Know yourself, your business


 Avoid head-on collisions with cash-flushed competitors

ON YOUR OWN By TAN THIAM HOCK

ENTREPRENEURS are the most gung-ho people in the world. But not necessary the smartest. More often than not, this everything-also-can-do attitude lands the entrepreneur in trouble especially in new projects.

Without a realistic assessment of his own capabilities in funding, experience and competitive strength, he plunges into so-called virgin territory that existing competitors dominate.

I have been trading in food, confectionary, toiletries and cosmetics for 26 years and the two product categories that I will not compete in are chocolate malt drink and mass shampoo for ladies. Nestle through Milo controls more than 90% of the chocolate malt market and unless you have suicidal tendencies, you will be better off donating your launch budget to your favourite charity.

If you turn on your TV, you will find shampoo advertisements in every channel, every hour and every brand. Well, every brand refers to brands from Unilever and P&G and the two of them control more than 80% of the mass shampoo business.

Unilever AustralasiaImage via Wikipedia

These are the only high margin high volume businesses that I will ask you to leave alone. Unless you have RM20mil to dump into TVCs in return for a 2% market share. And even then, your shampoo TVC will look the same as the others with long silicone hair swinging from side to side in slow motion being watched by slow-witted viewers already numb to new brands.

To be fair, new and small entrepreneurs have no access to market information, consumer research and competitive activities. Relying on their gut feeling and entrepreneurial spirit, they plunge into new businesses with gusto and optimism.

Unfortunately for every survivor, there are probably five casualties with battered pride, empty pockets and hungry families. What a waste of time, effort and financial resources.

Economist will tell you that competition breeds efficiency and inefficient players will be eliminated eventually. So before you invest into a new venture, do you consider yourself an efficient competitor? Do you know who your main competitors are? What is their competitive edge over you?

Competition comes in all shapes and sizes. Here are a few pointers about competitors that you should avoid and do what entrepreneurs do. Dream big, start small.

Avoid going head on with big cash-flush competitors especially when their petty cash is equivalent to your annual sales turnover. Concentrate instead on nibbling some market share. No point in waking the sleeping fat cat. There is enough fat in the business to keep everyone happy.

Avoid the herd mentality. By the time you hear the news, hundreds have gone into the business. Rubber gloves then, swiflets and kopitiams now. So stay out and let others enjoy the success. If they can.

Talking about herds, many politicians are angry because they were not offered loans that they do not have to pay back. Grave injustice indeed. I predict state feedlots will be the new trend. Opposition state government will also join in the cow and bull circus act. Opportunities of easy loans will be in abundance. Now everybody can breed.

Avoid big business. This is reserved for the well connected incumbents and GLC’s. But keep your eyes open for any crumbs of opportunity that might just spill over from their inefficiencies. To the small entrepreneurs, crumbs is still better than nothing, right?

Or better still, for existing players, there will never be a better opportunity to cash out. GLC’s are paying high premiums for non controlling stakes nowadays but offer is only open until cash runs out.

Avoid owning airlines and airports. Stiff competition for attention and support. Nobody trust nobody. But you. You will end up paying for every single service provided. But nobody will admit it.

But there’s money in ancillary business for small entrepreneurs. Like printing protest stickers and placards. Or join the band of protestors online. RM10 for every tweet against price hike. And RM10 for any twit who is willing to believe that travelling by air will be cheaper in the next 10 years.

So where are the opportunities for small entrepreneurs? Plenty, if you know where to look for it. Just look at businesses that have been ignored by your competitors;

competitors like EPF, Khazanah, PNB, SEDCs, LTAT, Felda, Umno, MCA, MIC, politicians, politician’s family, politician’s cronies, politically-connected business tycoons, MNCs etc. Competitors with superior comparative advantage over you. Competitors who are allowed to sit on the dining table first and have their choice cuts before others.

But spare a thought for these competitors. There are just a limited number of seats at the table and come meal time, everyone is scrambling to get a seat. The first group gets the best cut, the second scrape the leftovers and the third gets to lick the plates and scream hell. Grave injustice indeed.

