How to set up a new business in Singapore?

Setting up a new business in Singapore

Recently, I advised a group of people who have been working for the past 5-7 years in an office. Their job range from back end to middle office and they told me that they are really sick of their job. They can't wait to break free and they would like to try running their own business. However, they have no idea how to do that.

I ran through with them their raw ideas and I realised that they do not have a clear structure on how to set up a business. The key thing is, you should not jump into setting up a business simply because you are bored of your job. You will need to think through and plan.

The following steps are what I got them to do before deciding on kicking off their business and I thought it will be interesting to share here:

1. Think through your key competencies (your KSA - knowledge, skills and abilities)

2. Decide on your competitive advantage based on your core competencies

3. Envision where your business will be in the future

4. Decide on your business's identity (What will the business represent? what will be the value add to the society and the consumer?)

5. Research on current market situation (both micro --> your strength and weaknesses and macro --> the economic situation, changing trends etc)

6. Strategize to achieve your vision and mission (You can follow the 4Ps strategies to have a clearer idea -->

-- product / service: what are you selling? Why would people buy from you? What is the core advantage that you are offering to your consumer? How are you going to package? Why? Are you providing any ancillary services?

-- price: how much are you going to sell your product or service at? Why? 

-- place: where are you going to sell product? How much is the rental? Is the fixed cost too high? How long can you hold out with your capital? Have you explored digital space?  

-- promotion: how are you going to promote? Through which channel? would it reach your target audience? How much budget do you have?

7. Come out with ways to measure and quantify your business (Are you going to only focus on financial perspectives or are you taking into account other KPIs such as customer perspectives (like retention rate, satisfaction rate etc))

You should also assess your business and know if you are going to start a sole proprietor, partnership, company or?

Done with brain storming all those mentioned above? Eager to start your business?

The first step is always to register your business with ACRA

ACRA has an informative page on how to start a business -- https://www.acra.gov.sg/components/wireframes/howToGuidesChapters.aspx?pageid=1755

Backward looking = reflection, forward looking = solutions!

We should only spend 20% of our time looking back to reflect and learn from past events and the rest of our time looking forward to find solutions.

Many people I know spent too much time looking back and asking the "whys" instead of channeling their energy into looking forward and solving the problems. Start today by spending majority of your time looking forward!  

Business Requires Transparency and NOT intransigence

Transparency:

Regardless of whether it is towards your employees or customers, every business requires transparency. The inability to be transparent towards your employees or customers will only cause more issues in the future.

I have learnt along the way that the inability to be transparent has led to more problems in the long run. I always thought that if sensitive information is not shared or disclosed, it might be better for both sides. However, some of the times, it is important for us to disclose to the employees on certain things such as revenue model so that they will know how they are value adding to the customers. Some times, we got lazy and we decided not to disclose certain information and this might also lead to potential bottlenecks in the future.

Intransigence:

One of the worst things that can happen to a company is when agreements cannot be met due to intransigence. No one would gain from prolonged insistence on their own stand. Many businesses have lost deals or huge revenue because they are not willing to compromise on anything.

I used to have an employee who is always quick to point finger at someone else whenever things happen. He can come out with many reasons why things go wrong due to other people. No common agreements can ever be reached in the company when he leads the meeting as he is always making an extreme decision and expecting everyone to follow. While devil's advocate is good, the inability to listen to others and compromise is a big NO NO! Eventually, the whole company spent too much time debating and hence became unproductive. As counselling and coaxing did not work out, he was subsequently asked to leave.

As such, it is really important for a business and also a person to always be transparent and not intransigent.

Ideas? Stories? Share with us! We Want to Hear You!

Valerie Chai
www.starcresto.com

Do you think that focusing on getting too many government grants is a setback in business? Would that make you lose focus on what your business should really offer?

Government GRANTS -- Vice or Wise? Are you over focusing on chasing for grants and not spending time on building your business? 

Recently, I get to know of an entrepreneur who is running her own business based on grants. She is very focused on spending almost ALL her time looking for different grants and thinking of how to get more money from all the different grants from the government.

