by Alex Campbell, Managing Director, Asia, Xero
Global Entrepreneurship Week took place last month around the world, and it was a rather opportune time for me to examine the factors that have helped Singapore startups succeed. It should not really come as a surprise that this year, Singapore was ranked number one in the world for startup talent by Startup Genome, a US-based small business research and development firm. The supportive pro-business environment paired with forward-thinking government initiatives such as the Start-Up Enterprise Development Scheme (SEEDS) ensure that Singapore’s startup community is teeming with activity.
There are also efforts by the government to share data collected by public agencies through online portals as part of the Smart Nation initiative. This creates a symbiotic relationship with Singaporean startups. As Singaporean businesses have access to reliable and sufficiently large data sets, they become more amenable to implementing data-driven insights. In turn, they are empowered to innovate solutions that benefit society.
Singaporean startups are in fact becoming measurably more innovative. A study by NUS Enterprise reported that almost every second young startup is currently focused on developing completely new technology. This is an encouraging trend as the study also showed that innovative startups attain significantly higher sales growth – an average of 70.4 percent per annum – than less innovative firms.
Despite these positive moves, the same NUS Enterprise study reported that half of Singaporean startups operate at a loss. Of the 530 Singapore startups surveyed in 2016, a quarter recorded no revenue at all while 29 percent generate revenues but were spending more money than they earned. The unfortunate consequence of this is that only half of startups formed in Singapore five years ago are still currently operating.
To identify the success factors of the startups that demonstrated staying power, I spoke to six of Xero’s customers which successfully operate in a diverse range of industries, to get their take on what helps their businesses run effectively. Each of their answers was surprisingly consistent, revealing four key pieces of advice to fellow entrepreneurs.
1. Understand your market, understand your customer.
Lelian Chew of Floral Atelier, a boutique floral studio and online delivery service, encourages businesses at their inception to clearly identify their market, “The market won’t find you! Have a target market and be consistent in your approach towards it.”
Similarly, Keyis Ng, CEO and co-founder of Cafebond.com, an online coffee retailer and subscription service, emphasized the value of understanding your customers: “Watch how they interact with your product – even the smallest changes should make you innovate and adapt.”
RSS feeds can also be very helpful for keeping on top of conversations in the small business community, helping to build mental model of the market. At the same time, new information should always be assessed on how it either reinforces or challenges that existing mental model, developing an understanding of what customers want and how they want it. This can also help to grow your confidence, particularly when it comes to making big moves.
2. Build a team.
“Don’t do it alone!” implores Amira Priest, CEO of Zahara. Zahara is an online retailer of halal makeup. The website also acts as a supportive online community for Muslim women. While Amira did not have a team per se, she did have her husband Cam who acted as trusted confidante and business advisor.
Fitness enthusiast Luciano Tesoriero concurs. The New Zealander, who started the first F45 gyms in Singapore, advises entrepreneurs to identify their business values and build a diverse and interesting group around them. A like-minded team that you can trust helps to take the pressure off doing it all on your own.
3. Be open to new technology.
Michelle Koh of tech company Robust Tech took a cautious approach when it was starting out, to avoid repeating the business decisions which had led to the failures of other small businesses. However, with the business having grown and thrived, she now sees the value in taking leaps of faith. In particular, she says, “be open to exploring new technologies and ideas. Keeping an open mind leads to more business opportunities.”
Ben Lee, the proprietor of bustling CBD sandwich shop, Sarnies, encourages the same, “Get the right technology tools to manage your finances!”
4. Know your numbers.
In that same vein, Ben also highlighted the importance of being smart with your company’s finances. “Only invest what you can afford to lose”, he says.
This is an important one. There is a premium put on sticking out the struggle and being in the game for more noble reasons than money, but these noble pursuits have to be balanced with common sense. If you love what you do but are losing money, then get out! Or make sure you find a way to make it profitable. After all, money and a positive cash flow is what keeps the machine oiled and running smoothly.
Alex Campbell is Xero’s Managing Director for Asia, a role he took on in early 2016 to officially launch Xero’s operations in the region. He leads Xero’s growth into Singapore, Hong Kong, Malaysia, the Philippines, and 45+ countries across Asia. Alex brings over a decade’s experience working in technology and a passion for helping small businesses grow and thrive.