Singapore small business owners are dipping into their personal savings, increasing their prices, and not paying themselves to mitigate rising costs and make a profit, according to a new report from global small business platform Xero.
The report titled “Money matters: navigating the impact of economic conditions on the cash flow of Singaporean small businesses” surveyed “over 1,000 businesses on their perspectives and behaviours on cash flow management.”
The report’s findings indicate significant “signs of financial stress for Singapore’s small business owners, with almost a third (31%) revealing they’ve not been able to pay themselves and 19% accessing their personal savings to keep their business afloat.”
The report also revealed that 83% of small businesses “on the island have experienced some cash flow issues in the past 12 months, which have affected their ability to grow, hire new staff, and invest in new capabilities.”
Late payments can have impacts “on the entire supply chain and create a domino effect, making it difficult for businesses in Singapore to pay their own bills on time (27%), which can contribute to cash flow stress.”
Many have also needed to negotiate payment terms “with suppliers (41%) and experienced stalled revenue (30%).”
Koren Wines, Managing Director, Xero Asia, said cash flow is a major challenge for small businesses and small businesses are making sacrifices to keep employees paid.
According to the report, 50% of small businesses “in Singapore believe that inflationary pressures will continue to have an extreme or high impact on their business.”
These sentiments come even as Singapore’s inflation rate “moderated to 3.4% in August 2023, and small businesses received new government relief measures to ease inflationary and cost-of-living pressures.”
In addition to cash flow challenges, many small business owners in Singapore are experiencing an increase in emotional distress, the top three being stress (53%), anxiety (46%), and sleepless nights (44%).
Despite these troubling figures, an air of optimism still “exists among Singapore’s small business community.”
The survey’s insights show that 81% of small businesses feel at least reasonably upbeat and reassured about their financial well-being, “with 40% describing themselves as very confident and secure. 61% of small business owners on the island believe they are on track to achieving their financial goals.”
Wines adds that “business transformation should continue to be a multi-pronged approach. Outside expertise will give small business owners the knowledge they need to tighten financial practices, while digital solutions will provide the capabilities small businesses need to manage and sustain cash flows better, giving owners the confidence they need to deal with financial pressures.”