Friends and relative laughed when I told them of my intention to be in business. A friend went as far as to call me crazy when I told him that I quit my job to pursue the insurance business in 2015.
Thinking back, I was crazy then. Taking up insurance was just an excuse to escape from my soul-sapping job as a general manager. It was scary.
After going through the many ups and downs in starting this business, I am curious. Are there fix formulas in determining on how to be successful in a new startup? Or better, are all the so called ‘proven formulas’ by your favorite experts, mere myths purportedly played up to scare us?
MYTH 1: DO NOT QUIT YOUR JOB WITHOUT A JOB LINED UP
This is my challenge for any employee who wishes to have a business startup. Quit your job at least once in your life without another job as a backup. Without a job doesn’t mean I’m advocating leaving a job without cash reserve though.
Liew was my coursemate in varsity. He uses two decades of his youth in perfecting his knowledge in food manufacturing in two major factories in Malaysia. Towards the end of his stint in Unilever, the company offered him a VSS (Voluntary Separation Scheme) following a major corporate revamp.
The VSS made Liew three hundred grand richer. As a result, with an ex-colleague, they bought over a medium-sized manufacturing arm that specializes in making savory products.
Don’t stay and languish in a toxic workplace, just because you haven’t found another job yet. Realize that the job can wait but your health can’t.
MYTH 2: YOU NEED A LOT OF MONEY TO SURVIVE A JOB LOSS
This is the biggest bullshit that comes out from the mouth of your typical insurance agent. Ah, I hear you. Yes, I had once contemplated joining the insurance industry but somehow, my instinct told me that I would fail.
A financial planner or an insurance agent is trained to scare his potential client. When I first participated, the company gave us software that supposedly calculates my prospect’s financial needs in case he retires.
They will throw in figures like mortgages, children’s education, hospital fees in case one gets cancer and all the bad things to frighten you into buying their expensive plan. The fact is if you can afford those expensive plans, what have you to worry about if you lose that income?
What if I tell you that you don’t need to be loaded with cash to quit your job? It doesn’t matter whether you are unattached or a parent. Don’t let these concerns weigh you down and prevent you from pursuing your dream.
I’m forever indebted to God and my first business opportunity. God bless me with a business already built in my hometown so that I can be with my family. The God-given principal supplier offered me a 70-day payment term that allowed the business to gather the critical breathing space to survive. Thank you, God.
MYTH 3: EDUCATION DOES NOT MAKE YOU WEALTHY
I’m sure many of you have read the book Rich Dad and Poor Dad and all its hoo-haa about getting the real financial literacy. It says school education makes us poor because it does not impart real knowledge about money.
At the peak of his popularity, many of my friends including engineers treated the book like a Bible. They will quote verses out of the book, like the infamous four-quadrants when we talk about escaping the rat race or anything about investment.
The people in MLMs and insurance loved attending get-rich seminars that adapted to the “Rich Dad” franchise. Anything related to Robert Kiyosaki, can do no wrong.
But let me assure you. There is indeed wealth in education. When big businesses are falling like flies in this disruptive economy, leverage on your education to find a niche.
Without my knowledge as a Food Technologist, I wouldn’t have the depth to carry on the food additive business. Without my MBA and the accumulative experience in running several businesses, I wouldn’t have decided to carry out the business using a bootstrap startup model.
MYTH 4: THE FOOD BUSINESS IS THE SAFEST BECAUSE EVERYBODY NEEDS TO EAT
We hear this over and over when someone somewhere aspires to start a business. You will be surprised at the smart people that bought into this mantra.
“Everybody needs to eat!” my own father told me when I got accepted into the Food Science Degree twenty years ago. We know he was right. The problem is every Tom Dick and Harry who wants to start a business go head over heel into the food business.
When the Bubble Tea started a decade ago in Taiwan, every Asian country in the world rushed head-on into the fad. Coffee is even more explosive. You could probably find five different brands of coffee retail with every Starbuck that appeared on a street.
