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HomeEditor's PicksFrom challenges to opportunities: How S’pore SMEs overcome rising costs with digitalisation

From challenges to opportunities: How S’pore SMEs overcome rising costs with digitalisation

Since the onset of the pandemic in 2019, small and medium-sized enterprises (SMEs) in Singapore have been grappling with numerous headwinds.

According to DBS Bank’s SME Pulse Check Survey 2023, SMEs have ranked rising global interest rates (50 per cent) as well as labour costs and availability (43 percent) as their top concerns in today’s economic landscape, followed by inflation (36 per cent), GST hike (26 per cent) and supply chain disruptions (25 per cent).

These economic headwinds have significantly raised costs for businesses across Singapore, pushing some to the brink of collapse. In fact, as of July 2023, as many as 109 companies have wound up.

Given the bleak economic outlook, 35 per cent of companies anticipate a deterioration in business conditions in the next 12 months.

In response to this, many SMEs are looking to optimise their operations through digitalisation. In fact, 32 per cent of SMEs are looking to reduce business spending and optimise operational efficiency through technology this year.

Studies have consistently shown that SMEs that embrace digitalisation can expect to see average revenue gains of 26 per cent. Recognising these benefits, a substantial 36 per cent of local SMEs have already digitised a significant portion of their operations.

Embracing digital solutions helped Intchess Asia streamline its operations

One such SME that has adopted digital solutions amidst these economic headwinds is homegrown chess academy, Intchess Asia. According to its managing director Wagish Kumar Rai, the pandemic served as a catalyst for the business to fast-track its digitalisation efforts. 

“The pandemic brought about a seismic shift in how businesses operate. It became clear that a robust digital infrastructure was essential to ensure our operations could continue seamlessly,” he said.

As such, the company turned to DBS’ Start Digital programme, which offers an array of digital solutions tailored to the needs of SMEs, including access to efficient invoicing systems.

Through the programme’s accounting partner, Financio, the company was able to generate invoices quickly, saving the business time and improving accuracy while reducing the risk of errors.

Today, the business sees a notable improvement in the speed of invoice processing, with payments being received three to five days faster than before.

Meanwhile, the programme’s digital collaboration partner, Google Workspace, has revolutionised Intchess Asia’s collaboration and communication by allowing its team to work seamlessly from various locations, which has proved to be exceptionally helpful during the pandemic as its team worked remotely.

“The cloud-based nature of Google Workspace means that our team can access documents, calendars, and emails from anywhere, ensuring that operations continue smoothly even when not everyone is in the office. It’s greatly improved our efficiency and responsiveness, which is crucial in the education industry,” said Wagish.

The digital solutions offered under DBS’ Smart Digital programme have also significantly contributed to Intchess Asia’s ability to recruit and retain talented chess instructors.

During the pandemic, Intchess grappled with reduced revenues and manpower challenges. By offering a more streamlined and efficient teaching environment through digital tools like Google Workspace, the company has managed to increase its headcount by approximately 70 per cent and raise its revenue by approximately 20 to 30 per cent.

Live Young and Well leveraged DBS’ Start Digital programme and tripled its revenue

Aside from Intchess Asia, DBS’ Start Digital programme has also helped homegrown media and advertising agency, Live Young and Well, achieve business growth through digitalisation.

As a relatively young web development agency, Live Young and Well initially struggled with credibility. Inflationary pressures further exacerbated this challenge, especially as marketing is one of the first departments that would see a budget cut during times of crisis.

With less business and clients, the company saw revenue of its second quarter decrease to nearly one-third of that in the first quarter of 2023. “For 10 months, we were earning an average of S$1,900 per month,” said John Lim, the founder of Live Young and Well.

Live Young and Well seized the opportunity to recover its losses through online marketing to grow its leads. They revamped their business strategy to accelerate digital efforts and turned to the DBS Start Digital Programme.

Shortly after adopting Google Workspace through the programme, Live Young and Well observed that their leads began to view the company with increased credibility.

