Which Businesses Make Money in Singapore?
Throughout the course of my work, I’ve had the privilege to access confidential financial data of SMEs from various industries. One trend I’ve noticed is that the young entrepreneurs who approach me do NOT come from industries that really make money. This is really interesting. Why?
Nowadays, everyone seems tempted to do a tech startup, run an ecommerce platform, start a café or market a novel/new interesting business idea. I can get multiple emails per week looking for partnerships or growth hacking help for service portals, seminar sales, F&B marketing, novel products or “the next big idea”.
Perhaps in all this excitement about innovation, young entrepreneurs are overlooking other good opportunities?
Know those little shop fronts you see in Lavender or Chinatown? Hardly any crowd, you wonder how they survive. But many are actually trading companies that supply products to businesses in Singapore. Many of the products you see on the shelves in big departmental stores or offices are supplied by trading companies situated in “ulu” locations.
One of the most interesting cases was a company that did nothing except buy pipe covers online from Alibaba and rent them to construction companies that needed to transport pipes. That’s all. Pipe covers. The warehouse had nothing but pipe covers.
If you know a certain trade well enough, you will know where the opportunities lie.
If there’s 1 thing Singaporeans don’t save on, it’s their children’s futures. The margin in this industry might no longer be that great, but the demand is huge. This is the only big money maker left that isn’t strictly regulated. Financial, gambling, property, basically every other cash cow industry in Singapore is either outlawed or highly regulated.
It’s not easy path though. NO BUSINESS IS EVER EASY. It’s blood, sweat and tears.
The education/childcare industry has created plenty of new-rich business owners. 3 other areas that Singaporeans spend recklessly in are:
- baby related
- home renovation
My good friend’s brother runs one of the few restaurant chains that’s still privately owned (cafes not counted). But he only got it to work because he saved up enough capital from another business: importing and exporting computer parts in the 1990s.
For those who think such opportunities are over, think again. A famous ex-politician is now a multi-millionaire through exporting electronics to Africa. Many major brands like working with Singaporean distributors so if you can get a deal going, you can start distributing it to other parts of the undeveloped world.
Before any of you go Google for government grants to apply for, I need to make myself clear.
The companies making great money from this are not the companies claiming the grant. They are the companies which products and services can be paid for using grants! PIC/ICV/CDG* are 3 of the most popular grants now.
“Your receipt printer is too old. You should replace it with a modern POS. Government paying anyway.”
“Why pay for marketing? Our agency can help you structure a branding campaign. Claim CDG $30,000.”
“$500 Skills Future to upgrade online marketing skills. Get more job opportunities. You don’t need to pay cash.”
These grants have already made a number of millionaires in Singapore, especially during the 2012/2013 PIC heydays. A similar alternative is selling online courses.
*PIC ends this year (This has my full support). ICV is strongly rumored to be killed off this year (I strongly support this too) and replaced with a digitization scheme. CDG will likely stay.
Which business do you think makes more,
- Carousell (who everybody in Singapore knows)
- Selling ball-bearings to factories (who nobody in Singapore knows)
The 2nd one is likely a multi-millionaire, while the first will still need funding to grow and turn profitable (Caveat: profitability isn’t necessarily required for a tech startup to “succeed” as there are other ways to play it through capital markets).
There are many businesses that no one outside the trade knows about. Engine Remote Control System, Inert Gas System & Oxygen Analyser, Oil Discharge Monitoring System, Hydraulic Control Systems, Tank Gauging System. I don’t even know what any of those do, but there are big businesses that need and pay for them.
Marketing works insanely well for growing profits for tuition centres and education services.
But for the rest, deals often come from relationships and a real need for tangible product/services. The relationships are part of their business system and usually passed down from generation to generation. So even for a marketer, whenever people tell me “everyone needs digital/newspaper/events marketing”, I just smile and keep quiet.
Apart from these, there are other brick & mortar businesses that make good profits.
- A popular handyman can make $10,000 mthly
- Getting your hands dirty fixing pipes
- Contract air-con servicing and repair
- Changing car batteries
- Many other less glamorous trades
These are all businesses that can grow and scale once you have a ready pool of loyal customers. So why are young entrepreneurs ignoring opportunities in more “old fashioned” businesses? Honestly, there are plenty of valid reasons.
Lifestyle, glamour, purpose, just for fun. They’re all valid. But it certainly would be nice to see more support for young entrepreneurs wanting to go into a less innovative, more old-school, real business.
Author BioA leading digital marketer in Singapore, Nate has beaten professional benchmarks for Google SEM by 400%. Previously a Vice-President of Marketing in his corporate career, he's worked with American Express, Yahoo, Starhub, Genting. Trained people at Facebook, Google, Starcom. Approached for strategic insights by IDC. Helped a bank save 98% on marketing. Increased user revenue for Deloitte's fastest growing tech startup in Singapore by 4,400%.
Currently offering free consulting for charities, social causes and start-ups with shoestring budgets. Also works with private clientele at That Web Consultant.