Saturday, 7 February 2015
LAST November, after 12 rounds of fortnightly chemotherapy, my CT and PET scan showed that the big C was in remission. Cool. Then my oncologist recommended that I continue with maintenance chemo, reasoning that my pain in the butt stage 4C has a 95% chance of a relapse. # Not.Cool.
Sheesh … faced again with having to make a ‘do or die’ decision.
Damned if I do, damned if I don’t. Just like having to decide on whether to go for a ‘carry over the water’ golf shot from 170 metres in the last hole when your opponent is one up and has only a 130-metre shot to the green.
The last time I have had to make such a decision was during the last currency crisis in 1998.
I believe some idiot of a ghost writer will be trying to link ‘George’ Tong to the last currency crisis of 97/98 but if I do remember correctly, our ex and still politically active PM singled out George Soros as the economic saboteur of Malaysia.
Nothing has changed in our national politics over the last 20 years. Fact or fiction. Fiction mentioned enough becomes fact.
So as an entrepreneur, have you ever faced a ‘do or die’ crisis scenario in your business? How did you decide? Emotionally calm or frantically disorientated to the point of panic? Based on fact or imaginary fiction? Have you evaluated the impact of internal and external factors that has contributed to the potential demise of your business?
What can you do and what should you do?
My recommendation is for you to review your precarious position with a calm mind and a clear head. Avoid acting like a politician desperately lashing out incoherently at easy targets just to stay alive. If you are not careful with your words and actions, you will damage the relationship with your suppliers and customers forever.
Most internal factors affecting your business are within your control. Cut cost, re-jig your business model, sell non-productive assets and downsize your ego.
There is no shame in closing down losing businesses to stop the bleeding. At least you live to fight another day.
External factors affecting your business are normally beyond your control. The ringgit depreciation against the US dollar is just part of a waging currency war amongst nations.
There is a race as to who can depreciate faster against the USD. From the yen to euro to won, most nations are competing for exports to prevent their economies from being deflated. If you are an exporter earning USD, good for you. You have suffered enough over the last 10 years due to a strong ringgit and a weak USD.
If you are an importer paying in USD, it is your turn to face the music. Is your business model a high margin type?
If not, can you pass this cost increase to your customers in your value chain? If yes, good for you. You will not have a ‘do or die’ decision to make.
If you answer ‘No’ to both questions, then I suggest you look into immediate cost cutting maneuvers.
God forbid, you might even have to tell your wife to hold off buying another chinchilla coat!
The other external factor that will affect all businesses will be the introduction of the general sales tax or GST come April.
This is not an April Fool’s joke. Morbid and cliched as it may sound, the only thing certain in life is death and taxes. Now everybody pays tax.
So rather than complain about the GST, my recommendation to you is to study your pricing structure and figure out how to pass on this cost increase to the poor masses. Profiteering? Not a chance.
If TNB does not reduce the electricity tariffs, may I recommend that you quickly pick up their shares as their profits will be humongous due to low oil and coal prices. Profiteering? Nah.
GLCs do not make extra profits at the expense of the rakyat. Meanwhile, selective profiteering prosecution of guilty by race and political party affiliation has started. The dumb just get dumber. While the mass suffer.
I would like to see Mamak shops reduce the prices of teh tarik, nasi lemak and roti canai as the majority of poor Malaysians throng their shops on a daily basis. Are they profiteering? Nope.
First, you have to reduce the price of electricity, sugar, tea, rice and flour.
So who controls the import of sugar, rice and flour? Are they profiteering? Definitely not. With the high USD, they are probably suffering as well.
This monopolistic government backed business will not achieve bumper profits this year. Poor thing.
It looks like the cost of living will continue to trend higher due to the twin impacts of a weak ringgit and GST.
Profiteering will not be possible for companies involved in free market competition as consumption will remain soft throughout the year.
There will be continuing pressure to increase wages in tandem with the rising cost of living. So pay your workers more but demand for higher productivity. Make them multi task if possible.
To the entrepreneur wannabes who wish to strike out on your own this year, it is still not too late to reconsider delaying your entry into this dog eat dog world.
Let the GST conundrum settle down first. Expect more ridiculous rhetorics from some low IQ politicians and NGOs as they talk themselves into a frenzy.
Just a no brainer prediction that more twist and turns are just around the corner. It all adds up to more uncertainties, racial disharmony and loss of consumer confidence.
Unlike existing entrepreneurs who are already stuck in business, wannabes do not have to make a ‘do or die’ decision now.
So live and let live. Enjoy the year.
Brickbats and courteous exchange of opinions most welcomed at thiamhock.com. No deadlines imposed. Replies only when possible. Cheers.