What puzzled me is ---> WHY? Why spend so much time thinking of ways to get grants from the government rather than focusing on building up the business?

The grant from government is helpful for entrepreneurs who aspire to run their own business but do not have the resources to. PIC grant is such grant which has helped many entrepreneurs in terms of getting their systems and hardwares. (you can read more about PIC grant here --> http://entrepreneur-weekly.blogspot.sg/2014/05/what-is-productivity-innovation-credit.html) However, relentlessly pursuing different grants seems pretty pointless to me.

I guess the most important thing in running a business is to have clear vision and values. Once you are very clear on those two, then the next important thing is the ability to execute through planning and strategy followed by measurements and feedbacks of results. I realised that some of the entrepreneurs do not know what they want in their business. They seem to be more focused on getting cash from the business by applying for different grants. While, this might seem as a smart move by some, my question to them is --> is this sustainable?

It is more important to build up a strong foundation for your business and think of a sustainable revenue model (yes its gonna be tough but doing things the short cut way also means that there might be little or no sustainable cash flow for the company in the future).

Your thoughts? Share with me! 

About Valerie Chai

I am the founder of starCresto Education Group (starCresto). 

starCresto was founded in year 2000 and has expanded over the years from tuition to tuition agency to enrichment courses to mentoring. I am born in a poor family and I guess that gave me a lot of drive to succeed and get out of poverty cycle and most importantly, the rat race that so many people are stuck in. I believe strongly in human capital and talent management. 

The business journey has not been all that smooth sailing with great lessons learnt from mistakes made. With all these learning, I live by my three rules in life now:

1. Think strategically

2. Behave optimistically

3. Execute courageously

Success is a matter of chance or choice?

CHOICE OR CHANCE?

Are you determined to succeed or are you leaving it to chance or destiny? Even though it is true that success might require luck and chances, the determination and choices that you make will make you successful when the chance arises :) 

CHOOSE to succeed and charge!! 

Entrepreneur Weekly - Triangle model of BUSINESS that involves ACTIVE and PASSIVE business sections

In all businesses that you do, it is important to build up a triangle that consists of a stable base and a risky tip. I call it the A + P = S model (Active + Passive = Success)

(c) Valerie Chai. ALL RIGHTS RESERVE 2014

To build a successful business, there is a need to build up a strong base of repeated business that requires very little involvement and yet gives you strong repeated cash-flow. This strong base of cash-flow allows you to take on more risky deals that can potentially give you higher ROI. If the risky projects fail, you know you always have the passive income that you have built up to cover your losses. 

Talent Management

The next question I usually get when I share this model will be --> "So what type of employees should you use for passive and active business section respectively?"

Well, it is always good to have your trusted, loyal, stable, efficient and not so adventurous employees to help you manage your business portfolio that are passive in nature. These employees should be remunerated for their loyalty and efficiency. It is important to ensure low turnover for this business section. 

The active business section requires the employees to be a risk taker, solution creator, problem solver and good sales person. However, employees who are in this section tend to be those who job hop very often and they could even learn whatever they can from you and bring it over to your competitors or even set up another company to compete directly with you. As such, it is important for you to include non disclosure agreements and non direction competition for a few years with these employees. However, it is still very important to groom, empower and trust these employees. These employees should be remunerated on commission basis and could even be groomed to be part of the partners if they prove to have the potential.     

Opportunists are usually entrepreneurs

Build a business focusing on your comparative advantage

Absorb like a chance when you have the chance to learn

  Issue 3,  Quote 1, Week 2, Jun 2014

One of the tricks to a successful business is when you are able and willing to learn as fast as you can when you have the chance to. Absorb like a sponge when people tells you their lessons learnt, knowledge that they have gained when they are doing business etc. 

Always be prepared to give back by sharing with others what you know as well. Giving and taking will make you learn the fastest! 

Why Business Start-ups Fail? TOP 5 Pitfalls of Business Start-ups Failures

  Issue 3,  Article 1, Week 2, Jun 2014

5 Pitfalls of Business Start-ups Failures

Approximately 75% of the business start-ups failed within the first 3 years of their business (Business Journal, 2012). What exactly are the reasons for the failure of a start-up? 

