(SINGAPORE) Almost six in 10 of start-up companies and limited liability partnerships operating less than three years are still losing money, according to a survey released yesterday. Many cited high rental and raw material costs, as well as manpower issues.

The survey of 1,521 start-ups was conducted by DP Information Group and the Action Community for Entrepreneurship (ACE), a public and private sector partnership set up in 2003 to help new businesses. It is the second year the survey has been conducted.

It found that although they were losing money, bosses seem reluctant to cut their losses - 84 per cent said that they would not quit their business to work for someone else. Three-quarters of them were still unprofitable and half were still in the first year of operations.

Sixty per cent of all respondents said that high rental costs made it difficult to sustain their business, and soaring raw material and goods costs as well as the need to have competitive pricing weighed heavily among concerns.

The survey found that awareness of government schemes among respondents, despite their difficulties, to be low. About half of them said that they did not know of schemes to help start-ups. Technology take-up was also low. Just 5 per cent felt the need to keep their technology up to date, and 62 per cent did not have a website for their business.

Chen Yew Nah, managing director of DP Information Group, said that there was a correlation between the use of technology and higher net profit. She pointed to the finding that half of those generating net profit of between $200,000 and $500,000 said that they were highly dependent on technology.

'These results confirm the need for targeted programmes to assist small enterprises to make technology a principal consideration, not an afterthought.'

However, she admitted that the survey did not show any causal link between technology and profitability.

Inderjit Singh, deputy chairman of ACE, said that the key thing from the findings was that Singaporeans were still willing to try their hand at starting their own businesses, despite all the problems faced. Even if they failed, 'there must be next time in our society', he said. 'In places like Silicon Valley, failure is a prerequisite for funding.'

He said that Spring Singapore's Micro Loan programme, which now provides small firms with up to $50,000, could be expanded to disburse even larger sums in loans, noting that the survey found that half the respondents said raising capital was their biggest obstacle when starting up. A committee is working to increase the amount that can be borrowed under the Micro Loan scheme and Mr Singh said that a decision could be made by the end of the year.

The survey found that only a quarter had some form of banking facilities, with most relying on savings, family members or friends. Just 4 per cent had access to venture capital and Mr Singh said that more could be done to help firms that are too small to attract angel investors or seed funding.

ACE is working hard to raise awareness about government and other schemes to help start-ups, Mr Singh said. He pointed to the Start-up Enterprise Conference to be held on April 4, which will address issues raised in the survey.

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