Title: TO START OR NOT TO START YOUR OWN BUSINESS

By: CM

 

What is business?

The Chinese word  生意  for business is very relevant. It means “matters alive”.
In this fast changing world, everything is revolving and nothing stays for long. If you are in business, you have to adapt and keep changing with the business environment to survive. It’s no more, the older is the company, and the more established it is.

In the real business world, the bottom line counts i.e. PROFITABILITY
Simply, if your business is not profitable, you have to close shop and the game is over.
Business is a money game. The winners take the reward, and the losers have to pack up.

 

Life as an employee.

In general, you go to work with a fix time table and a job specification set by the employer. Your responsibility is limited to your job specification.
You are paid or rewarded according to your qualification and performance.
Generally you belong to the middle class.

 

Life as an employer or “The Boss”.

In general, you don’t have a fix time table and with no job specification.
You are responsible from A-Z.
Your payment or rewards depend on the company’s profitability and satisfaction of achievement. You have a good chance to go broke or make it very rich. When you are successful and rich, everyone looks up to you.

 

Why do people choose to go on their own?
People venture into business for various reasons.

1) The young and energetic graduates.

This group is green, ambitious and very eager to make his or her 1st million. To me they have the lowest chance of success. They could have certain skill and talent but lack the commercial experience needed in business. Commercial experience are not taught in colleges and universities.

Example:

* How to handle trouble employees? * How to deal with bad debt customers? * How to negotiate with suppliers and creditors? * How to maximize your limited resources when every cent counts? There is no ending to the challenges face. Only with exposures and experience will help to make you a better entrepreneur. If you are young and energetic, your time is your asset. The sensible way is to work for someone in the same trade first and learn the commercial experience before you jump in.

 

2) Ambitious and jealous employees.

Employees who are confident, capable and feel that they are fully responsible for the company’s profit, 
so why not do it for themselves.


 3) Employees who are under pressure from their bosses.

Employees who are fed up and cannot take the humiliating scolding from their bosses or superiors.

 

4) Employees who are bored with their corporate life.

Long serving employees with good savings and always wanted to do something on their own before calling it a day.

 

5) Opportunity strike.

Trusted and capable employees are often offered shares and partnership to expand the 
company business or start a new branch.

 

6) Joining the family business.

This is the lucky group who walk into the family business after finishing study, given a good position and has all the time in the world to learn the trade. Generally they do not do well or better than their parents who are the company founders. They are too comfortable, not hungry and lack the desire. I guess it’s just human.

 

How to know when you are ready to plunge in?

There is no best time to go into business. In good times and bad times, there are always success and failures.
It’s important to take note that in good times, the cake is bigger and in bad times, the cake is smaller.  
The answer is on you.

Serious notes to take:

1) Are you mentally ready? -be prepared to work extra hard, accepting the challenge, take risks, to sacrifice time for yourself and family. If your business fails, you still have to put food on the table. Do you have to pay back the loan taken? Do you have a plan B?

 

2) For company partnerships – majority cannot last.

How well you know your partners is more important than how long.  
Before you start, do a detail profile of your partner or partners.
List down and study their integrity, strength, weakness, habits, personality or their spouses if they are influential or involve behind the scene. Give an overall score. If you can get 60% or more in favor, then go ahead.
Do your homework.

 

3) Business Accounting – first, you have to do a Profit & Loss Account.

Revenue less Overhead Expenses = Profit or (Loss)
Overhead Expenses are generally fixed and that is easy to be accounted for.
The difficult part is the Revenue. You can only do a forecast.
Do not be naïve, there are too many factors which can affect your business.
In this case, you must know your competitors well. What are your “value added” against them?
If you cannot find many “value added” then you better think again.

Example:

a) Open a restaurant.

Do you have one or more specialties in your menu?
How tasty are your food? Is your pricing right for the targeted customers?
Your customers are the ones that determine your specialties, the right pricing and not you. 
You have to do food testing and survey with a big group.
Do your homework.

 

b) Open a retail ICT Shop.

If you are only doing trading of ICT gadgets, likely you will not survive.
Models are changing too fast and margin too low. So what are your “value added”?
If you provide repair services and having a network of corporate clients, then you are different.  

 

4) Capital

All new companies take time to grow to be profitable. After paying the initial business set up, 
how many months of operating cost can your capital sustain? 
Many first timers cannot get through this initial stage. One good example is the food business. 
It is sad to see so many new restaurants closed shop within 6 months.
They cannot even recover the renovation cost.

 

 

Competitions

Can you name a business where there is no competition? I can’t. Even a drug pusher who sells drugs on the streets faces stiff competition. Selling drugs in Malaysia is a crime punishable by mandatory death sentence. Even such a risky business is competitive. To have a sustainable and profitable business, one has to be creative and to develop constant improvement in your skills, services and products. Big corporations can afford to set up R & D department, for small companies it has to come from you, where your desire, passion and hard work are needed most.

 

 

How to measure success on your own?

As mention earlier, when you are on your own, you are responsible from A-Z in your company and the sacrifice is unlimited. To me the bottom line of measurement is simple.

Example:

If you are paid RM 5,000 monthly as an employee, then you should earn RM 15,000 monthly or more on your own with a targeted time frame. It has to be 3X and more or else it’s not worth it.

 

What business to start and with the lowest risk?

Not forgetting direct sales business. Many of us would have being approached by direct sales companies like Amway, Cosway and Insurance sales. These businesses provide good training ground for new comers.
They are very focus on sales and marketing.  
Not forgetting the digital world, websites and online business. Having a website in cyber space is like having a shop. The beautiful side is that you don’t have to look after the shop and there’s no overhead expenses other than setting up the website which is a onetime cost. Your cyber shop operates 24 hours a day and 365 days a year with no rest day.

 

Conclusion

I have worked for big corporations for 17 years and on my own for 16 years.
I have built a small but comfortable business where I have not fail to put food on the table and 
can afford to buy all the basic luxuries for the family.
This article is written from my life experience and observation. 

I certainly hope this article can give some guidance and warning to up and coming entrepreneurs.
Every individual and environment are not the same. Every investment comes with a risk.
Remember, you must do your homework well which will be your foundation to success.
Whether to start on not, is your decision and you are solely responsible for your success or failure.

Good luck.