Singapore may be a tiny red dot on the world map but its well-developed infrastructure and robust economy and skilled workforce made it the perfect place for those who are honing their entrepreneurship skills and ready to make their business ideas come to life.
Just look at the growing number of SMEs in Singapore and it is not hard to figure out how easy it is to set up an enterprise here.
If starting your own business has always been your dream, this blog may provide you with a step-by-step guide on how to be an entrepreneur and the cost you must be prepared to bear.
Step #1: Choose a Business Structure
Whether you are starting a business in Singapore on your own or with partners, you need to choose a structure that best suits your needs. Here are the five types of business structures commonly adopted by SMEs in Singapore:
A sole proprietorship is the simplest form of business structure. The business is owned by a single owner and he or she has full control of the management and retains all the profits. However, such a business is not a separate legal entity from its owner, as such, the owner is personally liable for all debts and obligations of the business. Creditors can go after the owner's personal assets if the business is unable to repay the company’s debts.
This is similar to a sole proprietorship, except that it is formed by two or more partners. The number of partners is limited to 20.
Limited Partnership (LP)
Such a structure is a partnership between two or more partners, with at least one general partner who assumes full personal liability for business debts and obligations. and one or more limited partners who invest capital or assets in the business but have limited liability. If you intend to be an investor for a business with limited liability or are seeking to raise additional capital by bringing in new investors, this may be the right business structure for you.
Limited Liability Partnership (LLP)
An LLP is a preferred structure for two or more partners looking to incorporate an entity separate from themselves. Every partner is personally responsible for any liabilities that arise from their own actions and another partner of the LLP cannot be held personally liable for the actions of any other partners. This is a common business structure adopted by law firms and medical practitioners.
A company has the right to own property, has perpetual succession and can sue or be sued in its own name. A company is owned by its shareholders who hold shares and are entitled to a share of profits, voting rights, and other rights outlined in the company's bylaws or operating agreement.
There are four types of companies:
- Private company limited by shares
- Exempt private company
- Public company limited by shares
- Public company limited by guarantee
Step 2: Registering Your Business
An essential step to your entrepreneurship in Singapore lies in registering your business with the proper authorities. Here are two ways to register your business and how much it will cost to start your own business in Singapore:
|How to Register
|Sole Proprietorship and Partnership
|Directly through GoBusiness (Sole Proprietorship/Partnership) or BizFile
|Hire a professional services agency or corporate services provider
|Agent to register on behalf of business owner/s
Step 3: Raise Your Capital
If your business venture requires more capital than you have saved up for, there are several methods you can use to raise funds.
There are many government assistance schemes in Singapore to promote entrepreneurship. For example, you can tap into the Startup SG Founder grant of S$50,000 available to first-time entrepreneurs with innovative business ideas. The Enterprise Development Grant is also a popular scheme for companies starting new projects to upgrade their business, explore new growth or expand overseas
There are many loan products such as business term loans, working capital loans, and equipment financing loans. These loans typically require collateral and have specific terms and interest rates.
Crowdfunding allows you to raise funds to finance a project from a large number of individuals who contribute small amounts. Some Crowdfunding Platforms in Singapore include Funding Societies, FundedHere and Minterest.
Venture Capital (VC) and Private Equity (PE) Funding
Private equity firms typically buy companies and streamline operations to increase revenues while Venture capital firms invest in startups with high growth potential.
Step 4: Set Up Your Business
Setting up your business will include a myriad of activities to ensure the business can start operation. Whether you intend to have a brick-and-mortar store, work from a co-working space or run a remote online business, there are some key activities that will require your immediate attention before you will be ready to generate revenue.
Here are some examples of what you need to set up and essential costs of starting your own business:
|Rent office and/ or shop space
|S$3.80 to S$14 per square foot per month depending on location
Note that a refundable security deposit equivalent to three months gross rent required
|Renovate the business space to suit business operation
|S$70 to S$150 per square foot
|S$3,000 to S$30,000 a year
|Apply for business licences required by authorities
|Refer to Gobusiness Singapore
|Recruitment ads at S$300 to S$1,500 per posting
|Buy business insurance to protect against general risks and loss of income
|From less than S$200 per year for sum insured up to S$100,000
Step 5: Manage and Run Your Business
Now that you have set up your business, you will need to drive the business with consistent effort to keep it running. This is where on-going processes like marketing, accounting or manufacturing need to function on a daily basis to ensure you reach your business goals.
Marketing Your Products and Services
A marketing budget typically ranges from 5 to 10% of your company revenue or targeted revenue, depending on company size, stage of growth and the importance of marketing on sales within the company's industry. It is common for startups to invest this budget into creating an online presence through social media, active advertising and content creation to put their brands out there.
Maintaining Overheads and Employment
This is the mundane effort to fulfil payroll, rentals, utilities and any other overhead costs on a monthly basis. It might seem insignificant but is essential to get the business going. The costs largely depend on the size of your set up and can run from thousands to hundreds of thousands in cost per month.
At a start you may be tempted to manage your own accounting functions but as your business grows, you can save a lot more time and effort if you hire employees with relevant expertise or work with the right accounting services provider. Investing in an accounting software to automate manual functions such as generating financial statements and managing payroll and expenses can also make your overall operations more effective and efficient.
Do not get stuck wondering how you can be an entrepreneur in Singapore, sometimes, all you need is a bit of courage and initiative to get you started. If not having sufficient capital is your concern, why not leverage business loans to ease that burden?
There are many loans in the market that will help you to fulfil your enterprising vision. Refer to our best business loans page for more information.
- Best Corporate Credit Cards for Businesses 2023
- 3 Ways to Optimise Your SME's Finances
- 3 Ways Startups in Singapore Should Assess Different Financing Options Like SME Loans
- Why Do Start-Ups Need More Support From Banks Following The Pandemic?
- An Entrepreneur's Guide to Business Loans and Why You Need One
Cover Image Source: Unsplash