My Take on Empowering the Malay Economy, part 1

The PM has spoken. He has an agenda to empower the Malay and Bumiputera's economic power. The agenda focuses on five main thrusts:

• Empowering bumiputra human capital;
• Strengthening bumiputra equity ownership in the corporate sector;
• Strengthening bumiputra non-financial asset ownership;
• Improving bumiputra entrepreneurship and business; and
• Strengthening the services delivery ecosystem. 

I don't have a bone with the thrusters; they seem to make sense - common sense.

But I have some issues with the plans for the thrusters. They seem rushed. I don't believe they would bring a quantum leap in the Malay's economic power; I believe the think-tank could think and come up with something better from their tank.

Before we go on, there is something that we must be clear in our head. I am talking about the Malay economic power (in saying Malay, I am including the Bumiputeras as well) AS A SOCIETY, rather than individual or a segment, a caste. When a policy benefits a few individuals and they get extremely rich from it, it does not translate into Malay Economic power unless they give back much more to the Malay community. We must look at the society as a whole, from the poorest to the richest.

In that regard, we must also understand the demographic of the Malay society that while it is true that past policies have created a larger pool of middle class Malays, the society is still dominated by largely the poor, both in terms of financial education as well as the financial itself. This society is by and large, poor and heavily subsidized.

Lets start with the ASB2; RM10 billion of it. And here are my issues:

• ASB is attractive only because it is a superhigh-return savings scheme. The guarantee of the capital makes it risk free (better than bank deposit (?), maybe, because PIDM has a limit on the guaranteed savings amount) and it gives an equity-based return (way higher than the deposit rate of around 3% per annum).
• That would just make people switch their long term fixed deposit into ASB (those poorer ones who needs to withdraw cash regularly cannot benefit because you need to lock the amount in ASB to fully enjoy the yearly dividend). Who has one year long term deposits? Certainly not the poorer Malays nor even the middle class Malays. It will definitely benefit the richer Malays, those who have maxed out their ASB1. 
• So it looked like this plan would benefit the already rich Malays first. But their number is not that big.
• In my opinion, this ASB  does nothing to promote active economic management of the Malays. Instead it is training the Malays to be passive owners of equity. The term "reign but does not rule" comes to mind. I don't believe that passive ownership of equity would make the society any better at creating and managing economic power - that one comes from owning and operating businesses.
• ASB does not directly and significantly help the Malay society in owning and operating businesses. The moneys in ASB would have to be placed in secure investments so that the managers could manage the risk and give the expected return. Amongst others, they would be invested in companies owned by non-Malays (because they still dominate the real economy, they own the businesses) and when this happens, the capital flows to enhance the economic power of the original owner. They would use the much needed cash to build more businesses and when it has grown big enough, they would then go for listing again - and the cycle continues.
• So, I ask myself, does the Malay businesses really benefit from the ASB? Does the Malay society as a whole benefits from ASB? Do Malay entrepreneurs benefit from ASB? I have great difficulty to say a resounding yes. Menang sorak, kampung tergadai.

ASB1 was relevant back then, to tilt some Malays into middle income class and some middle income Malays into rich ones. It was a quick fix to create purchasing power within the society. But now we need something different. We need production power. We need Malay businesses flourishing in a competitive and sustainable manner. I will share my issues on this segment next time. In the mean time, Selamat Hari Malaysia.

Salam.

Cash or Profit?

In one of the recent workshops we discussed about how could a profitable company goes bankrupt.

Weird, but it is true.

For all entrepreneurs, it is important to remember that cash is king. While profit, as calculated by the accountant based on accounting principles is important, cash is vital. Accounting allows you to record profits when you don't actually have any cash. Take for example, a RM1,000,000 sales of cokodok that you made to Mr A on credit. Mr A has 90 days to settle the bill.

Accounting wise, you would have recorded a revenue of RM1 million ringgit and if the cost was RM300,000 you would have recorded a profit of RM700,000. This is called accrual based accounting.

The problem is, when the supplier comes to collect his RM150,000 cost or your staff wants their salary at the end of the month, you cannot pay with profit! You need cash. You need cash to pay everyone their dues.

So, while you would be happy with your profitable business, please take a closer look at your cashflow.