In the past, John admitted that the company was often accustomed to hearing little to no responses 80 per cent of the time when they reached out to potential leads with their Gmail addresses. By using a custom email created through Google Workspace, the company has managed to raise leads to conversion from 20 to 70 per cent.

Aside from Google Workspace, the business also utilised DBS’ end-to-end cash collection system, DBS Max, enabling the business to obtain its own PayNow QR code.

Through DBS Max, the company was able to host its own Christmas pop-up store at Orchard last year. “Granted, we only earned S$142 and gained 46 customers, but this would have been halved if we had to collect cash because most customers didn’t bring cash along.”

By embracing these digital solutions, Live Young and Well’s revenue has increased by more than 300 per cent in just three months.

Digitalisation becomes more essential as a business grows

DBS’ Start Digital programme has also played an integral role in PlayFACTO @ Woods Square’s digitalisation journey.

The student care centre, which saw a significant impact on its bottom line due to economic headwinds as parents tightened their budgets, was seeking reliable IT solutions to manage its day-to-day business needs.

Prior to adopting digital solutions, the company mainly used Excel sheets for “everything from HR and finance to accounting and operations”. However, as the business expanded, the limitations of Excel sheets became increasingly apparent.

Hence, the company made the decision to adopt one of the programme’s accounting software, Xero, which was a great fit to the PlayFACTO @ Woods Square business model.

As the company’s transactions are mostly banking-related such as GIRO and PayNow transactions, Xero’s integration with the company’s business model allowed it to sync these transactions, making PlayFACTO @ Woods Square’s account reconciliation a breeze.

As a result, Wilson shared that the company was able to cut down on its staff costs by 15 per cent, as it did not need to hire additional HR, accounting, and IT support headcount.

But some SMEs are still hesitant to adopt digitalisation

Aside from accounting and digital collaboration solutions, DBS’ Start Digital programme offers a plethora of digital solutions with key partners, ranging from e-commerce to digital procurement and cybersecurity solutions, which can help kickstart an SME’s digitalisation journey.

While digitisation can definitely benefit businesses in various facets, some SMEs are still reluctant to implement these solutions, with 25 per cent of businesses delaying their investments into digitalisation efforts due to cost constraints, coupled with inflationary pressures.

In fact, prior to implementing DBS’ Start Digital programme’s solutions, Wagish shared that his primary concern was ensuring that Intchess Asia’s investments in technology were aligned with the company’s budgetary constraints as an SME.

“This meant carefully assessing the return on investment for each tool and technology we considered,” he elaborated.

Through DBS’ Start Digital programme – which curates a suite of digital solutions with key partners – the company was able to access essential digital tools and services at affordable rates. This helped Intchess Asia manage its budget effectively, while still obtaining the necessary technology for its operations.

Another major concern when it comes to implementing digital solutions is the lack of digital skills to fully utilise these solutions. Introducing digital tools meant that a company would have to acquire the right skill sets to adapt to these changes.

In order to alleviate these concerns, the DBS SME Skills Booster allows businesses to gain access to training resources that equip their employees with skills spanning various verticals including digital and transformation, sustainability, banking and finance, as well as cyber wellness.

This proved to be invaluable to SMEs like Intchess Asia as it helped the company in bridging skill gaps within its team.

Kickstart your digitalisation journey

By adopting digital solutions, SMEs can stay more resilient and competitive amidst economic headwinds.

In order to accelerate the digitalisation of SMEs, the Singapore government is working with institutions such as DBS to support SMEs in harnessing technologies.

As such, DBS is offering a six-month fee waiver for up to two digital solutions for SMEs that choose to participate in its Start Digital programme.

“We’re thankful that the government is extremely supportive of SMEs to adopt digital solutions. [The government’s] grants subsidise the cost of adoption and give us a period to allow us to start digitalising to grow our businesses,” said Wilson.

Since its inception in 2019, the DBS Start Digital programme has helped over 37,000 SMEs. If you’re an SME looking to kickstart your digitalisation journey, explore digital solutions through DBS Start Digital programme here.

This article was written in collaboration with DBS Bank.

Featured Image Credit: 123RF

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