Top 8 Pain Points Small Businesses Face, and How to Deal With Them


The impact that small and medium enterprises (SMEs) have on the local economy is phenomenal. Making up 99% of all companies in Singapore, the 180,000 local SMEs contribute to almost half of the GDP and employ 70% of the workforce. Similarly, in Hong Kong, 320,000 SMEs account for over 98% of all business entities and employ close to 1.3 million people.

Most SMEs are characterised by 1) lean teams (hence, little resources) and 2) slim margins (hence, tight finances), and as a result face a host of challenges.

Today, we lay out the top 8 pain points that SMEs most commonly face, and point to some resources that may make this entrepreneurial journey easier for you:

1. Managing cash flow

With slim margins and limited resources, SME owners are always concerned with ‘balancing their balance sheet’. SMEs need to have a thorough understanding of their sales margin in order to ensure that their revenue covers not only the cost of goods but also overheads as well as the costs of financing. It is no surprise that one of the key challenges hindering efficient cash flow in SMEs is the problem of late payments by customers. This poses a headache especially for small businesses with low cash reserves.

Things are looking up. Banks in Singapore are looking to grow their SME lending – Maybank Singapore is targeting retail SMEs with revenues of up to S$20 million while DBS announced a loan structure to help SMEs cope with restructuring costs. SPRING Singapore also launched a S$2 billion SME Working Capital Loan Programme, under which SPRING Singapore will co-share 50% of loan default risks with participating financial institutions and SMEs can apply for unsecured term loans of up to S$ 300,000.

Related reading: The 6 Singapore government grants for small businesses you need to know

On a day-to-day level, SME owners can also take things into their own hands by drafting legal documents that set out favourable payment terms in order to obtain timely payment and optimise cash flow. Download our free eBook on Managing Cash Flow to learn the legal documents that you need.

2. Hiring and retaining staff

Hiring and retaining staff is an ongoing challenge for SMEs. A survey by DP Information Group revealed difficulty in hiring staff and high manpower costs as the top two business concerns in both 2014 and 2015. 

While you may not be able to offer the best remuneration packages for your employees, there are other creative (and non-monetary) means to keep your employees happy and motivated. You may also wish to consider hiring freelance consultants instead of taking on a full-time employee for fixed term projects with once-off deliverables – such as building a website or designing a brand identity for an event. In that case, make sure you know the key differences between independent contractors and employees and the relevant legal rights and obligations:

Download our FREE eBook on hiring and managing staff:
Singapore version   Hong Kong version

3. Dealing with customer complaints

Statistics from the Consumers Association of Singapore (CASE) in 2015 revealed the 3 industries that received the most complaints to be motorcars, electrical and electronics and the beauty industry.

It’s important to keep your customers happy. After all, they keep your business going! Inspired by Small Business BC, here are 10 tips for dealing with customer complaints to keep them on your side:

10 tips for offering good customer service

  1. Listen. Show customers that you are aware the problem and don’t be dismissive.
  2. Apologise. Rather than engaging in fault-finding, acknowledge the problem and deal with it immediately.
  3. Take them seriously. Make customers feel important and appreciated, and not laughed at or spoken down to.
  4. Stay calm. By staying calm, you’ll allow your customer to feel that you’re in control of the situation and that you can help solve their problem.
  5. Identify and anticipate needs.
  6. Suggest solutions. Have at hand a pre-determined menu of solutions that you and your employees can turn to; whether this is a refund, or vouchers that the customer can return to use in the future.
  7. Appreciate the power of “Yes”. Make doing business with you easy.
  8. Acknowledge your limits. At the same time, be upfront when you are unable to fulfill their requests and ensure that you can keep your promises to your customers.
  9. Be available. Identify key pain points and situate information on avenues for help there.  
  10. Get regular feedback. Provide avenues for your customers to offer feedback, whether as an online form or a targeted customer satisfaction survey.    Tweet this

4. Marketing your business online

Technology has presented businesses today with whole new ways to market themselves. This however poses its own challenges:

Customer expectations have changed and competition is no longer local but now global. Deciding on an effective marketing method with the most return on investment can be difficult, especially when faced with little budget and resources. While channels like social media are free to set up, it can take time to build up an online community. The same goes for blogging. Other forms of advertising, while quick to scale, can be expensive.