Selamat berniaga :-)

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Going back on the payroll....

Well, it has been a while since I really blogged. Much have happened since then.

For the past one year and a half, this entrepreneur had taken up employment with two fund management companies, assuming the role of  the head of business development ( I told myself that it actually reads "intrapreneur"). My businesses (Elixir Synergy Venture & DYAZ Associates) still runs as usual either by my own intraprenuer or my partners. Some plans (training) had to be put on hold to accommodate some changes and some had to be shelved altogether. There is actually some order to this chaos... and you know what? I kinda like i!

Moving from full time entreprenuer to employment was not an easy thing, primarily due to ego and the fear that I will forgo the entrepreneurship roller-coaster once I am back on the payroll. There were demons that I had to really wrestle to the ground. Voices in my head said I need to stay on the path of full time entrepreneurship no matter what. Pain is the only way to go. No pain no gain. Risk is entrepreneurship.

Then I told myself, who the fish (expletive) am I to say no to money! I have to start looking at things objectively and make the decisions based on sound reasons; just what an entrepreneur supposed to do.

Firstly, does taking up employment changes myself and removes my entrepreneurship attributes or skills?  Entrepreneurship is about making money, creating wealth. Being paid for your time and skill is the same. If I managed to generate more wealth per hour then I am being enterprising with my time.

Am I then now no longer an entrepreneur because I take lower risk as I am assured of a pay every month? Firstly, let me correct a misconception. Yes, entrepreneurship is about taking risk, but is supposed to be calculated and managed risk. Taking un-calculated and un-managed risk is not entrepreneurship, it is stupid(ship). What happened in my case was that I found myself able to take on more opportunities (and risks) with the cushion of the pay. The extra dough enabled me to invest more in my businesses without having to leverage on outside parties. I was able to give more staying power to my businesses.

Would my businesses and aspirations suffer because now I have a job? Well, part of being a true passive income earner is to have your businesses run without you having to run it yourself. My situation proved as a perfect opportunity for that, for me to build my management team. But before I leave, I have had to set in place systems to monitor (not cctv) the progress of the business on a daily basis. The procedures were in place to make sure the business runs in a way that I wanted it to be run. All I needed was then the people to manage the business and key in the progress into the system (don't spend money, use google drive documents to create your own monitoring spreadsheet. Plus it is real time). The businesses have been growing for the past one year and a half, so the system must be right...at least most of the time.

As for the training business, I will let the brochure at the end of this blog 'tell' you the story.

So remember, entrepreneurship is not about a business, it is about you.

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Distractions in business

When we start or have a business, one of our biggest enemy is distractions. Distractions is bad as it derails us from our original and true intention; making us lose focus on what matters, normally leading to wasted money, time and resources.

Distractions come in many forms and guises. For those who are making progress, distractions could be in the form of lifestyle and fun; the women, men, frolicking and all the sweet things on earth. These kinds of distractions would come to those who started making money from their business. We see and hear these kinds of stories all the time; someone falling off his fortune because of a mistress, excessive travelling and lavish lifestyles.  These types of distractions are tests for those who has made it and wishes to either stay on top or go higher.

But those who just started business and have not made it yet are not spared from distractions. For those who just started a business, distractions can come in forms of new ideas and perceived opportunities. In the beginning, you business will have to go the 'budding' phase; it is a phase where the growth is not visible and it could be frustrating at time. During this phase, your impatience may invite you to be distracted with new ideas and perceived opportunities. These distractions are very dangerous as they would cause you to abandon your original plan, leaving it half-baked. Be careful of this distraction of perceived opportunities as it is very intoxicating. Why? Because it is filled with hope and hope drives an entrepreneur high; only that getting 'high' on hope is not going to get you anywhere.

Therefore, my advise is to always check if you are on the right track. I mean have a systematic method to check if you are on the same track and persistently moving along the track. The first thing is to write it down on paper - do not trust your brain with the plan. You need your brain for the execution of your plan; storing the plan itself should be on a piece of paper. make it a point to spare 1/2 an our each monday to go back and read that piece of paper to remind yourself of your goals and plans. Sit down and write what are the things that you are planning to do for the rest of the week and compare that list with your original plan. You would be able to spot clearly, once it is on paper, what are necessary actions and what are the distractions. Cross out the distractions and reclaim back the time and effort that your are planning for that distractions; the very least, you could use the time to be with your family.

