Singapore
Singapore
SMEs make up about 99% of businesses in Singapore but contribute less than half of our economy’s added nominal value in 2017, according to the Department of Statistics. Major players in Singapore’s business landscape clearly have the upper hand, which leave our local SMEs highly vulnerable to the ebb and flow of these large corporations.
How then are they able to stay abreast of the situation and maintain a competitive edge? Speaking on MoneyFM 89.3’s segment “Business Forward with Canon”, Mr. Eric Lam, CEO of Amdon Consulting, shares some insights on how SMEs can survive and thrive in the face of these MNCs. You can listen to the podcast here.
Having to face multiple challenges is part and parcel of the industry for small businesses. However, there’s a way for these SMEs to maintain a competitive edge, asserts Mr. Eric Lam, and that is the key for them to be successful in a business environment dominated by large corporate giants.
Eric first addresses the elephant in the room: what competitive edge do larger companies have over smaller ones? With size comes the luxuries of resources and manpower, and this possession of resources contributes to their success. For example, with greater monetary capital, larger companies are able to locate and hire talents who are more competent.
However, Eric suggests that having such extensive resources can be a double-edged sword. Take the corporate red tape for example. Large companies can often be held back by the intricacies of bureaucracy because they have more to lose. Multiple stakeholders, all of whom have differing opinions and perspective, make it difficult for fast response times during crises. These large businesses are thus forced to consider the situation from all angles, instead of making snap decisions, in order to mitigate potential losses.
Smaller companies, on the other hand, don’t have that much to lose. In other words, their stakes are much lower. In light of this, Eric claims that SMEs should “dare to take the plunge”.
This shines a new light on how smaller companies can have an edge over larger companies. Eric affirms this by noting how smaller companies, by having less to lose, tend to be more forward-thinking. He contends that SMEs need to “stop thinking about competition and start thinking of alliances” – small companies shouldn’t view large companies as their competitors. Instead, analyse the entire value chain, identify areas where they have a comparative advantage and excel at those.
In other words, small companies should discern where the gap in the industry lies and play to their strengths in filling that gap. This shift of mindset should push SMEs towards determining what they can do better, and in turn attract the collaboration of larger companies.
Such a mindset has correlated to success for Amdon Consulting. With a niche in producing digital content in the education technology and HR technology industries, Amdon’s success has drawn the attention of big publishers, some of which even include movie producers in the US.
The trick is to “find something you (SMEs) can optimise and do really well”, says Eric. Why force yourself to compete on an uneven playing ground when you can carve out a niche and excel in that? Only when SMEs change their mindsets and realise how this could work for them will they be able to compete on a global level.
As Eric explains from a bigger picture, when Amdon Consulting works with SMEs, they see them as content producers, while they see themselves as a mentor, providing pedagogy, production and distribution capabilities to these smaller firms that do not have experience or the necessary resources.
Larger companies look for collaboration with SMEs to achieve new heights. It is the sharing of knowledge that will help propel any player in the industry – no matter big or small – forward. As such, businesses “can capture the market much faster this way”.
Eric stresses that with the right mindset and strategies, opportunities will eventually arise for SMEs. There is no point in keeping resources and information within any one business; companies should recognise the pertinence of information sharing and how it can help elevate their status in the industry.
Partnerships and collaborations can indeed benefit SMEs faced with the ongoing revolution of digitisation. Why fight the uncertainty alone when businesses can do so together? This cohesion will benefit all parties in the equation; SMEs just have to take the first step in recognising this.
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