Now that competition is so intense at the dining table hosted by the government, some of these competitors have moved on to the private sector dining table. With superb strategies, bottomless funds and sheer political brute force, they have plonked themselves at the dining table and helped themselves to all the choice cuts of the economy.

The big entrepreneurs who refused to play the political game have cashed out and moved to greener pastures overseas. The small entrepreneurs will still be fighting among themselves for the leftovers. The economist is proven right again. Inefficient and weak competitors will perish.

Against my better judgement, I recommend that you stick to your original plan to open your dream 24-hour Kopitiam. It does not matter that there are already two mamak restaurants and three fast-food joints in your choice location.

At least, you get to put food on your own table, dignity in your heart and pride on your sleeve. You have fulfilled your dream to be an entrepreneur.

The writer is an entrepreneur who hopes to share his experience and insights with readers who want to take that giant leap into business but are not sure if they should. Email him at thtan@alliancecosmetics.com

IT folk upset over draft Bill


Logo of the Ministry Of Science, Technology an...Image via Wikipedia

Many say proposal will cripple industry

By JO TIMBUONG and GABEY GOH bytz@thestar.com.my

PETALING JAYA: Members of the Information Technology industry are up in arms over a proposed Bill that seeks to certify IT professionals, claiming it will cripple not help the industry.

Industry players said a draft of the Computing Professionals Bill 2011, released online on Thursday night, proposed that only registered IT professionals could create software or computer applications for government use.

The Ministry of Science, Technology and Innovation (Mosti) drafted the Bill, with the aim of maintaining a registry of certified IT professionals in the country.

It is a bid to ensure that only qualified professionals can work in the sectors classified under the Critical National Information Infrastructure (CNII).

The CNII covers, among others, banking and finance, cyber-security, the national defence industry, healthcare, emergency services, food and agriculture, and utilities.

The Bill will recognise two categories of IT talents certified IT practitioners who do not have formal qualifications, and certified IT professionals who have the full qualification.

But some industry players are arguing that the proposed Bill would in effect hinder innovation and development across the board because CNII was very broad in its scope.

Willie Chan, founder of business software maker xIMnet Malaysia, said anyone should be able to create software or applications, not just certified practitioners or professionals.

“If a doctor who writes code as a hobby comes up with a software that can benefit the health industry, shouldn’t he be allowed to market it to the Government?” he asked.

“If this draft passes into law, it will hinder such cross-pollination of ideas.”

Chan holds a degree in English Literature. Under the drafted Bill, he would be listed as only an IT practitioner, and would not be able to market xIMnet Malaysia solutions to the Government or its agencies.

Daniel CerVentus, co-founder of an online resource portal and community for entrepreneurs Entrepreneurs.my, believes that if such a situation were to develop, it would aggravate the country’s brain-drain problem.

Mosti said the Bill did not aim to regulate the entire computing profession and was only applied to those identified as working in CNII sectors.

It also said registration was not mandatory.

Mosti will be holding an open day at its Putrajaya premises from 9.30am to 5pm on Tuesday to collect feedback and suggestions.

A house built on smart ideas with earning power


Earth's horizon and the International Space St...Image via Wikipedia

A house built on smart ideas

By WINNIE YEOH winnie@thestar.com.my Photos by WAN MOHIZAN WAN HUSSEIN

WITH cool breeze blowing into his house which is also basking in ample natural light, retiree Tan Vait Leong does not need to switch on the lights or air conditioner during the day.

Even at noon, the 56-year-old’s bungalow at Puncak Bukit Mutiara in Pearl Hill is still cool, thanks to the environmentally-friendly and open concept design of the house.

“The planning of the design of the house started five years ago, while construction of the property took three years to complete.

“I would draw up the designs and concepts for the house while I was at airports or in planes, as I travelled frequently for work.

“I enjoyed the process, as it was also an outlet for me to destress,” said the former vice-president of a multinational company.