So which marketing channels are best for SMEs? This article lists a variety of ways you can start marketing your business online. 

Source: Slides from Doing Business Online – Legal Academy by Zegal


The key is to employ a mix of marketing tactics. Based on HubSpot’s inbound marketing methodology, visitors pass through a purchasing funnel before they are converted into customers. HubSpot also produces a tonne of (free!) and useful resources for sales and marketing – which the team at Zegal absolutely loves!

Learn more about Doing Business Online. Download our free eBook:

5. Rising costs & competition

Running a business in hubs such as Hong Kong and Singapore can be a challenge with the high overheads and strong competition. The rising cost of office rental, as well as increased cost of production, has squeezed the profit margin for small businesses.

Thankfully, there are ways to manage costs even in expensive cities like Hong Kong and Singapore. While co-working spaces are often associated with startups and tech entrepreneurs, SMEs who use co-working spaces agree that it may be a more cost-effective alternative to rented office space. Co-working provides you with the flexibility to scale the size of your operations up or down rapidly, and allow frequent review of your terms of stay more frequently than traditional, fixed leasing arrangements.

Read more: Co-working Space Terms of Use

As members of spaces like The Working Capitol, The Hub and Paperclip, you also stand to benefit from the community events and education workshops they host, such as Zegal’s Legal Academy. 

6. Protecting ideas and commercial assets

Intellectual property (IP), which comprises of trade marks, patents, copyrights and trade secrets, is a core business asset. Yet, SME owners neglect to properly protect their IP rights as they are daunted by the application process, and often are unaware of what needs be protected. As a result, SMEs run the risk of having their ideas stolen. 

Whenever your business develops intangible human creations, it is key that you protect your creations. Your business has information that should remain private, such as your customer database, financial information, and new business ideas. A Confidentiality Agreement (or Non-disclosure Agreement) is your first line of defence to protecting this information. This legal document creates a confidential relationship between your business and any contractors, employees, and other business partners who might get a behind-the-scenes look at your operations.

Additional reading: Download our free eBook on Protecting Your Trade Mark

7. Dealing with regulation and staying up-to-date

While Hong Kong and Singapore are provide relatively easy environments for conducting business, it is important that you stay up-to-date with the latest updates to laws, acts, and regulation that may impact the way you run your business.

Legislation changes frequently; and by being unaware of the latest developments, you put your business at risk.

This is especially true for SMEs who are looking to expand overseas, where it can be challenging to fully grasp the relevant legal and taxation requirements are in other marketsin the host country.

Read: International Growth: Getting it Right

This is why most business owners choose to engage in-country experts to help navigate bureaucracy and other administrative hurdles. This inevitably raises expansion costs. In addition, a potential pitfall that entrepreneurs make is putting too much attention into overzealous expansion and neglecting the home market.

One solution is to cut costs by reducing dependency on external providers, or automating certain tasks with the help of technology. Online tools such as Zegal allow businesses in Singapore, Hong Kong, Malaysia and New Zealand to self-service legal work while saving time and money in the process.

These documents are localised for use in their respective jurisdictions and because it is all online, you will have the ability to, from wherever you’re based, administer the documents you require for expanding into other countries.

8. Time management

As a business owner, you wear multiple hats in your organisation. Did you know that almost 9 in 10 Singapore SMEs lose focus on long-term business goals as a result of being to caught up in day-to-day business operations?

A natural solution to the perpetual time crunch is to employ technology to automate basic tasks. According to a Singapore Chinese Chamber of Commerce and Industry (SCCCI) survey, more than 70% of Singapore’s SMEs are applicants of the various government assistance schemes in Singapore. One key business area where SMEs can afford to save time and money is legal. Legal technology has emerged in Asia as a newer and more cost-effective solution for SMEs to meet their legal needs.

Our cloud software enables fast production of custom documentation which will help your business improve efficiency, accuracy and compliance.

Zegal is used by 5,000 small and medium-sized businesses, general counsels, law firms and business advisors and that number is growing at 20% every month. Join the new face of business law – as a Zegal subscriber, you can:

  • Access any of our 500 existing business documents and customise them to your specific needs, and
  • Choose to automate any of your frequently used documents and save a few hours each week.