1. Vague or Complicated Vision

It seems that one of the greatest reasons why business start-ups fail is because the leader came out with a vague or complicated vision which made them lose the direction of their company as the business grows. One of the entrepreneurs that I talked to told me this: "You are suddenly very lost about the direction of your company as the vision that you set up is so vague you are not so sure what you want your company to be anymore". 

It is very common for start-ups to come out with a vague vision and eventually improve and refine it until it is very clear for the company on where they will be in the future. 

However, many business owners who have failed their businesses before, stated that their businesses did not work out because the vision was either too vague or too complicated. As such, when they are see opportunities they do not know how to assess it. They might end up with too many business deals that are not quite in the direction of where the company want to be and thus making the consumers confused about their positioning.  Not knowing the vision implies that you do not know where you want to be. If you cannot see the end goal of the company, how can you develop strategies that gear you towards your goal?

Suggestions:

• Look at successful company's vision
• Sit down and think of where you want your company to be

2. Lack of Focus / Loss of Interest

A lot of the people think that starting a business is very easy and there are easy money to be made because they see an opportunity in making money (usually a one time off event). THAT means that they are starting up a business for the wrong reason! Eventually, they will start to lose interest when there is no business continuation and they will get distracted by other stuffs and hence wind up the business. 

There are also another group of people that I have met who have a lot of ideas gushing through their head all the time. Before they succeed in one idea, they will move on to another idea and they will keep doing that. At the end of the day, every idea get started as a business but there is no continuation of the business as no effort is made to maintain the business!

Suggestions:

• THINK of continuation of business and how you can make money with your idea on a ongoing concern  basis. 
• Be passionate about what you are doing, you should not start a business just because you see easy money to be made.

3. Poor Capital Management

This is a very common problem. You wanted to expand your business but you have lack of capital but I guess lack of capital is not a very big issue. The biggest issue is when you do not know how to manage your capital! 

I always believe that when you do not have enough capital, you can always raise it through bank loans, investors, venture capitalists, SPRING Singapore etc. However, if you expand too quickly  and / or did not do any capital budgeting (hence overspending before the cash-flow comes in), then your business will face serious cash flow problems leading to liquidation. 

Suggestions:

• Budget for your capital
• Plan your cash flow
• Do not over expand 
• Consider all expenses involved, you can take reference from similar businesses' cash-flow budgeting

4. Lack of Planning

Some people that I have met told me that they are always eager to jump into a  business idea without much planning. While I believed that over planning might be counter productive, not planning is doomed to fail. If you do not have any planning or whatsoever when you start a business and you try to make changes as you go along, you will waste a lot of money and time trying to alter the business. Certain level of planning is required to start a business keeping in mind that you have to be fluid and adaptable as the environment changes. 

Suggestions:

• Write a business plan
• Ask yourself what-if scenario questions

5. Poor Execution

This is one of the key issues that most businesses face. They have an awesome idea and a seemingly perfect vision for the business. HOWEVER, they lack the "how" tool for their business. They have little ideas on HOW to get started, HOW to get the resources, HOW to market to the people etc etc

At the end of the day, the business fails because the execution was poorly carried out. 

Suggestions:

• Hire someone who can help you to execute your ideas
• Ask around for resources

About Valerie Chai

I am the founder of starCresto Education Group (starCresto). 

starCresto was founded in year 2000 and has expanded over the years from tuition to tuition agency to enrichment courses to mentoring. I am born in a poor family and I guess that gave me a lot of drive to succeed and get out of poverty cycle and most importantly, the rat race that so many people are stuck in. I believe strongly in human capital and talent management. 

The business journey has not been all that smooth sailing with great lessons learnt from mistakes made. With all these learning, I live by my three rules in life now:

1. Think strategically
2. Behave optimistically
3. Execute courageously

Share with me your experience as well!

Self Reflection - An amazing tool to help your business grow!

  Issue 2,  Quote 2, Week 1, Jun 2014

The key to growing in your business is to self reflect upon the "what, how, why, who, when" of your business. (look at Issue 1, Article 1) The more you self reflect, the more you learn, the more you grow and thus the more your business will flourish. Spend 30 mins a day self reflecting and be surprised  by the outcome! 