Having spent a substantial amount of time travelling, the father-of-four said it was only right that he designed his house ala-resort style so he would not “need to go for holidays anymore”.

One of the special features of the house is the photovoltaic (PV) solar panel fixed on the roof, which Tan had obtained through the National Suria 1000 programme to generate power from solar energy.

With that, his household is automatically enlisted under the newly launched feed-in-tariff (FiT) programme where Tenaga Nasional Bhd will buy back power generated from the PV solar panel.

Currently, the PV electricity subsidised about 20% of the household’s total electricity intake while Tan pays about RM700 monthly for his power bill.

“With the FiT, I might not have to fork out a single sen for my electricity bill,” he said yesterday.

A tour around the handsome house with a built-up area of 8,000sq ft shows there are five spacious rooms, four bathrooms, an infinity pool with a view overlooking the sea which is also connected to the living room and master bedroom, an indoor fish pond, a kitchen, a family room, a study room, a living room, an outdoor deck as well as a cosy playroom for Tan’s 10-year-old twin daughters.

Aptly named after Tan’s wife, Foo Sin Gein, 54, he said his home Gein Villa was constructed to blend into existing green environment where the big trees around are spared from the axe.

“I don’t spend money on landscaping. The trees shed leaves seasonally but it is part of the feature of the house. I don’t understand the reasons behind cutting down trees if people want to build houses on the hillside.

“Well there are occasions where our ‘special guests’ — monkeys, squirrels and bats will pay a visit but we don’t harm them as they are not aggressive, just playful,” he said.

There are no excessive furniture in the house, with only the walnut and cherry flooring along with salvaged chengal wood which Tan used to lay the staircase and kitchen tabletop.

“I also use the hollow bricks that were left over from the construction as display shelves,” he said.

“We water the plants with water from the fish pond, and we keep plants at the pool and the filter tub to absorb the nitrate.”

Retiree who still has earning power

By WINNIE YEOH winnie@thestar.com.my

GEORGE TOWN: While most people have to pay for their electricity, a 56-year-old retiree is looking forward to selling it to Tenaga Nasional Bhd.

And Tan Vait Leong (pic) simply can’t wait to be paid by the utility giant for the power generated from his photovoltaic (PV) solar panels fixed on the roof of his Tanjung Bungah home.

Believed to be among the first consumers in Penang to obtain the PV under the National Suria 1000 programme to generate power from solar energy, his household is automatically enlisted under the newly launched feed-in-tariff (FiT) scheme.

“This is a blessing in disguise. I have always been conscious about the environment and had incorporated recycling and green ideas into my daily life.

“With this, I might not have to fork out a single sen for my electricity bill,” he said excitedly at his double-storey bungalow at Puncak Bukit Mutiara in Pearl Hill.

The former mechanical engineer said the PV electrivity subsidised about 20% of electricity usage for his sprawling premises with a built-up area of 8,000sq ft (743.22sq m).

Currently, the father-of-four forks out about RM700 monthly for his power bill.

Tan also maintains an open concept for his five-room bungalow where good air circulation keeps the environment cool while ample natural light through glass panels brighten up the interior.

“The swimming pool is part of the house while the indoor fish pond keeps the home cool and is low maintenance too.

“I don’t need to switch on the lights or air-conditioners at all during the day while I do keep several floor fans on,” he added.

Launched last week, the FiT allows individuals or non-individuals to sell electricity generated from renewable energy sources back to power utility firms at a fixed premium price for a specific duration.

The four renewal energy sources that are eligible for FiT are biogas, biomass, small hydropower and solar photovoltaic.

Currently, the rate Tenaga Nasional Bhd (TNB) pays to renewable power producers is 21 sen per kWh. Concurrently, the average domestic rate that consumers pay to TNB is 27.6 sen per kWh.

With FiT, consumers can install their own solar modules at home and earn a secondary income.

Under the Renewable Energy Act 2011, consumers who installed capacity up to and including 4 kWp (kilowatt peak) would be paid a FiT of RM1.23 per kWh.

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