Special Report

Singapore's Start-up Companies Showing Amazing Resilience

More young enterprises see information technology as the key to success

Singapore's young enterprises have shown amazing resilience in the face of the global downturn, maintaining both their revenue and profit levels through the crisis.

This is the key finding of the fourth annual DP Information - ACE Start-up Enterprise Survey (STEPS) released on 1st June 2010. The survey was conducted by DP Information Group (DP Info) – Singapore’s leading provider of business and credit information – with the Action Community for Entrepreneurship (ACE) as the strategic partner, and both the Infocomm Development Authority of Singapore (IDA) and SPRING Singapore as supporting organisations.

A record 1,982 businesses, companies and partnerships participated in this year’s survey, making it a comprehensive snapshot of the issues faced by Singaporean enterprises that have been in operation for less than three years.

According to the survey, the percentage of companies earning more than S$500,000 increased from 30% in 2007 to 34% in 2009. Profit levels have remained fairly constant for the last three years with 17% earning S$150,000 a year, while 22% generate profits of less than $25,000.

The sector with the strongest revenue performance was Transport/Storage with 52% of Start-ups reporting more than S$500,000 in sales. Manufacturing companies also did well with 50% hitting the S$500,000 mark. The Retail and Services sectors had the weakest sales, with 52% and 49% respectively reporting less than S$100,000 in revenue.

INFORMATION TECHNOLOGY ADOPTION

The number of Start-ups intending to invest in Infocomm technology in the next 12 months has increased by 7% to 31%. The amount they intend to spend is also increasing with 19% budgeting between S$10,000 to S$50,000 – up from 9% last year.

Number of Start-ups with a company website is increasing year on year - 58% now have their website established compared to 46% and 38% in 2008 and 2007 respectively. This adoption of websites parallels the use Start-ups are making of the Internet, with 93% going on-line to support their business, an increase of 14% on a year ago. Use of the Internet is focused on communication and sourcing information, and only 3% of Start-ups use it for marketing or advertising purposes.

Infocomm solutions are now accepted by the majority of Start-ups as an essential part of their business, with a higher percentage of respondents using (62% vs. 42%) or planning to use (7% vs. 5%) Infocomm solutions compared to last year.

OVERSEAS OPERATIONS

One in four start-up companies are now generating revenue from overseas, compared to just 16% two years ago. Start-ups with overseas revenue also register higher turnover.

Looking at the Start-ups generating sales in excess of S$500,000, more than half generate at least 30% of their revenue overseas, compared to just 24% which rely on the domestic market alone.

Nearly twice (26%) the number of Start-ups with overseas revenue are more confident about achieving their first S$1 million in sales within the next three years, as opposed to those with only a domestic market (14%).

EMPLOYMENT BEHAVIOUR

The majority (76%) of Start-ups hire less than 10 staff in their operations, with 96% choosing to employ them on a permanent basis (94% in 2009). There was an 8% drop in the number of companies hiring Temporary/Contract staff – from 20% in 2009 to 12% this year - indicating this category of labour was cut back during the downturn in preference to permanent employees.

A relatively higher percentage of Start-ups are engaging foreign staff – 42% this year compared to 36% last year. The Hospitality (71%), Construction (65%) and Manufacturing (58%) sectors have the highest percentage of companies using foreign staff.