Rooting for Singapore’s microenterprises

What do brands like Ya Kun and Charles and Keith have in common? Nothing, you may say.

But trace the origins of how these companies first started and you’ll realise that both began as a two-man operation! That’s right, both started out as microenterprises (MEs) and went on to become household brands known both in Singapore and internationally – Ya Kun has presence in 11 countries and Charles and Keith operates in 33 markets!

Not to be confused with the more commonly-known Small and Medium Enterprises (SMEs), MEs represent small businesses employing 10 employees or less (whereas companies are considered SMEs when they employ 200 employees or less) and are started with a small capital.

MEs have long been recognized as the backbone of the economy – making up 99% of all enterprises and providing employment for 60% of our workforce. Mama shops, dry cleaners, DVD shops, hawker stalls, hair salons, framers, the list of microenterprises we interact with on a daily basis goes on and on.

So why aren’t all of these important businesses thriving like Ya Kun and Charles and Keith and growing to become large Singapore-bred MNCs?

The main challenge, apart from the fact that Singapore constitutes a small domestic market with little room for expansion, is the fact that the numerous schemes, grants, and funding options available to ME owners are not very widely known.

As Teo Ser Luck (Minister of Trade and Industry) has stressed, some of the productivity schemes were “unclear or very erratic in reaching out to those they were supposed to help”.

It’s about refining and simplifying some of the processes involved in tapping the available schemes. Tedious paperwork and application processes could prove to be a deterrent to get more sign ups.

For example, it was reported that only 17% of MEs have tapped the Productivity and Innovation Credit (PIC) scheme (source)!

Supporting this, the Singapore Manufacturing Federation felt that the PIC application process could be easier for MEs. The Singapore Chinese Chamber of Commerce and Industry (SCCCI) also proposed expanding the scope of qualifying activities under the scheme to include simpler innovations and improvements.

Often times, policies rolled out by organisations such as SPRING (subsidies for MBA courses or hiring of overseas technical expert) are more targeted towards medium-sized organisations. At the other end of the spectrum, Action Community for Entrepreneurship is more focused on helping entrepreneurs start and build up their first venture and not so much on the different ways already established businesses can grow.

Benjamin Chia, 27, one of the founders of a local microenterprise, remembers the challenges that he had to overcome.

“Our runway was long and getting money in had to be something that was deliberated on at length every day. We were well aware that grants in the range of $50 – $100k would only enable you to start your business, but after that you need to look for potential investors or higher level funding to propel your business to the next level.”

So how can MEs sustain their livelihood and find help in accomplishing even the most basic of administrative tasks (auditing, filing taxes, etc.)? These are more practical and targeted forms of help that MEs need in order to ensure that operations run smoothly for years to come.

“There should be specific courses for participants to pick up tangible skills, which enables them to look at their own businesses from a micro and macro perspective,” said Benjamin.

“Also, guidance from mentors who form a board of advisors often provide valuable insights because they have ‘been there and done that’, so that the less experienced person can gain from that knowledge to sidestep common mistakes and scale up his business faster,” he added.

These are important, as supporting MEs can contribute to tackling income inequality in the long run; instead of relying on MNCs’ profits and foreign investment to trickle down to Singaporeans, MEs can instigate a trickle-up effect by providing jobs and wages from the ground up.

A sort of grassroots entrepreneurship, if you will!

Everyone loves the story of how an underdog created success for itself. With more top-down support from the relevant communities, we can hopefully create a more conducive environment for these MEs to flourish.

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