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Why you should take the plunge now
Thinking of becoming your own boss?
The conditions may be just right, thanks to the
economic slowdown.
With the economic slowdown showing no signs of
improving in the immediate future, many people
are coming to a crossroad.
On one hand, the Government is encouraging Singaporeans
to be entrepreneurial, while on the other, others
are continuously warning of more trying times
ahead.
This creates a dilemma for entrepreneurs to-be:
What are the odds of a start-up succeeding during
this period?
Notwithstanding recent government incentives and
rebates to encourage entrepreneurship, the following
are further reasons why now is the best time to
be your own boss:
Lower business costs: The economic
downturn has led to a general deflation of costs
across the board.
Based on the Ministry of Trade and Industry's
(MTI) economic survey report for 2002, the unit
business cost indices for the manufacturing and
services sectors declined by 5.4 per cent and
2.1 per cent respectively last year.
Office
rental rates have plunged to their lowest level
in 14 years. The interbank rate has stayed below
1 per cent, putting pressure on banks to cut their
lending rates further.
Start-ups have the advantage of not being burdened
with the heavy operating costs of larger establishments.
As long as they are prudent with their business
spending, start-ups stand a good chance of riding
out this economic trough with their relatively lower
cost structures.
Loyalty is crumbling:
During better times, customers are more willing
to overlook a price premium in exchange for a long-standing
working relationship.
Today, with the pressure to contain costs, customers
are more conscious of, and open to, better pricing
and value-add offerings.
PSA Corporation has embraced this new reality after
losing Maersk and Evergreen to its Malaysian rival.
A new start-up stands a better chance of breaking
into the market if it can offer the right product
at the right price.
Smaller start-ups are also able to offer more personalised
attention and customisation, adding further value.
Human capital galore: With
the unemployment rate expecting to hit 5.5 per cent
this year, staffing does not rank as a major concern
for start-ups.
Available manpower comes in all forms, from experienced
retrenched managers to young and eager fresh graduates.
Best of all, they are more affordable than before.
MTI's overall unit labour cost index for 2002 fell
by 4.2 per cent in contrast to a 6.1 per cent rise
the year before.
Another plus: Employees will tend to stay with you
longer as they are unlikely to find other ready
employers so easily.
Outsourcing/privatisation:
With keener competition, corporations are focusing
more and more on core competencies to stay lean
and mean. One consequence of this is, of course,
shedding of peripheral businesses and staff.
However, the flip side is that they need to outsource
their non-core activities to external parties. This
translates into opportunities for start-ups.
The Government has another name for this: Privatisation.
Deputy Prime Minister Lee Hsien Loong, in his recent
Budget speech, cited Ascendas, PSB Corporation and
Hdbay as examples of businesses that are best left
to the private sector.
'Delayering':
Management analysts are constantly talking about
the 'delayering' of corporate hierarchies. This
refers to the flattening and reduction of organisational
chain-of-command and staff. The trend is here to
stay.
Instead of waiting for your job to be eliminated,
why not proactively seek to blaze your own trail.
Take control of your own destiny.
Take heart from a recent story involving a man who
was retrenched and is now doing the same work for
his ex-employer on a contract basis.
All he needs to turn this into a business venture
is to find customers who need similar services and
employees or partners who can provide the services.
Sow now, reap later:
Start-ups will have an advantage once the economy
recovers. Take this time to learn, make mistakes
and refine your offerings.
When the gloomy economy clears, you will be poised
to harvest the fruits of your labour. If you hesitate
and wait for sunny weather before acting, you will
be but one of the herd. Timing is everything.
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