Thursday, 17 September 2020

Singaporeans Don’t Lack Entrepreneurial Spirit and Capability? (Part 1)

Earlier, I highlighted the flaws of seduction model and the need of penetration model. Many may feel that the fundamental problems why Singapore are unable to build companies to “penetrate” into international is due to Singaporeans’ lack of entrepreneurial spirit and/or the way our education system is structured to be lack of creativity. 


In my opinion these two reasons can be contributing factors, but Certainly NOT the root cause!  

Before I delve into what I think are root causes of Singapore’s maladroitness towards “Penetration Model”, let me first share my personal encounters with many entrepreneurs. The personal experiences can give me a better understanding to determine the root causes. 

Finally, I hope these personal experiences can help me or my children in my/our own journey to transit from employee to employer in the near future. 

MY OWN SISTER AND BRO-IN-LAW (BIL)

My BIL and sister founded their businesses in the mid 90s. As a teenager student, I will work part-time in their company, and learn a lot about businesses. They have two businesses in complete separate fields total 150-200 employees. Maybe lesser this year! The first business was market leader in Singapore for close to two decades. Today, they are still running both businesses successfully amid in a very difficult business environment. 

No lack of entrepreneurial spirit
My BIL is very entrepreneurial, have a glib tongue, good in sales and have so many ideas for growth. He is willing to take risks and love to make decisions. He will take action before you know it. He had tried so many businesses before, including selling “90s TV sell-a-vision products”, push-carts, door-to-door-sales etc. He failed for one decade and get up again before finding his truly first venture in the mid 90s. My sister has finance background, and is the brain and the operational hands across the entire spectrum of the businesses, giving the stability and sustainability. For more than 25 years, they work extremely hard, and are always very hungry and driven, to the point that they may even neglect their family.   

The business struggles 
Their first core business has been thriving until recent years. That business lacks technology and is not niche! Margins became very thin with influx of so many competitors. Many ex-staffs learn the trade and started as competitors. Furthermore, demand softens in Singapore as years go by, and overseas protectionism meant it is extremely difficult to thrive there as well. 

The other business is in financial and consultancy. It lacks technology and provides mainly services and training. The competition is lower, but it is very difficult to convince customers to sign up orders. In general, they tend to have more overseas clients but lesser Singaporeans one. I was told that local ones tend to be more sceptical and price conscious compared to their overseas clients who are mainly from China and Malaysia. Their overseas clients also value relationships more than local ones, that I feel they sometimes sign up orders, due to friendships and out of pity, seeing the hard work and sincerity of my sister and BIL. 

Both businesses lack of technology and nicheness. Hence, aggressive sales and low pricing are needed. Whoever have better sales persons and network, work harder and able to keep price low will win the orders. 

Why able to sustain for more than 20 years? 
Aside from hard work and passionate commitments and other attributes needed in business, below are some key external factors that CERTAINLY HELP A LOT in their business success and sustainability. 

First, they started early in mid 1990s.  Back then, competition is not that intense and customer loyalty is also stronger. With a bit more of creativity and good service in business, you are able to satisfy your clients. Customers also tend not to go shop around for many vendors. Yes, no internet yet! Relationships meant more than money at times. 

Secondly, cost of living is low facilitating their start-up. Their 4-room HDB at prime location is only less than 150K. They sold for more than 400K five years later. While they were very poor, but cost of living is also low, allowing my BIL to fail so many times for close to a decade, before finding his first pot of gold. My sister is an employee initially, supporting my brother in all household and daily expenses, and even giving him pocket money. Until their business started to earn money, then she joined him. 

The third reason is the riding of the boom from 2000 to 2008 (except for brief period of SARs), where they accumulated good earnings in their business. During this golden period, you need not to be very smart to earn good money! 

Lastly, my sister always said properties are their best earning and not business itself. The buy/sell of properties including landed ones, really earn them quite a fair bit of money.

MY EX-BOSSES, CUSTOMERS AND VENDORS

I have worked in local SMEs/listed entities ranging from 5-10 to 150-200, 400-500 pax. The direct day-to-day dealings with the founders of these companies, taught me a lot of things and I get to know their entrepreneurship struggle as well as recipe for successes! Likewise, I had many dealings with clients, suppliers who are owners of companies. My decade-long MNC experiences with frequent travelling also allow me to come into contact with many overseas entrepreneurs. 