Contact us to learn how you can manage legal at the fraction of the time, cost, and complexity.

No credit card required.

5 Must-Have Legal Documents for Cash Flow Optimisation



29% of businesses fail because they run out of cash. Tweet this

Cash flow management is the cornerstone of every healthy business. In addition to giving you the confidence and room to grow your business, cash reserves provide the cushion for unexpected events.

Businesses face many challenges – some companies fail to plan their finances properly, some don’t keep track of costs, and some fail to chase payment or to collect debt. Some don’t use standard documents before they enter into a business relationship, which makes it hard to create the right expectations and chase payments as there are no written agreements.

Learn how to optimise your cash flow. Download our newest eBook:

Free eBook download: Manage Cash Flow


Start taking the first step towards a healthy cash flow right now with these 5 essential steps.

1.   Start commercial relationships with watertight contracts

Start off your business dealing on the right foot with watertight contracts detailing the scope of products and services you are providing. When selling goods or services, make sure you use a Sale of Goods Agreement or a Supply of Services Agreement. A Sale of Goods Agreement typically covers a description of what is to be bought, the price, payment terms, delivery or collection conditions, returns, and how the agreement comes to an end.

Use a Supply of Services Agreement when one business provides services to another. This agreement will describe the scope of services provided as well as the service levels, timescales, the fees to be paid, when payments will be made and how to change or terminate the agreement.

By taking ownership of the contract drafting process, you can create payment terms that will help to improve your cash flow.

Learn more: Download free eBook on Managing Cash Flow

2. Confirm each sales order with a purchase order

A Purchase Order is a document between a supplier and a buyer that confirms a purchase. It details the items the buyer agrees to purchase at a certain price. It also outlines the delivery date and terms of payment for the buyer. A Purchase Order makes the purchasing process more efficient and allows for better inventory and payment tracking.

3. Issue invoices on time

Invoices allow you to set out clearly the type of goods or services you are providing, the price for such goods or services, and your payment terms. It is a document you typically send to a customer requiring payment for goods or services that you have provided or will provide. It also serves as a bill and a proof of a transaction. Invoices also allow you to get the money you are owed by your customers or clients.

4. Chase payments

Dealing with late payments and collecting money owed to you is a crucial part of cash flow management. Late payments and bad debts are faced by many businesses.

If you do have to chase up invoices, Late Payment Letters are a useful to chase overdue invoices. Late Payment Letters can be split into three parts; the first, the second, and the third:

  1. First Payment Reminder Letter – sent once the payment becomes overdue,
  2. Second Payment Reminder Letter – sent after a reasonable amount of time given to the client to repay the debt, and
  3. Final Payment Reminder Letter or Letter before Action – sent to communicate your intention to commence legal action to enforce the debt collection.

5. Recover debt

Occasionally, accepting payments in instalments can be an alternative solution to legal action for bad debt collection. If your customer does not dispute that money is owed and is willing to make arrangements for the debt to be repaid, you can consider a Letter Accepting Payments in Instalments. Such a letter allows the debtor to pay off the debt through regular fixed instalments.

More than 33% of business owners are uncomfortable with the levels of their company debt. With as many as 29% of businesses failing as a result of poor cash flow, it is easy to see where poor cash management will lead you! Mitigate your business losses with the right legal documents that are customised for your specific business situation. Let us help you prevent that.

Answer a few questions, and get legal documents that are customised for your businesses.

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Start drafting your first two free documents. No minimum commitment, no credit required.

Starting up in Asia? You Don’t Want To Make These 5 Mistakes


In the case of legal, most businesses don’t realise what they need until it’s too late. In an era where a search for “free contract templates” delivers 28,100,000 results on Google, it is inevitable then that fledging founders and entrepreneurs choose to go for the easier way out.

The Client Relationship team at Zegal works with countless numbers of early-stage founders and entrepreneurs everyday. We asked them about the most common legal issues they encounter with startups in Asia. These ones topped the list:

1. Not incorporating their business

In a free market, it is easy for any individual to start supplying goods or services as an
independent. As a result, and in order to avoid the additional administrative hassle and tax burden, Founders often choose to start their “business” without taking the steps to incorporate a company or other legal entity. While this may seem viable at the beginning, it will undoubtedly expose you and your business to future mismanaged legal liability.