Is Partnership for you? What is a partnership?

  Issue 2,  Article 1, Week 1, Jun 2014

What is a partnership?

Partnership is an agreement between two or more parties to work together for a common interest. You need at least two parties and at most 20 parties to set up a partnership unless you are setting up a professional firm such as law firm that allows up to 70 parties. Partnership has unlimited liabilities (implying that during liquidation, you will need to pay off the debt with your personal assets) and the liabilities are joint and several. 

Limited liability partnership (LLP) is like a hybrid between company and partnership where it allows you to enjoy limited liability and operates as a separate legal entity (which means that LLP can enter into contract, sue and be sued) like a company; yet it has a less tedious filing and reporting process and it is not liable for tax at the entity level. Instead, each partner is taxed at their personal income level, very much like a partnership. 

In my opinion, despite being a new structure, I feel that it is the best company structure around. 

source: vitalvoiceanddata

Is partnership for you?

However, I guess the key question here is -------- IS PARTNERSHIP FOR YOU?

Many of the times, you will hear people telling you that partnership might not be good because partners might be very different and what you want to achieve in the company might be deterred due to the different opinions. We hear a lot of friendship and even kinship that got destroyed during partnership and many of the entrepreneurs who have been through bad partnership would advise against partnership. 

I have been through a few partnerships and my experience varies very differently. I would say that partnership might work or not work for you depending on your character, your partners' characters and also the business nature. 

My first partnership was with a smart and veteran entrepreneur who is already very successful. I have an opportunity to work under him and was eventually offered a partnership with him with a 20% stake in the partnership. It was a pretty good partnership in the sense that I was still very new to entrepreneurship and I had a lot to learn from him. He is very patient with me and he is willing to teach and share events and lessons with me. However, as time goes by, I realised that I do not have much say in the partnership and felt more like an executor of the business rather than a partner of the firm. Eventually, I left the partnership when I started my own venture where I needed more time and commitment.

Overall, the partnership is satisfactory.

My second partnership is with my university school mate whom I only know after we graduated. It was a very fun partnership since we were both quite alike. The partnership worked out well as we were both not into details and so we did not bothered about small little stuffs and we had a lot of trust between us. However, since we were both alike, we made quite a number of mistakes which made us learn along the way. The company recruited two other partners as we expanded. There were a lot of misunderstandings with one of the partners due to language barriers and cultural differences. Under the influence and pressure of our mentor that time, we felt pressurized to make him leave when he could not deliver and was very rude towards us. Eventually, the partner left on a sour note. The partnership continued under the leadership of my schoolmate and myself.

Overall, the partnership is good .

My third partnership was very short lived where I saw a very good opportunity to work with a talented friend of mine. So I grabbed the opportunity to ask him to work together. I set up the company and provided all the necessary initial start up capital. However, he felt that the partnership is too good to be true so he decided that since he cannot trust anyone, it is better that he stays as a sole proprietor and stay lean and small. I am glad he told me that before we spent a lot on marketing. 
Overall, the partnership is neutral.

My fourth partnership was by far the worst experience I had so far. I gave up a lot of my time and effort to set up this partnership as I believed that this business idea can bring us to a great height if we were to execute it properly. Working with someone that I respected a lot and saw a lot of complementary skill sets in, I decided to give my all. Every start-up is slow and I expected two years before the partnership can break even. However, my partner who is facing financial pressure at that point of time was getting disappointed at the speed of the flow of funds. 

Eventually, she set up her own company doing the exact same thing that we were doing in the partnership. When I confronted her, she says she did not see any conflict of interest at all. We went through a very difficult and draggy phase of arguments, thrashing out of unhappiness and also the risk of losing our friendship (that is more than a decade). I felt very disappointed and went through a phase of mourning for the business (I liken every business venture as giving birth to a child. I felt sad that the baby died prematurely just because perhaps the baby does not look very attractive as a baby. It was not even given a chance to be groomed to an adolescent). In the end, I decided to put an end to this business and the bad partnership.  