No lack of entrepreneurial spirit
Again, there is no lacking of hardwork, commitment and entrepreneurial spirits from Singaporeans. I have witnessed many grew their business into the international arena with creativity and drive. One of my ex-bosses grew his business from zero up to 400-500 employees, and having offices/factories in SEA, China, Middle East and India. We also had many globally renowned clients. 

The business struggles 
Yet, despite the “on paper” brisk business, my ex-boss of engineering and manufacturing firm told me that he struggled for 30 years to make money. While in business, money earned was reinvested each time, and he almost go bankrupt three times. Although people thought he is extremely rich, his house and car were still on instalments back then. 

High costs of business and intense competitions, and learning from projects to projects, are main reasons of the struggle. Many of his ex-employees also become our competitors, competiting mainly with price. Clients also have more choices and often “squeeze” to the maximum. Many times, we accept orders that eventually lost money. 

Fortunately, my ex-boss sold his business before the GFC and cash-out. If not, the GFC may have bankrupt his business. Even if he may survive the GFC, the Oil crisis in 2015 is likely to ruin him. I had known too many businesses collapse even after 2-3 decades. Specifically, I have one close friend and vendor who was in business since 80s and use to be the big boss, but loses everything including his properties that was collateralised to inject cash into the business for survival. Swiber, Ezra, Swissco and many others, who used to be darlings in the industry all went down. Likewise, in other industry, you also see big names like Hyflux, recently Hin Leong going down. 

MY FRIENDS

I have also many friends/relatives who started their own businesses in various industries, ranging from Tech & IT, Retail, F&B, Marine & Offshore etc. Here, I am referring to those without parents’ support, and depend solely on their own. Some started after graduation with funding support and others get working experiences before building their businesses. 

I realised that those who started earlier before 2005 tends to be able to sustain longer their businesses. Many who started after 2005 struggle to make their means. It may look good initially that wow “I finally become the boss of my own business”, but for many, it only looks good for a while, before they returned to become employees. In the process, many also lost their savings that was ploughed into the businesses. There are very few who are successful having started their ventures after 2005. 

CONCLUSION

So…is it really true that we lack entrepreneur spirit? Or our education only teaches us to be obedient? Or Sim WL’s No U-turn philosophy is embedded in us, Singaporeans? 

In general, I also do not think that we lack entrepreneurial spirits, comparing to overseas Entrepreneurs who are successful. I have met many foreign smaller sized entrepreneurs who have do very well in their own countries but cannot do well in Singapore due to the high cost and over-competitive nature here. 

Overseas Entrepreneurs have lot of support from their government for local-for-local. For instance, in UK, Norway and many European countries, they have Export-Credit financing support for any export to overseas clients. Most important of all, it is easier for them to be profitable within their own countries before they venture outside due to local protectionism. 

In Singapore, it is too tough a business environment within our country. Local-squeeze-local rather than local-for-local. Hence, if our base core business in Singapore is not strong, venturing outside becomes tougher. 

But one thing I am sure is all work extremely hard and have full commitment in their businesses. In fact, those Singaporean entrepreneurs I know, tend to work harder and longer hours than their Malaysia, rest of South East Asia, European etc counterparts. Kudos to all Singaporeans! 

Our education may not focus on entrepreneurialism like the USA, but overseas education system in Malaysia, China or even some in Europe are also sub-par or comparable to ours. But why it seems like they have more successful entrepreneurs than us. In my article earlier, I also mentioned successful companies build by Singaporeans such as Dymon Asia, Razor, Espressif have founders graduating from local universities.  

I personally don’t think the founders of these companies lack entrepreneurial spirit or capability. They are neither inferior in ability compared to overseas Entrepreneurs. The environment of Singapore is definitely tougher than overseas. Overseas business environment either have bigger market, or tend to support local for local in spite of price, while I reckon the Singapore business environment is over-pragmatic in general. Furthermore, cost of living is simply too high here. The opportunity cost of leaving a high-paying job in MNC, locally owned Temasek big companies or Statutory board, without parental support or backup money and with a family to feed, is giving sensible people two cents worth of more thoughts! 

To be continued…. Part 2 : Will I become an Entrepreneur myself or encourage my kids to become one? 

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