Singapore is ranked among the top of the most startup-friendly nations in Asia. It offers start-up grants and loans to help promote entrepreneurial spirit. It further provides incentives, low tax rates, and sometimes exemptions, as well as tax rebates.
As a top Asian economy, Singapore is a one-stop destination for foreign investors and companies. Not only because of its stable economy but because, geographically, it opens businesses to all the Asian countries.
Homegrown start-ups are not left out, as the country looks to promote more of its own to compete globally. However, irrespective of the available advantages for start-ups in Singapore, some struggle to survive within the first year or two.
Furthermore, it’s been estimated that a significant percentage of these start-ups fail within 5 to 7 years. Therefore, as an entrepreneur or investor, it’s essential to understand the possible reasons these start-ups fail in Singapore.
Top 6 Reasons Why Start-Ups Fail
Although failure is commonly celebrated as a rite of passage on the path to success, you may not always be able to entertain such luxury as a start-up. There are several avoidable mistakes and errors that start-ups often make.
As a start-up looking to succeed in Singapore, these are the top six reasons why start-ups fail that you need to watch out for.
Do you have a business plan?
Think of it this way; every start-up has the vision to meet a particular need, right? There’s usually this grandiose idea of providing products and services to the market. But, how often do these start-ups draw out a plan to achieve the vision?
A business plan acts as a guide showing the needed steps to take. It reduces the element of surprise as the business grows from its nascent stage to sprout. See a good business plan like a map that helps navigate you to the treasure.
While there may be some hurdles on the way, as long as you stick with the directions on the map, you can always navigate back into its path. So, do you have a business plan?
You may clearly understand the company’s goals, but how (methods) and when (timeframe) can you achieve them is something you need to chalk out clearly even before incorporating your business.
Do you know and understand your target market?
As a start-up, you have to think in terms of specifics or targets. This is a major reason why start-ups fail after a few years. You cannot service a generic market and expect sustained success over time.
You need to think and have clear answers to questions like:
- Who are your products or services for? You have to think in terms of demographics and how well to capture them. There’s probably no disputing that you may have experience making a profit in a foreign market. Still, you have to understand the Singapore markets fully to succeed.
- Who do you intend to sell to? Where are they located, or how easily can your product or service get to them? When you understand your intended target market, you can reposition the company’s resources and time to produce better results.
If you have everything defined, not only would you save up on costs, but it would also give you insights into your competition.
The start-up’s management and workforce
A large part of the success of any start-up is determined by the activities of its management and workforce. The quality of employees hired can either make or break the company.
It’s always advisable to invest in quality, experienced management as they are the company’s decision-making and driving force. Unfortunately, most start-ups fail because those at the helm of affairs are either inexperienced, under-qualified, or unteachable.
As a start-up, it’s best to hire staff who share the company’s vision and are willing to strive to meet its goals continuously. Create a conducive, workable atmosphere with zero toxicity, so staff and management get along well to enhance productivity. Each team member must know they are trusted enough to deliver in their assigned roles.
You should also hire the right corporate service providers to help you manage all your statutory requirements within the required time frame.
Understanding the company’s cash flow
A cash flow statement shows the profitability or losses of a business at any given time. Start-ups either have the problem of underfunding or overfunding. But, even for those with the right funding, the business cash flow plays a vital role in the company’s lifespan.
Care has to be taken to ensure the outflows and debts are not greater than the inflows. In trying to make capital expenditures, start-ups can sometimes invest in liabilities that can affect the company’s finances over time.
By hiring financial experts and working with a budget, start-ups can survive the operational costs needed to sustain the business. As much as you want to hire experienced employees at competitive rates, compensation costs should not overwhelm and hinder the profitability of the start-up.
Do you have customer management strategies?
Many start-ups are so focused on pushing their products and services and building their brand that they forget the essential ingredient for success—customers! Often overlooked by start-ups, customer management helps businesses manage relationships between a company and the customers.
One of the key ways to stay profitable is turning customers into loyal customers. An excellent example of this is what Apple does with its products. They have found a way to have loyal customers continue buying their products and staying committed to their vision. As a result, they are ready to wait in line (in the cold or sun) as long as it takes to buy a newly released product.
How flexible is your business model?
We live in an ever-changing world. As a start-up, you have to develop a model that allows you to adapt to the trends more than ever before. This makes the business more competitive and guarantees profitability and success over time.
As globalisation continues to change how we do things, many start-ups are caught up in a bubble of rigidity. You have to always be open to adopting innovations for your company’s good. Still in doubt? Ask Nokia and Kodak!
Singapore will always be a great destination for start-ups because of its friendly environment and market opportunities. However, like in many countries of the world, some start-ups in Singapore fail within the first few years. This is because they fail to understand the fundamentals of running a business. You should have a robust plan even before you incorporate your business. There are a lot of things you should consider before starting your business like familiarising yourself with the market, government bodies and local culture.
Adaptability to new situations, requirements, and revitalisation by designing various goods and services to satisfy clients’ needs, an acceptance to alter your management structure and thinking creatively will all assist in taking your business forward.