Business Related Blogs

I rather expect the reason for this sudden surge in interest in ‘working for oneself’ stems from the last 18 months or so where people’s lives and finances have been eroded to the point of desperation. They have lost jobs, find getting meaningful employment hard, are now grappling with high inflation and dwindling savings, and generally speaking, they are not very happy because they are being controlled more than they wish to be. They are unhappy with the governments’ responses to the current economic crisis, but are powerless to do anything about it. Life has to be better than this right? Under the back-drop of seeing large companies making record (and obscene) profits, and their own earning capacities’ slashed, they want some control in their own working lives which they believe will spill-over into their everyday lives. While there seems to be no end in sight to this current and unprecedented fiasco, people are (I believe) reassessing how they can survive today and into the future (in whatever form that may be). It’s any wonder people want to work for themselves. I’m a little surprised that the number isn’t higher – maybe it will be in the coming months. There are, other than to beg, steal or borrow (this might be something that surfaces next year), not many other options, if any. I’m a small business advocate and have been for a long time, but I think if people’s motivation to be ‘self-employed’ is about wealth then I think this is not necessarily a good reason to invest in or embark upon a business venture (which is what being self-employed is). People often view wealth/money as being a path to personal success, and for some I guess, it might be, but working for yourself – being your own boss – being an employer and not an employee, and being motivated by money is not really a good idea. If you are one of the 46% contemplating working for yourself, I would like to give you my take on this as a person who had his first business in 1985 and has owned 4 companies and several sole trader and partnership businesses over 35 years in three countries, with mostly (but not always) successful outcomes. My current businesses are now all based in Thailand. I’m being hit hard – very hard in fact (and, unlike many of the more affluent countries, small businesses don’t receive any government assistance here in Thailand), but I’m still trading and I have a growth plan which I hope will work! No point beating about the bush as they say. I’m not the font of all knowledge on this subject, but I am pretty well versed and experienced and think my views should be considered by those who are contemplating (perhaps) investing their remaining savings into a business venture so that they can be ‘self-employed’ thinking it may be the answer to the current situation we are all in. From the outset, I would think most people understand how risky small business is. It doesn’t matter whether you a chef and you want to buy (or setup) a restaurant or are a graduate and want to be a social media influencer or blog writer, if you plan to work for yourself, you will be a small business owner by definition. Here are a few stats about small business start-ups. Investopedia states that “in 2019, the failure rate of startups was around 90%”. Another site, referring to Australia, says “60% of businesses will fail in the first three years”. Because my businesses are currently based in Thailand and while I can’t readily find any business success/failure stats for Thailand, an article from the Asia Times (from August 2020 – a year ago!) states “11% of micro and small businesses are verging on permanent closure and 75% of small tourism-related businesses have had their revenues decline by at least three-quarters”. I don’t think anyone will contradict me for saying that the situation has become a LOT worse over the last 12 months since that article was written. There are probably many of you who would agree with me when I say, it is likely to get worse in the next 12 months. While I personally wish everyone entering into and already (read … still left) in small business every success, the fact of the matter is that it is not very easy – perhaps not as easy as some people might think. In my lifetime it never has been and in my opinion, it has actually become harder and requires different talents and strategies today than were needed and employed previously. Not only do we have the ‘normal’ challenges a small business owner faces in order to be successful, we now have additional ones created by the governments’ responses to the economic disaster, which are likely to be with us in some shape or form for a very long time. Like it or not, small business has changed and there is no going back. The Normal Challenges – Let’s call them Pre-COVID Normally, in my opinion, a business’s success (or ability to succeed) was never calculated by its profit alone and if you entered into small business for the express purpose of making money, I think you made a mistake. In fact, I will go one step further and say if you actually entered small business for the sole reason of making money, you were probably one of the recorded failures. I am of the opinion that there are many other more valid reasons to be in business. To state the obvious (hopefully), you first need to be able to provide goods and/or services that will be needed and you have to have reasonable to superior expertise in this field. In short, you need to predict what the market needs and be good at providing it. Perhaps a little less obvious, but I think more important, is that you need to have passion for what you do and that passion should drive you to provide the best possible products and/or services you can to your customers and other stakeholders. If you concentrate on providing a really good product/service, and assuming you have the financial model correct, money will flow and you really shouldn’t be obsessed with money. There are other considerations too of course, and as your business progresses there are many more requirements, but initially and in order to establish long-term viability, passion is a must and the passion must be evident in your goods/services. So my argument is simple, if your reason for being ‘self-employed’ is to make money, I believe you have missed the point and may find it hard to achieve this. If you are passionate about your product and/or service and you provide an amazingly good product and/or service, then you might be successful and money probably won’t be of concern. So, that is how we used to do it and it hasn’t changed. But along comes travel restrictions, trading restrictions, curfews, tighter government control and licensing, inevitable higher taxes to pay for unprecedented government spending, etc and what happens even if you provide a really good product and/or service? Your business is decimated. Your ability to make a daily living no longer applies. You are faced with maintaining expenses (you might be able to reduce some), but the income has typically ‘dried up’. And if that is not bad enough, any money you invested in buying, improving and/or maintaining your business has more or less been flushed down the toilet. As a business broker in Asia for the last 7 years, I can tell you that MOST