Singapore Entrepreneur - Venturing Out on Your Own Business

Any business venture needs some in-depth study on the risks and opportunities. Here are some topics which may provide you with some guidance to ponder about.


Capitalize on Your Strength


When you wish to embark a your own business, it is best to capitalize on your own strength and experience. Try not to explore into uncharted territories without any prior studies as the price to pay is usually very high. You will find yourself in best form when you do the things you are familiar and like. If you don't think if you are a qualify to be a gastronomist, you'd better not be in food business just because you think the money is lucrative.

Be Focused, Be Professional


Companies are usually identified by their respective products or services. When you think of Honda, you think of cars. When you think of HP, you think of computers and IT services. Start your business focused in a certain area so that your customers can identify your company to the services or products they want. Don't be too diversified in your services just because you want more revenue. It not only makes you lose your focus but also customers would not have assurance that you are putting enough attention in the particular field.


When you are focused in your area, you would inevitably become an expert in that area. That is called professionalism. For example, if you set up a business that focuses in repairing computers, you would be the best person for the job and no one can proclaim he is better than you. As such, customers would have faith in you and would respect your expertise in the field.


Look at the Demand Perspective, not just the Supply Perspective


I feel many people who yearn to start their own business tend to make a common mistake in analyzing the risks. For example, a friend of mine wanted to bring in some children's boutique from China and set up shop here. He has no prior experience in this line. He claims to know the direct manufacturer of these clothes and their exclusive customer is in Japan. The supplier has offered to provide at factory price and wants him to open a Singapore market. Clothes designs in Japan usually appeal to Asian market and it seems like a good deal. He decided to fly over to Shanghai to talk further with the supplier. Now, looking at this aspect, there are still many things to study and plan before you should decide to proceed further. The most common negligence people make is they tend to indulge in the supply perspective and never thinks of the demand perspective. In today's real world, it is always easy to buy things but the most difficult to sell things. Try googling for any item you think of buying. Chances is that you will usually find the things you want from many websites. The world is so connected that information is so easily available. If you can find a good price with this manufacturer, why can't another person find this supplier and bring in the same types of clothes to compete with you? Once there was an attendee asking me in a motivation class which I was conducting. She devised some recipe on cooking beef patties which tasted uniquely good. Her friends all agreed with her. She was sure it tasted better than MacDonald's and vowed her business will outbid any MacDonald's outlet. I can't agree more that any burger would taste better than MacDonald's. But I cannot agree that taste alone can outbid a competitor. MacDonald's spends millions of dollars in advertising campaigns in upkeeping its brand name. Branding is a very powerful tool in the business world and people are very much connected with brands. Unless she has a similar budget to that, she should just focus on a different target audience who may appreciate the taste of her burgers.

I had my fair share of mistakes when I first ventured out. I had the skills to do great computer programs and could create smart card programs which only big companies could do during then. Equipped with that alone, I decided to form partnerships with my friends and started a company. We started to realize how hard is to convince customers to use our cards even if we offered whole suite of customisations for them. During then, most of them were connected with more well-known industry suppliers. We paid heavily for our lessons.

So before deciding to bite the bullet, do put more emphasis in studying how to create a market for your product and how to protect and differentiate yourself from competitors. You have to understand how the industry works in the first place before making the plunge.

Identifying a Market Gap

In the world we are living in today, everything seems to be complete. Whatever humans can supply, we have it. Computers, cars, planes, telephones, etc. The world will continue to operate even without the existence of you. So, it appears that there is no room for you to create any business for the world. That is what most people think. If you are the odd one out, and choose to think otherwise, you have the making of an entrepreneur. Identify a market gap is not an easy task. It takes experience and vision to create a demand from a gap in the market.

Singapore Entrepreneur - Get Started in Investing Today

If the previous two blogs are what you want to achieve in your life, then get started into investment. There are many ways to grow your wealth. If you are not, by any chance, an heir of an inheritance, or not having any luck in striking a first prize lottery, then investing and starting a business would be the most pragmatic ways to bring you maxium returns.

Of course it's easier said than done. And we do not want to jump into any get-rich-quick business scheme which promises you the sky. What we want to do is to do some self-evaluation on what is your capability and aptitude in a particular area. The most comforting fact about growing rich is, you do not need to be clever ot have high IQ. You also do not need a Degree or Masters in MBA. In fact, many wealthy people who I know of, are simply businessmen who didn't even complete their school. The negative impact of receiving high in education, it makes you less risk averse in taking the plunge to start a business. Armed with a degree, you'd be more attracted to join big enterprises with promising career. This is actually a trap to most people into a rat race cycle. On the contrary, people who drop out of school usually have nothing to lose and have more opportunities to try on many things. They give themselves more exposure into starting up businesses. Of course, they need a little bit of luck and lots of planning to grow their business.

I shall talk about 2 areas of going into investments; starting out your own business and investing into equities in my following blogs.

Singapore Entrepreneur - It's All In The Books

Singapore Entrepreneur - The Power of Compounding Interest

My young Engineer once wondered aloud: "When will I ever earn my first Million dollar". He started using his salary and multiplying the number of years to reach one Million dollars. He told me he needs about 25 years. I told him that is only "revenue". He hasn't factored in his "cost" which is his expenses. Furthermore, inflation rate of about 4% per annum needs to be factored in. So, in reality, he will never be a Millionaire in his life. And even if he is, 25 years later, that amount is only worth half the amount today.

The scary reality about inflation which many people tend to neglect is that it is compounding. Your wealth is eroded by 4% every year and that is compounding at an exponential rate. There is a simple rule called Rule of 72 which could help you estimate how much long today's 1 Million Dollars is eroded by inflation to half its value. If you take "72" divide by the rate of annual return, it would give you the number of years it takes a value to become double or half. Take for example: "72/4%" = 18 years. This means it will take 18 years for $1M to be eroded to $500,000 (in today's value)in 18 years if the inflation rate is 4% per annum.

On the other hand, Rule of 72 helps you to estimate the number of years it takes to double your wealth based on your achievable annual return rate. Take for example, if you manage to find an annual return rate of 10%, it would take 72/10% = 7.2 years to double your investment. The power of compunding interest is that every dollar you earned from interest is re-invested into the capital. This simple technique gives a powerful exponential growth to your investment.

Singapore Entrepreneur - Financial Freedom

When we complete our studies in school, we look for a job which gives us a monthly salary. Each year, based on performance or gratuity, we get an increment to our salary. This trend carries on as we proceed to our mid-career life. We spend part of our pay on necessities, bills, some on personal entertainment and save the remainder of it. High salaried employees like bankers and lawyers may earn at least half a million dollars a year. Thus buying luxury items like sports cars or indulging in high life are no big deal to them. The more we earn, the more we would spend. But if we lose our job, we will lose all the capability in spending. It means to say, our lifestyle is very dependent on our income. Welcome to the Rat Race society.

What is to be financial free? Financial free is a lifestyle you have created such that your passive income is enough to cover your daily expenses and lifestyle. Passive income is an income that you do not have to actively work for it, like a job. To be financial free does not necessarily mean you have to be very rich. It is with respect to how much you have to spend to support your lifestyle. If you live a simple life in prairie house and live on some vegetables and chickens you plant and rear, you don't need any money to spend and you don't need income. Hence you are financially free. On the other hand, if you have a family to feed or a lifestlye to enjoy, you would then need a stable income to support your expenses. If this income is passively earned and is able to support your lifestyle, it means you are financially free. You are out of the rate race.

Examples of passive income are dividends payout from investments in equities, or owning a business which constantly brings in healthy profits.