The key purpose of setting up any business entity is to avoid personal liability when conducting business. Providing services in a personal capacity puts personal assets at risk – yes, your own house, car and other assets may be at serious risk in the event of a dispute or lawsuit!

It is also worth noting that incorporation procedures in pro-business hubs like Singapore and Hong Kong have been made relatively straightforward in the governments’ attempt to encourage more entrepreneurship and economic development. For example, qualifying startups in Singapore enjoy tax exemptions in their first three years of operation. Hong Kong’s Budget 2016 further announced the waiver of business registration fees for the next two years, an initiative believed to benefit 1.3 million business operators.

Get started now:

2. Founders not having a Shareholders’ Agreement at the very outset

A Shareholders’ Agreement outlines the rights and responsibilities of each Founder and dictates what decisions have to made by consensus and discussion. Failure to set out a Shareholders’ Agreement at the start of the business can make for a host of very complicated situations – some of the more obvious being in the event that a Founder decides to leave the business, an exit, or a company liquidation.

A well-prescripted Shareholders’ Agreement addresses what will happen in these events:

  1. What roles will each Founder play?
  2. What are some of the key metrics or goals that must be achieved by each Founder at each phase of the startup?
  3. How much decision-making power does each Founder possess?
  4. Is the percentage ownership subject to vesting based on continued participation in the business?
  5. Under what circumstances can a Founder be removed as an employee of the business? (usually, this would be a Board decision)
  6. What happens if a Founder decides to exit the business?
  7. How will a sale of the business be decided?
  8. How will Founders go about splitting ownership of the business?

Learn what clauses to look out for in your Shareholders’ Agreement:

3. Not owning their Intellectual Property

Intellectual Property protection is what prevents the commercial exploitation of your hard labour. As the author, you want to claim the exclusive rights to any reproduction, publishing, performance communication and adaptation of your work.

Just earlier this year, Global Yellow Pages lost a suit against Promedia Directories despite a claim that Promedia had copied from four of its directories over a period of an entire decade. Global Yellow Pages did not own the copyright, and the court ruled there was no infringement.

Learn more about the different types of IP:

4. Not creating a Privacy Policy

Never in history has personal data been collected, analysed and used at the magnitude it is today, thanks to technology. With such a trend comes growing concerns from individuals about how their personal data is used.

In order to maintain individual trust in organisations that manage data, government bodies have begun to take a protective stance to govern the collection, use and disclosure of personal data.

Singapore, for example, is protected under the Personal Data Protection Act that came into effect in 2012. Simply put, your organisation now has to seek the consent of individuals (with some exceptions) before you collect, use or disclose personal data – all of which are provided for in a Privacy Policy. Tech in Asia recommends using clickwraps, just as Redmart has done:

Build your Website Privacy Policy for FREE:

5. Not having the right legal documents in place for fundraising

There are various legal considerations and documents involved when raising capital through a private investor. If an Angel or VC wishes to invest in your company, depending on the type of investment structure, you will need one or more of the following documents:

  1. Term Sheet
  2. Seed Investment Agreement
  3. Convertible Note Purchase Agreement
  4. Simple Agreement for Future Equity
  5. Shareholders’ Agreement
  6. Board Resolution
  7. Share Certificate for the new Investor

Learn all you need to know about early stage funding:

Has your organisation given serious thought toward the above?

Many entrepreneurs try to shortcut legal processes by printing documents they find on the Internet, and then attempt to make contract edits by themselves. This puts the legality of such documents into question. By the time they decide to seek legal assistance, it may cost even more to have to go back to undo the damage done.

Get serious about legal without having to incur exorbitant legal fees. For an inexpensive annual fee, Zegal’s technology makes it easy for organisations in Singapore and Hong Kong to identify, create and customise the legal documents required at every stage of the business.

Find out how Zegal can help you:


Zegal’s technology helps companies in Singapore and Hong Kong build legal documents they need at every stage of the business. Its intuitive platform allows users to create, customise and store legal documents in the cloud for sharing and signing online.

Getting Your Startup Going


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Finally, everything you ever wondered about funding in one place.

Download here.

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