For many years now, Singapore has enjoyed a highly favorable reputation as one of Asia’s foremost hubs of commerce and industry. The island nation’s business-friendly government policies, healthy economy, and abundant private funding sources make it an ideal place for local and foreign entrepreneurs to set up their companies. At present, the city-state is home to more than 4,000 tech startups and nearly 200 intermediary organizations, such as incubators, accelerators, coworking facilities, and others.
Of course, a hospitable environment isn’t enough to guarantee the success of every enterprise in Singapore. It’s common for new entrepreneurs to take the country’s famously easy business setup process for granted, leading to costly errors. Many also find that maintaining a company’s operations in the long term is much harder than establishing one. If you’re thinking of setting up your own startup business in Singapore, you’ll want to avoid making these 4 common mistakes:
Neglecting to monitor expenditure
While Singapore is one of the best places in the world for startup businesses, the fact remains that the average cost of living in Singapore is one of the highest not only in the Asian region but in the world. The country has been ranked as the most expensive city in Asia to live and work in and the 13th most expensive city globally.
Office leases, labor, equipment, and other business needs can be costly in Singapore, and business owners must consider these on top of their living expenses. You’ll want to draw up a detailed business plan as part of your business strategy and keep detailed tabs on where your money is going. It’s also generally a good idea to overestimate your potential expenses slightly rather than the other way around, as this gives you some financial cushioning in the event of unforeseen expenses.
When budgeting for your startup, don’t hesitate to cut costs or seek the most inexpensive alternatives possible when necessary. Many new businesses have to forgo all but the essential expenses in their first few years. You can always upgrade your office facilities, software, or equipment with a larger operational budget.
Insufficient market knowledge
Studies by Bloomberg have noted that 80% of startup businesses fail within their first 18 months of operation. This is due, in large part, to the fact that many business owners don’t know enough about the market they’re meant to be catering to. Entrepreneurs must research their potential customer base and estimate the demand for the product or service they intend to offer. This knowledge, in turn, helps them clarify their product’s unique selling points and how to market these.
Any entrepreneur aiming to set up a company in Singapore can benefit from building market knowledge, and it’s essential for potential business owners coming from overseas. Luckily, many efficient and effective ways to study your markets include market research and networking with possible clients and partners. It’s also always helpful for foreign entrepreneurs to pre-visit Singapore and gets to know the local business environment.
Limited understanding of the tax regime
Singapore is lauded for its generous tax regime and abundant government support available to new businesses. However, entrepreneurs often fail to take advantage of tax breaks and incentives. For instance, the Singapore government offers tax relief for their first three years of operation.
New entrepreneurs should also study the country’s tax regime to clearly understand how and when they should pay their taxes to avoid costly penalty fees. Besides thorough research, seeking advice from government agencies and other industry professionals should also help.
Poor hiring practices
Hiring the right talent has historically been difficult for employers in Singapore. A 2016 Willis Towers Watson Global Management and Rewards study revealed that 65% of surveyed employers reported difficulties attracting skilled employees. The study also struggled to retain talent over the long term.
High turnover rates are detrimental to a company’s operations. Businesses lose significant amounts of time and productivity from frequently hiring new staff from scratch. They may also need to contend with flagging morale among their remaining employees. A reputation for losing employees early will hurt the company’s attractiveness to potential job candidates.
To attract and retain the right people, business owners must create favorable working conditions that equally benefit the company and its employees. Invest time and effort in finding your employees’ career goals, needs, and aspirations, and work with them to align those needs with your shared business goals. Beyond competitive salaries, it’s also essential to leverage your organization’s lifestyle benefits, such as remote working arrangements or flexible schedules.
Starting your own business in Singapore can be daunting, but any savvy entrepreneur can manage it with careful planning. Once you know what common pitfalls business owners in the country encounter, you can then focus on avoiding them and setting your enterprise up for success.