 Overall, the partnership is very bad

It is true that not all partnership will work out well and sometimes, the more you know the person, the more the partnership will not work out. Partnership can be good because it gives you resources that you might not have on your own but at the same time, the time taken to smooth a partnership might cost you so much that it is better that you hire the resources you need. This world is about trade off. We cannot expect to get all the things we want in this world. 

What is your take? Do you think partnership is for you? Do you have more partnership story to share?

Why did I set up this blog?

Doing business requires a lot of learning and sharing from entrepreneurs. I feel that I learnt the most while talking to fellow entrepreneurs. As time passed by, I realised that it is imperative that I jot down what I have learnt or quotes that I think of so that it will become a knowledge platform where people can participate in my thought process and makes my learning journey even more complete. 

About Valerie Chai

I am the founder of starCresto Education Group (starCresto). 

starCresto was founded in year 2000 and has expanded over the years from tuition to tuition agency to enrichment courses to mentoring. I am born in a poor family and I guess that gave me a lot of drive to succeed and get out of poverty cycle and most importantly, the rat race that so many people are stuck in. I believe strongly in human capital and talent management. 

The business journey has not been all that smooth sailing with great lessons learnt from mistakes made. With all these learning, I live by my three rules in life now:

1. Think strategically2. Behave optimistically
3. Execute courageously

Share with me your experience as well!

Is passion sufficient for business to thrive?

  Issue 2,  Quote 1, Week 1, Jun 2014

Passion can get you started.

 To go further, you need sound management skills and superior leadership skills 

to monetized your passion.

Executing with a Vision is WORLD CHANGING

  Issue 1,  Quote 1, Week 4, May 2014

So stop daydreaming and wasting time, start changing the world!

What is Productivity Innovation Credit PIC? Where can you get free consultation? Why you should not abuse it!

Issue 1, Article 2, Week 4, May 2014

Productivity Innovation Credit

Singapore has no lack of resources and support when it comes to helping entrepreneurs on cash-flow for businesses. Apart from SPRING, the most popular funding support that most SME goes for in recent times will be productivity innovation credit, commonly known as PIC. 

I had a chat with a friend yesterday on the reasons for PIC and why we should not abuse it. My friend was sharing with me how his friend paid $1500 and got back $8000 for a website and a free lap top. My first reaction was, is it legit? It certainly does not sound so!

WHAT IS PIC?

PIC supports investment in innovation and productivity (like what the name suggests). Businesses can enjoy tax savings or cash payout if they engage in any of the 6 activities below:

• Acquisition and leasing of PIC Information Technology (IT) and Automation Equipment; 
• Training of employees; 
• Acquisition and In-licensing of Intellectual Property Rights; 
• Registration of patents, trademarks, designs and plant varieties; 
• Research and development activities; 
• Design projects approved by Design Singapore Council.

HOW DOES PIC WORKS?

If your company chooses the tax deduction option (generally companies choose this option when they have high profit / higher expenditure to claim and would like to offset against their profit for tax savings), your company will enjoy 400% Tax Deductions on up to $400,000 of expenditure per year. However, if your company chooses PIC Cash Payout, your company can enjoy cash payout on up to $100,000 of expenditure per year.

Let us take a very simple example of a single PIC claim in YA 2014. Supposed you decided to buy devices such as smart phones, tablets, lap tops, machines etc that cost you $15,000. 

You will get a cash payout of 60% * 15,000. On top of that, you will get a PIC bonus of $15,000. Note that the maximum cumulative PIC bonus that you can claim over the years is $15,000. As such, you will get back $24,000. That is:

1. Cash payout: 60% * 15,000 = $9000

2. PC Bonus: $15,000 (Cap at $15,000)

Total amount that your company will get back: $15,000 + $9000 = $24,000

Suppose you decided to give a training that cost you $10,000 in 2015, you will be able to claim back 60% of $10,000 and you will not be entitled to any PIC bonus since you have already gotten the maximum amount of $15,000 PIC bonus in 2014. 

Another thing to note is that you will only be entitled to PIC bonus if your claim exceed $5,000. That is, if your first time claim is $4,000, you will get 60% of $4,000 and $0 for PIC bonus since your claim did not exceed $5,000. 

