How to be rich?

Originally Posted by greypiggi

i know many entrepreneurs and i can tell you that any field also can make good money. Look at even cleaning up pests, you got pest busters. Marine industry, all boomed recently. tuition centres, mindchamps, adam khoo, real estate, F&B - paradise group etc etc

u name the industry, chances are that the top 10 player inside it are all making good money. If you are fresh graduate, then i guess you have less capital. But you also have less to lose. Some industries that care less about knowhow and capital will be technology/internet/mobile area, small retail/cafe, service firms like what u mentioned etc....

Get your hands dirty and do your research. Once you committ and start business, give yourself 1 year to hit some goals. Always discount by half your projections and see what happens. Above all, if u are fresh, learn as you go and internalize the learning. At least if the venture fails, your next one will learn from it.

You mentioned "Selecting the right business model" in your earlier post. Could you kindly elaborate more on that? What are examples of good and bad business models?

[greypiggi]

two things. Profitability and scalability. Profitability refers to net margins and how easy to get there. Some businesses have naturally high margins due to low cost of goods sold. Eg internet. Some have high margins due to technology . eg microsoft. Some businesses are super competitive and so have low margins. Some are commodities etc..

As for scalability, some businesses can keep growing without hitting limit early. Others are rather limited and if you grow costs grow with you. Scalability depends on your local market factors to some extent. So in SG, u will find few businesses will allow you to earn above 10M profit easily. above 1M got quite a few.

But all of the above are at least viable businesses. Bad business model will be those that you spend $1 to earn 90 cents! There are such businesses around, or u plan a business based on a audience that simply does not exist or is too small in numbers.

And by the way, the words have different meanings to each person depending on your expectations. So if you have nothing and no networth, running a restaurant probably feels quite scalable and profitable. Good restaurant can do 1-2M turnover and make 10% margin. Imagine opening 3-4 restaurants!

But to someone who has run say a silicon valley dot com, they will say that margins are low and not scalable in nature since compared to a dot com, F&B is very high cost, low margin.

But also do realise that you have to fit the business. You need to love the area your business is in and become an expert in it... so your personal character and skills have to fit the business too.

Originally Posted by greypiggi

two things. Profitability and scalability. Profitability refers to net margins and how easy to get there. Some businesses have naturally high margins due to low cost of goods sold. Eg internet. Some have high margins due to technology . eg microsoft. Some businesses are super competitive and so have low margins. Some are commodities etc..

As for scalability, some businesses can keep growing without hitting limit early. Others are rather limited and if you grow costs grow with you. Scalability depends on your local market factors to some extent. So in SG, u will find few businesses will allow you to earn above 10M profit easily. above 1M got quite a few.

But all of the above are at least viable businesses. Bad business model will be those that you spend $1 to earn 90 cents! There are such businesses around, or u plan a business based on a audience that simply does not exist or is too small in numbers.

And by the way, the words have different meanings to each person depending on your expectations. So if you have nothing and no networth, running a restaurant probably feels quite scalable and profitable. Good restaurant can do 1-2M turnover and make 10% margin. Imagine opening 3-4 restaurants!

But to someone who has run say a silicon valley dot com, they will say that margins are low and not scalable in nature since compared to a dot com, F&B is very high cost, low margin.

But also do realise that you have to fit the business. You need to love the area your business is in and become an expert in it... so your personal character and skills have to fit the business too.

But on the other hand, it's easier to build a successful restaurant than a successful internet company, all things equal.

a mediocre restaurant in a good location can still make 10-20k for the owner, but a mediocre online service probably earns peanuts only.

Originally Posted by Unregistered

But on the other hand, it's easier to build a successful restaurant than a successful internet company, all things equal.

a mediocre restaurant in a good location can still make 10-20k for the owner, but a mediocre online service probably earns peanuts only.

On the contrary, a mediocre restaurant in a good location can lose its owner $500k in 6 months.

It happened to a friend of mine.

Originally Posted by Unregistered

On the contrary, a mediocre restaurant in a good location can lose its owner $500k in 6 months.

It happened to a friend of mine.

You are right. There's no place for mediocrity in business, either you're good or you're out. However, amongst different types of business the percentile required for sustainable operation varies.

In the restaurant business, your restaurant probably has to be in the top 1% to survive on a perpetual basis and fend off continually emerging challengers.

In the technology business, you have to be the number 1 in your business, otherwise you will be better off going into the mountain to meditate. It's fun to be the Apple of the industry but just look at the sorry state of some of Apple's rivals.

"Fri October 21, 2011. Acer posts $36.3m loss, iPad continues to bite. Acer continued to struggle in coping with Apple on Friday after it posted a loss equivalent to $36.3 million. The drop wasn't as steep as the $234.2 million from the spring thanks to the Taiwan PC bulider writing off the $150 million in 'abnormalities' of unsold PCs in Europe."

"June 17, 2011. How the iPhone and Android sandbagged the BlackBerry. The analysts were all over Research in Motion (RIMM) Friday after the company issued sharply lower guidance for 2012 and warned of forthcoming layoffs."

