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.