If you need help in your PIC claim, there is NO NEED to hire an external consultant that charges you $2,000 or $3,000 consultation fees as the ASME consultant helps you for free! I have far too many friends who paid for the consultation fees and got pissed when they realised that ASME consultant helps for free. If you need ASME consultant's contact, please contact me via the contact form at the right hand side. 

Having said that, what I told my friend is: you need to know what the company is doing. What kind of website? If it does not includes system that improves productivity, it is not claimable. Most importantly, in order to claim for PIC, you will need to pay for the full amount of the website first and subsequently claim it back through PIC. I am skeptical of the company that allows you to pay $1500 and get back $8000 and a free lap top!

WHY YOU SHOULD NOT EXPLOIT PIC?

It is a very simple theory. A lot of the people exploited and misappropriated the good intention of  the government to help businesses in Singapore. If a company does a fake claim and is caught (you should know the heavy consequences when you do something like that in Singapore --> http://www.iras.gov.sg/irasHome/page04.aspx?id=15532). Most importantly, if the government realised that PIC is not improving the productivity and companies are faking the claim, the government will scrap off PIC and so companies who truly need the fund to improve productivity and innovate are now deprived of this chance! (Sounds like Lemon Problem, isn't it?)

I strongly urged companies in Singapore to use PIC wisely so that in years to come, we can still claim 60% of our productivity or innovative activities. 

Share with me your views! 

Why did I set up this blog?

Doing business requires a lot of learning and sharing from entrepreneurs. I feel that I learnt the most while talking to fellow entrepreneurs. As time passed by, I realised that it is imperative that I jot down what I have learnt or quotes that I think of so that it will become a knowledge platform where people can participate in my thought process and makes my learning journey even more complete. 

About Valerie Chai

I am the founder of starCresto Education Group (starCresto). 

starCresto was founded in year 2000 and has expanded over the years from tuition to tuition agency to enrichment courses to mentoring. I am born in a poor family and I guess that gave me a lot of drive to succeed and get out of poverty cycle and most importantly, the rat race that so many people are stuck in. I believe strongly in human capital and talent management. 

The business journey has not been all that smooth sailing with great lessons learnt from mistakes made. With all these learning, I live by my three rules in life now:

1. Think strategically

2. Behave optimistically

3. Execute courageously

Share with me your experience as well!

The key questions to ask yourself when you are setting up a business - Entrepreneur Weekly

  Issue 1,  Article 1, Week 4, May 2014

The key questions to ask yourself when you are setting up a business:

"The WHAT, WHO, HOW, WHY, WHERE questions"

Before you start your business, while in your business, I always find it useful to ask the following questions:

• What business are you in?
• What products and /or services are you offering?
• What is your positioning? 

• Where do you see your business in 3, 5 10 years time and beyond?

• Who is your target audience?

• Why would people buy from you and not your competitors?
• (What is your unique selling points? How are different from your competitor?)

• How are you going to reach out to your key audience?
• How are you going to execute your business plans?
• How do you convince people to buy your products or use your service?

• When are your milestones? (Set clear goals and lay out plans to achieve them)

Any other things to add on? Let me know!

Why did I set up this blog?

Doing business requires a lot of learning and sharing from entrepreneurs. I feel that I learnt the most while talking to fellow entrepreneurs. As time passed by, I realised that it is imperative that I jot down what I have learnt or quotes that I think of so that it will become a knowledge platform where people can participate in my thought process and makes my learning journey even more complete. 

About Valerie Chai

I am the founder of starCresto Education Group (starCresto). 
starCresto was founded in year 2000 and has expanded over the years from tuition to tuition agency to enrichment courses to mentoring. I am born in a poor family and I guess that gave me a lot of drive to succeed and get out of poverty cycle and most importantly, the rat race that so many people are stuck in. I believe strongly in human capital and talent management. 

The business journey has not been all that smooth sailing with great lessons learnt from mistakes made. With all these learning, I live by my three rules in life now:

1. Think strategically
2. Behave optimistically
3. Execute courageously

Share with me your experience as well!