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Why Is It So Hard To Start A Business In Singapore In 2023?

While Singapore has a reputation for being a business-friendly environment, there are several regulations and requirements that can make it difficult for entrepreneurs, especially foreigners, to start a business.

Being a developed country with a high standard of living means that the cost of living and doing business in the country is relatively high.

Entrepreneurs who want to start a business in Singapore may face high startup costs, such as rental fees, employee salaries, and other expenses.

It has a highly regulated business environment. There are many rules and regulations that businesses must comply with, including obtaining the necessary licenses and permits, complying with labor laws, and meeting various tax requirements.

These regulations can be complex and time-consuming, which can make it difficult for entrepreneurs to get their businesses up and running.

While Singapore has a well-developed financial sector, entrepreneurs can still find it challenging to access financing for their businesses.

Banks and other financial institutions may be cautious about lending to startups, as they may be viewed as higher-risk borrowers.

One of the most obvious reasons for businesses to not consider Singapore first when expanding is undoubtedly the small and limited domestic market.

Businesses that want to start a business in Singapore may face challenges in reaching a large enough market to make their businesses viable.

This can make it difficult to generate the revenue needed to sustain a business in the long term.

With such a saturated market, Singapore has a highly competitive business environment, with many established businesses and multinational corporations operating in the country.

Starting a Business With S$2,000

Having said that, Singapore is not voted as one of the easiest places to start a business for nothing. If you are a Singaporean, you may find starting something small on the side is going to be as easy as filling up some forms online.

Starting a business in Singapore with $2000 can be challenging, but there are still some very viable options and ideas available to even someone who is clueless about business and what they want to do.

  • Freelance Services: If you have a skill or talent that you can offer, such as writing, graphic design, or photography, you could consider offering your services as a freelancer. This would allow you to start a business with minimal startup costs and work from home.

  • Online Retail: You could consider setting up an online store and selling products that you source from suppliers or wholesalers. With a limited budget, you could start by selling products that are in high demand and have a low price point, such as phone accessories, beauty products, or fashion accessories. With the ease of access to e-commerce platforms like Shopee, Lazada, and even Carousell, the side entrepreneur can find it so easy to set up a shop selling stuff even without the deep pockets traditional retailers need. If you are thinking about how to go about starting a small business and is clueless about how to do it, our Diploma that focuses on business management and digital marketing will help you kickstart any small ambitions you have in a heartbeat.

  • Home-Based Food Business: If you enjoy cooking, you could start a home-based food business, such as baking or catering. This would allow you to start a business with minimal overhead costs, and you could market your services through social media and word-of-mouth.

  • Cleaning Services: You could consider offering cleaning services to homes or businesses in your local area. This would require some initial investment in cleaning equipment and supplies, but it is a business that can be started with a relatively low budget.

  • Tutoring Services: If you have expertise in a particular subject or skill, you could consider offering tutoring services to students. This would allow you to start a business with minimal startup costs and work from home.

Having a business idea is the first part. The tricky part will come in deciding what kind of company you will want to incorporate when you reach the ACRA website where you formally register your business with less than $300.

To help you navigate through these messy waters, let's take a quick look at the different types of companies in Singapore and the steps involved in setting up a company.

  1. Sole Proprietorship: A sole proprietorship is a type of business that is owned and operated by one person. This is the simplest and most straightforward type of business structure in Singapore. However, the owner of a sole proprietorship is personally liable for all the debts and liabilities of the business.

  2. Partnership: A partnership is a type of business that is owned and operated by two or more people. In a partnership, each partner is personally liable for the debts and liabilities of the business. There are two types of partnerships in Singapore: general partnerships and limited partnerships.

  3. Limited Liability Partnership (LLP): A limited liability partnership (LLP) is a type of partnership where each partner's liability is limited to the amount of capital they have invested in the business. This means that each partner is not personally liable for the debts and liabilities of the business.

  4. Private Limited Company (Pte Ltd): A private limited company (Pte Ltd) is a separate legal entity from its owners. The owners of a Pte Ltd company are shareholders, and their liability is limited to the amount of capital they have invested in the business. This means that shareholders are not personally liable for the debts and liabilities of the company.

Steps to Set Up a Company in Singapore

After deciding what type of company suits your business the most, you are all good to register!

As mentioned, Singapore is not voted one of the best places in the world to start a business for no good reason. But although it is easy, it can still be daunting for someone who is looking at all the jargon and options on the ACRA site for the first time.

  1. Choose a Business Name: The first step in setting up a company in Singapore is to choose a business name. The name should be unique and not already registered with the Accounting and Corporate Regulatory Authority (ACRA).

  2. Register the Company: Once you have chosen a name, you will need to register the company with the ACRA. This can be done online through the BizFile+ portal.

  3. Appoint Company Directors and Shareholders: A Pte Ltd company must have at least one director and one shareholder. The director must be a Singapore resident or a foreigner with an Employment Pass or EntrePass. The shareholders can be individuals or other companies.

  4. Register for Tax and Other Licenses: Once the company is registered, you will need to register for tax with the Inland Revenue Authority of Singapore (IRAS) and obtain any necessary licenses or permits for your business.

  5. Open a Bank Account: You will need to open a bank account for your company to manage its finances.

  6. Maintain Company Records: You will need to maintain accurate records of your company's financial transactions and file annual returns with the ACRA and IRAS.

It may seem easy but businesses will face strong competition when they are operating in Singapore, which can make it difficult to establish a foothold in the market.

While Singapore offers many benefits for businesses, such as a stable political and economic environment, a skilled workforce, and favorable tax policies, starting a business in the country can be challenging due to high startup costs, stringent regulations, limited access to financing, a small market size, and strong competition.

Businesses that want to expand into Singapore will need to carefully consider these factors and plan accordingly to overcome these challenges.

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