Please do not mistake this with the adjustments that you need to make on your track due to reasonable and valid reasons. That adjustments is vital. You must know the difference between adjustment and distractions.



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Start a business to sell goods or services, not to get grants

Recently it was reported that PUNB has approved for an allocation of RM200 million to help bumiputera entrepreneurs. Great. But if you want to start a business, assume that your name is NOT in the list.

Many Malay entrepreneurs assume that a government grant is almost automatic for them if they have a business. Many went on to build an operation and make commitments based on the assumption that PUNB or some agencies would give them a grant/loan/assistance for their business. WRONG

One thing that you would need to realize, no matter how great you think your product is, how ingenious is your idea, how original your concept is, there will be a thousand others who thinks the same about their products/services. Therefore, there is no guarantee that your business will get the grant.

Build your business assuming that you will not get a grant; your business must be able to stand on its own. Ironically, once your business is proven to be able to stand on its own, he grants and loans will come pouring in. The rationale is simple, the grant officer wants to deliver success stories and proven business are less likely to fail.

But it does not mean that you should not apply for such grant. You should and must apply, but do not assume you will get it. And if you want to prepare your pitch, the following might  help (I do not own the copyright to the photo, it is reproduced under the Fair Use law, for educational purpose only)

Do what you have to do so you can do what you want to do, later

Hello readers,

Sorry for the long silence. I have been caught up with a myraid of things to sort and obstacles to jump over. Anyway, today I read an article which I cannot delay passing on to you through this blog. Read it if you have the time and please do comment if you share the views  in the article, here.

http://www.entrepreneur.com/blog/222831

See you again soon

Yazdi

If you like the article above, please like us here. :-)The Author is the principal of ElixirEducate - a training house for Smart Entrepreneur Program Series. If you would like what you read above, we would be grateful if you could 'like' us at our page here. If you would like to to find out or learn more about the the article above, you can email the author directly at yazdi@theelixirstore.com or be his facebook friend here.
 
Lastly, if there is anyone that you know who may benefit from reading this article / post please forward and share this posting by clicking the button "Share" below. Have a great day ahead.

ElixirEducate

Developing your business

Hello friends,

I am sure most of us have growth as one of the top priority, if not the highest. No, I do not mean the waistline (although mine has a mind of its own) but your business. Simply put, most of us equate business development / growth as increasing profit and wealth.

Well, if you are going to do it yourself (as most entrepreneurs would), these are some simple steps that you could follow:

1. Where are you now? You need to know, precisely, what is your present business model, how much business is it generating and its corresponding size. Brainstorming together with your employees would be a great idea. Do you have strong strategy but weak operations? Or weak strategy but strong operations? What is lacking?

2. Where do you want to go? You need to be clear as to what you want to GROW. Remember, it is sustainable profits that you would want to grow, not simply size. The target should be 'Realistic" but multiplied by two, at least. Set high standards. Do not be afraid that you might fail.

3. How are you going to achieve it? Organic growth VS in-organic growth? Product development? Market development? Diversification? Market penetration?

4. How much it is going to cost? You need to be very clear as to how much is this going to hit your pocket. Find out any hidden cost.

5. How are you going to fund the cost? Own money? Borrowing? New investors? Equity? Hybrid? Convertibles? What is the art of getting funded?

6. Is it going to be worth it? Is the benefit going to outweigh the cost?

Lastly, keep it simple and doable. Do not make your growth plan complicated. Take action.


Related reads:

1. Growing successfully for small businesses
2. Growing to business failure
3. The Art of Getting Funded



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If you like the article above, please like us here. :-)

The Author is the principal of ElixirEducate - a training house for Smart Entrepreneur Program Series. If you would like what you read above, we would be grateful if you could 'like' us at our page here. If you would like to to find out or learn more about the the article above, you can email the author directly at yazdi@theelixirstore.com or be his facebook friend here.
 
Lastly, if there is anyone that you know who may benefit from reading this article / post please forward and share this posting by clicking the button "Share" below. Have a great day ahead.

ElixirEducate