"For its financial year ended June 2011, Creative suffered a pre-tax loss of US$51.9 million, on top of a pre-tax loss of US$46.7 million in FY2010. It posted a net loss of US$47.2 million in FY2011, widening from : net loss of US$38.8 million in the previous year."

Originally Posted by Unregistered

You are right. There's no place for mediocrity in business, either you're good or you're out. However, amongst different types of business the percentile required for sustainable operation varies.

In the restaurant business, your restaurant probably has to be in the top 1% to survive on a perpetual basis and fend off continually emerging challengers.

In the technology business, you have to be the number 1 in your business, otherwise you will be better off going into the mountain to meditate. It's fun to be the Apple of the industry but just look at the sorry state of some of Apple's rivals.

"Fri October 21, 2011. Acer posts $36.3m loss, iPad continues to bite. Acer continued to struggle in coping with Apple on Friday after it posted a loss equivalent to $36.3 million. The drop wasn't as steep as the $234.2 million from the spring thanks to the Taiwan PC bulider writing off the $150 million in 'abnormalities' of unsold PCs in Europe."

"June 17, 2011. How the iPhone and Android sandbagged the BlackBerry. The analysts were all over Research in Motion (RIMM) Friday after the company issued sharply lower guidance for 2012 and warned of forthcoming layoffs."

"For its financial year ended June 2011, Creative suffered a pre-tax loss of US$51.9 million, on top of a pre-tax loss of US$46.7 million in FY2010. It posted a net loss of US$47.2 million in FY2011, widening from : net loss of US$38.8 million in the previous year."

I'm quite sure greypiggi's smallish company isn't in the same league. Still, at the individual level, he's amassed significant wealth through his company. Most big companies are co-owned by many shareholders, so at the individual level, each shareholder isn't too rich.

[greypiggi]

Agree with most points guys. If u do business better be obsessive and driven about it. But let's make a distinction between trying to just get decently rich and building a perpetual business. For the former, I think we do not need to be top 1 in tech or 1% for f&b. Take sg, there are about 4000 restauarants, top 1% means only the owners of 40 restaurants are making good money? I think more like top 25-50% are doing ok and up. I believe the case is same for most such service lines.

For tech, yes tends to be winner takes all. But even then, i would say and many bus school cases have shown that there is room for up to 3-4 players per city market. And in sg, I find top 3 all can make money. Eg. Singtel, star hub, m1 or on smaller scale killiney kopitiam , ya kun, toast box, etc

And as for shareholding.... Depends on how the founder got to the size.. If u check all the small catalist listings sub 100m market cap, many have main founder or family still owning between 20-60%.

And actually most businesses should have 1 key founder who owns above 30% until listing....

Originally Posted by greypiggi

Agree with most points guys. If u do business better be obsessive and driven about it. But let's make a distinction between trying to just get decently rich and building a perpetual business. For the former, I think we do not need to be top 1 in tech or 1% for f&b. Take sg, there are about 4000 restauarants, top 1% means only the owners of 40 restaurants are making good money? I think more like top 25-50% are doing ok and up. I believe the case is same for most such service lines.

For tech, yes tends to be winner takes all. But even then, i would say and many bus school cases have shown that there is room for up to 3-4 players per city market. And in sg, I find top 3 all can make money. Eg. Singtel, star hub, m1 or on smaller scale killiney kopitiam , ya kun, toast box, etc

And as for shareholding.... Depends on how the founder got to the size.. If u check all the small catalist listings sub 100m market cap, many have main founder or family still owning between 20-60%.

And actually most businesses should have 1 key founder who owns above 30% until listing....

Hi greypiggi,

Could you tell us more about your first 5 years?

e.g.
- did you get funding
- how much did you pay yourself
- when did you start hiring
- how did you market your product / service
- how long did it take for you break even operationally
- how long did it take for the company to reach +ROI

Appreciate your sharing. Thanks!

[greypiggi]

Self and family funded.

Paid myself 500 per mth for first few mths, then once product works, paid myself 2500 to 4000 per mth btwn year 2-5. Towards year 5 , paid more director fee and bonuses but kept base pay low.

Hire staff in 1 year. I think few business can don't hire staff?

Cold calling. No marketing at first.

Broke even with about 200k revenue in 2nd year.

Never calculated... But I suspect year 3 or 4?

Originally Posted by greypiggi

Self and family funded.

Paid myself 500 per mth for first few mths, then once product works, paid myself 2500 to 4000 per mth btwn year 2-5. Towards year 5 , paid more director fee and bonuses but kept base pay low.

Hire staff in 1 year. I think few business can don't hire staff?

Cold calling. No marketing at first.

Broke even with about 200k revenue in 2nd year.

Never calculated... But I suspect year 3 or 4?

When did you start to have good confidence that your business can make profits?

When should an entrepreneur keep going and when should he give up?

Some entrepreneurs say that it sometimes boils down to hard-headedness - just keep working at it until successful. However, I think there will be doubts sometimes and it can be hard to tell if you're near the summit. When climbing Everest, some mountaineers actually give up even when they can clearly see the summit.

Any golden advice on how to keep going?