My former boss, Kamal was in the family’s timber and equity investment business from the early fifties to the eighties. After a windfall from a reverse takeover exercise, they switched completely to the food-based portfolio like dairy production, bakery, health food, and fast-food restaurants.
Initially, everything was going smoothly for them. The executives from a major competitor joined Kamal and his brothers to build the condensed milk business into a world-class conglomerate in Malaysia. The condensed milk operation grew so fast that it even brought the whole company into the public listing in the Singapore stock exchange.
Anyway, greed takes over and the directors decided to sell the condensed milk operation to a Japanese firm. The initial success is both a blessing and a curse.
The bosses thought that they could repeat the Midas touch in every new business that they took over. As a result, they invested heavily in a chain of fried chicken restaurants, cafes, restaurants, and new condensed milk business.
Alas, their arrogance and greed have brought about their empire’s downfall. Yes, everybody eats, but with the fierce competition in this domain, customers are spoilt for choice. From a peak of $0.80, their share price falls to the current low of $0.13. Check out their website here.
MYTH 5: GROW YOUR BUSINESS AS FAST AS POSSIBLE TO BEAT COMPETITION
V.G.Siddharta was the largest shareholder of Cafe Coffee Day, the biggest coffee chain in India. Cafe Coffee Day or better known as CCD boasted 1700 outlets, that is 10 times as many outlets as Starbuck in India.
With a net worth of USD 1.2 Billion, Mr Siddharta was quoted here as saying,
“entrepreneurship is an ultramarathon, not a sprint — one can’t win it in 10 seconds. A few guesses won’t lead anywhere; there should be a consistent effort in order to be successful.”
He committed suicide on 29 July 2019 owing to excessive debt and financial burden.
Something closer to home. Jeff was one of the directors of an up and coming bakery cafe in Penang. He is a great guy. His passion for food and his business showed whenever I visited him with new ingredients.
Jeff had the grand vision to grow his bakery cafe nationwide, then to China. The young man once snide about his friend’s conservative ambition of only running a single restaurant.
A week ago, I found out that Jeff has left his position in the company. The slow market did not bode well with the cafe’s ambitious ambition. Another bad news. To date, the cafe still owes me about $200 in payables, and I’m not sure I’ll be able to recover these monies.
Here comes the irony. The last time I heard, this guy has jumped head-over-heel into a new bubble tea business.
Well, so much about scaling and rapid expansion. As a business person myself, I’m sure Jeff would have survived if the shareholders were less ambitious early on, in their business venture.
MYTH 6: BUILD A SYSTEM AND THE MONEY WILL FOLLOW
Robert Kiyosaki and every get-rich-quick guru in the universe create this bullshit to any gullible person that cares to listen. Let me tell you this. The so-called system is only as good as the people who run it. Period!
Once upon a time, I belong to the tribe of gullible asses. I bought into some of the bullshits of “Rich Dad Poor Dad”, mostly due to my own impatience and of course, my lack of experience.
I went as far as to tell more experienced business clients to focus on building their system when I saw them trying to do everything themselves. “Fools. When will they learn to let go”, I laughed to myself.
Reality is, your workers just love to take the shortcut. You could prepare the best Standard Operating Procedure and the best training for your staff, they would still skip a few steps.
We used to send our bakers to the best baking schools around the world, expecting them to contribute to better product quality when they returned. No matter how much training they received, they will still miss a few steps during the fermentation period so that they could go home earlier.
The same thing applies to the sales department in the latter part of my management stint, this time in a bigger bakery. We could devise the most profitable route for our sales fleet and for the company, and yet, the salesperson will deliberately skip a few clients so as to go home earlier.
The truth is, only the business owners will go the extra mile to make sure the system delivers. Once your operation and manpower grow, the system tends to develop “holes” that a smaller team will not see.
Therefore as you embark deeper into your business, friends will suddenly appear to share with you a piece of their ‘wisdom’. Before you start your business journey, learn as much as you can, both in theory and in practice.
Jump on opportunities that expose you to first-hand business experience, like running a company’s business unit. At the end of the day, only your own experience will tell you the business model that suits you.