 – DP4)

    companies (Up 3%)

  • Increase in High Yield

    (DP5 – DP6) companies

    (Up 3%)

  • Drop in High Risk

    (DP7 – DP8) companies

    (Down 6%)

Distribution of Respondents by DP Credit Rating


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

Recommendations


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME Development Survey 2008

- Recommendations

  • Strategizing for International Growth

    • Encouraging SMEs to collaborate and pool together their resources in bidding for overseas projects.

  • SMEs to Collaborate in Overseas Ventures

    • Assisting SMEs who are keen on internationalising to develop and implement a sustainable overseas growth strategy.

  • SMEs to Change Mindset on Technology as Investment & to Embrace Technology to Improve Cost Efficiency

    • Encouraging SMEs to have a mindset change on technology (cost vs investment) & to embrace technology through greater use of managed or hosted services to improve cost efficiency.

  • Banks to Review Evaluation of Innovative & Deserving SMEs

    • Reviewing existing lending criteria for innovative SMEs using DP Credit Rating.

  • Groom present & future leaders among SMEs

    • Facilitating SMEs’ bosses and key managers in training and capabilities development through greater funding support, customised curriculum and at flexible timing.


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

Thank You


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

SME DEVELOPMENT SURVEY CONFERENCE 2008

Wednesday, 15 October 2008

8.45am – 1pm

NTUC Auditorium

NTUC Centre, One Marina Boulevard

Special presentations

1. Mr Sareth Menon, US State Representative from Pennsylvania

– “An Insight into American SMEs”

2. Mr Terence Swee, Founder and CEO of muvee technologies

- “moving muvee” – home-grown technology company

Supported by SPRING Singapore, IE Singapore & [email protected]

Sponsored by HSBC


Media conference 6 october 2008 sme development survey 2008 conducted by dp information group

Q&A


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