bricks ‘n mortar small businesses like cafes, bars, restaurants, pharmacies, massages, guest houses, etc are now worth about 25% of what they were only 18 months ago. As a side observation, if business owners wanting to sell right now continue to think their businesses are worth more, they risk walking away with nothing; as is said frequently by Thai’s “Up to you”. The New Challenges – Let’s call them Post-COVID I read last week that Air Asia is now providing a food delivery service just like Grab. I notice that Thai Airways has a pop up business outside their main offices in Bangkok selling food to the public. Being associated with the real estate sector, I notice a huge increase in the number of ‘real estate agents’ advertising the sale of houses and condos (and cars and boats and anything else they can sell). I saw a rather entrepreneurial advert a few days back where a new business start-up was saying (something like) “Just let us know whatever it is you want to buy and we will source it for you and have it delivered”. I sort of like that and wish them well in their new business venture. I don’t have a problem with any of this and I wish them all the best, but you should be aware that there are lots of people out there doing lots of new things and lots of people now doing what you do. And it is not just people; it is very large corporations too. Air Asia (as an example) who is now encroaching on the food delivery industry and directly competing with them might not concern you as it may not affect your particular business, but what if it does affect your business? You are a small’ish startup just trying to make a living and a multi-national publicly-listed company decides they want to compete with you. You are going to need to understand that this is what is happening now. If your industry (and perhaps business model) is even moderately viable, then why wouldn’t someone want to enter into that industry and (effectively) compete against you? 7/11’s sell all sorts of consumer goods that were thought to be (mainly) available through other businesses (take-out food, cosmetics, toiletries, alcohol, etc). I understand that 7/11’s have sold take-out food for a long time, but here in Thailand where I am based, they are now directly competing with the local food stalls and carts and are achieving great inroads, which is effectively putting the stalls and carts out of business. And while in Thailand, 7/11 now provides a free delivery service as of this year so you can just order, pay with plastic and have it delivered. Amazon and other online retailers have made it incredibly hard for local businesses to compete as people become very comfortable just ordering online and waiting a few days, instead of venturing outside and potentially going to a few local shops to find what they want (remember, leaving your home is either discouraged or out-right not allowed). So we have increased competition and even from large multi-nationals that have historically, never interfered with your business and ability to succeed. If that were the only problem, consider this. Small business is not big business. What do you think ‘working for yourself’ is? My brother signed up to sell T-Shirts online through Amazon. Apparently the deal is, he does basically nothing except come up with the design and he will be paid $2 for every $30 T-Shirt sold. Sort of sounds ok, but who is really getting the money? It is not my brother that is for sure. A fellow business owner and friend of mine who is a musician and writes original pieces is paid pittance for his ‘YT views’ with the bulk of the money being channeled into YT through advertising - because of his content! From a marketing perspective, FB does not allow me (my own FB account) to invite my own friends to join my own groups if I select 6 or more friends at a time. I know you will call BS on this one – it is hard to comprehend, but it’s true. Now, on their own, these examples are not really that bad, but if you think you are actually working for yourself, you are mistaken. Activities that involve nearly all online marketing or content favour big tech not you – you are, in effect, working for big tech. So what happens when you become a bit too popular or have already been flagged as a bit too popular? Parlour.com – shut down within 48 hours. Donald Trump, banned from FB and Twit. Thousands if not tens of thousands (who actually knows – maybe hundreds of thousands), of posts and comments on social media platforms, ‘censored’ or just deleted. Posts that are not shared as you think they will be in accordance with the platform’s own rules. So who is actually in control of your business now? Do you think it is you? You are apparently working for yourself and perhaps even burning the midnight oil thinking it will achieve some success – working 18 hours a day maybe. We are now up against, because pretty much the only way we can promote or market our business and its products is online … let’s call them big tech. Big tech owns data – an amazingly large and diverse amount of data, and data is incredibly valuable. You think your database of who has eaten in your café is important? Well, it is, but you are not the only person who has this data and the volume of your data and the information you have pales into insignificance compared with what big tech has. Do you think they will ever use this data against you? Maybe… maybe not. If you are a restaurant or café or the like just servicing your dwindling customers maybe not, but if you appear to be doing well because you have hit upon a winning business formula, then the chances are you will be targeted and eliminated. Remember, they have a lot more data on you and your customers and your business than you will ever hope for. And if there is any money to be made, you will be taken out of the equation. Big tech is all about money. They prey upon small businesses and small business innovations and trends and then use that data to make more money. You need to be good at what you do, they just need to steal your data. So where is this all leading? Well, I’m a business broker – I sell businesses and I get a lot of pleasure in seeing a successful sale where both parties, buyer and seller, prosper and achieve what they want. I’m a business owner too and I understand how this is so important. So when I see a rise in interest in owning your own business, I’m happy, but also, because of the current circumstances, I’m also a bit worried that the already bad stats relating to new businesses will actually become worse. Nobody wants that – not me and certainly not somebody who commits, spends and then fails. If you want to work for yourself, that is great but be aware and consider my thoughts on this. The stats, even prior to the COVID debacle, are against you being successful. You should remain focused on quality of product/service, not money. You need to understand that your primary source of marketing and advertising online comes with a risk of competition, not only from people and companies that don’t normally trade in your industry, but also from big tech who is more or less monitoring and collecting your work and practices data and will put you out of business in the blink of an eye if you don’t contribute to making them money.