Think business, think margins

ON YOUR OWN By TAN THIAM HOCK

An Innovation Competence Process Coming From Knowledge Management (Photo credit: Alex Osterwalder)

ABOUT 20 years ago, when Forbes started compiling a list of the richest Asian billionaires, many rumours spread. My favourite story involves a president M of a neighbouring country. He was known as the 10% president. Just make sure you budget a 10% margin for him if you want to participate in any infrastructure projects in his country.

After diligently amassing a tidy fortune over his long rule, president M was surprised when the new list from Forbes placed him a few places below another head of state from a neighbouring country. This head of state had only been in power for a few years so president M decided to make a state visit to learn the ultimate trade secret.

After a sumptuous dinner at the palace on a hill, the head of state led the president to the balcony with a great view. When asked for his secrets to such quick success, he asked the president, “Can you see that beautiful highway? And that long bridge across the river? And the power station next to it?”

Faced with a vast landscape of lush virgin forest and hills, the puzzled president said, “Sorry. There is nothing there but a forest in my view.” The beaming head of state explained patiently, “That's my trade secret. I only take 100% margin!”

No, I am not asking you to make a 100% margin. Because you can't. Unless you are a very powerful and corrupt politician or head of state. But it just shows that you will make money faster when your business enjoy high margins. Net profit is basically gross profit less expenses. The higher your gross profit (sales minus cost of goods), the faster you cover your expenses, the more you make as your sales increase. All because you have high gross margins.

No, I am not asking you to invest only in high margin business. If sales turnover is small, your net profit remains small. Sometimes high volume, low margin business provides a very high return on investment, like the Walmart hypermarket business. A 2% net profit on a turnover of US$400bil will net the shareholders a cool US$8bil (RM24bil) a year! Only Petronas makes more money than Walmart. And that's because the abundant oil and gas from the sea bed is free!

But for entrepreneur wannabes who need to start on a small scale, I always recommend high margin business opportunities. You are under less pressure to achieve high sales volume and you need less working capital. You just have to watch your expenses and cover your opportunity cost of being employed.

High margins can be created through innovation, brand perception, necessity and scarcity.

In my pre-university days, I worked for 3M as a sales promoter. 3M is well known for its innovative research and development programme of developing next generation products. These are products that are sold at premium prices and fetch at least 70% margins across their 5,000 product lines! Once copycats flood the market and reduce their product margins, they just discard the product line and launch newer and more innovative products at higher prices.

Then you have Apple products which is at a premium to its competitors and they fetch higher margins through a combination of technological innovation and higher brand perception. Microsoft has been selling their so-called software diskette at an average of US$200 when their cost of production is US$2 per diskette. Out of necessity, your business computers must be installed with their operating system and Office application software. No prizes for guessing the reasons why these two companies are the most profitable in the world.

Why must you pay two times more for Gillette blades versus other blades when a shave is just a shave? Why must your wife pay RM5,000 for a plastic monogram bag when a full calf leather bag cost a mere RM500? And will a RM1,000 jar of cream make you look 10 years younger? If you have innovative products, make sure you hire the best marketing minds to create a superior brand perception, raise the prices and reap the rewards.

With a growing world population and depleting natural resources, we have seen continuous price increases in oil, minerals and agricultural products. What used to be cyclical in demand and supply, where prices fluctuate in 10-year cycles, have now become a continuous increase in demand versus depleting supply.

Compared with massive overcapacity in manufacturing of almost any conceivable product from consumer goods to ships to cars; it is a no brainer where the high margin business will be in the foreseeable future.

For entrepreneur wannabes, you should develop a competitive business model where you can charge a higher price for your goods or services. Be creative. Build yourself a superior brand image. Make sure your services or your products are a necessity.

A “must have” by all concerned. Embrace high margin mentality when you evaluate business opportunities. Then go forth and multiply.

This advice is free. But if you make your millions, just remember to send me a cheque for 10% of your earnings. Lest you forget that I do not have to be a crooked politician to earn my clean 100% margin.

● The writer is an entrepreneur who hopes to share his experience and insights with readers who want to take that giant leap into business but are not sure if they should. Email him at thtan@alliancecosmetics.com 

Be Captain Of Your Destiny - Not Prisoner Of Wishful Thinking

It's hard to will a business into being. Anyone who doesn't understand this through intuition figures it out soon enough through experience.

To win, an entrepreneur needs the conviction to overcome inertia. People have gotten along just fine without whatever it is you hope to sell them. Fact is your early attempts to convince them otherwise will almost always fail, which means you need the tenacity to keep swinging until you connect with the market.

George Bernard Shaw famously observed that the reasonable man adapts to his circumstance, that only an unreasonable man would seek to adapt the outside world to his own needs. Progress depends on the unreasonable man, said Mr. Shaw. It's a quote I've always loved. It means that apparent failure is just another obstacle to be overcome by an individual with the will, and the character, to do so.

That's an attractive idea to an entrepreneur. But sometimes that attraction is fatal.

 

For every story of conviction overcoming a perceptual speed-bump, there are 10 of an entrepreneur who hung on too long after the point where the market responded with a resounding, “Meh.” The stronger your sales skills, the longer you'll tend to hold out past the “point of meh,” and the higher your opportunity costs will be versus investing in an offering with the potential to be pulled by the marketplace rather than pushed by the brute force of your sales and marketing prowess.

So how do you know? How do you tell the difference between a light at the end of the tunnel, and the oncoming train of market indifference?

Here are 5 questions that can help:

1. Is your quality of execution sufficient to take quality of execution off the table as a variable? Poor execution of the right strategy will most likely lead to failure, just as brilliant execution can hide the holes in a flawed strategy. So where are you on that scale? If you're happy with the quality of your execution, on balance, you need to look deeper for the source of the challenges in your business.

2. Do your customers understand your offering differently than your prospects? The world has a learning curve, and dealing with it is part of the entrepreneurial adventure. But does the perception of the people who've climbed that curve — your existing customers — really change in important ways from that of your further-out prospects? If the answer is no, you're seeing something your customer doesn't. And that usually means it doesn't exist.

3. Are others finding success in your space? This one is simple. Is someone in your space kicking butt? If so the competitive threat may be important, but so is the validation that you're chasing something which can be caught.

4. Will the larger context change in some way to smooth your path to success? m-Qube was the 800-lb gorilla in a non-existent industry for years before the US text messaging phenomenon took off. We kept our powder dry, and waited it out. Are you doing the same? If so agree on a tangible trigger and conserve your cash until you hit it. If not consider giving the money back, and changing over to a game you can actually win.

5. Is the source of your conviction what you need, or what actually is? I love Shark Tank, and in almost every episode some amateur tells the sharks that their idea will take off because they need it to. Cuban and Kevin typically bow out soon after that. The reason? Entrepreneurs motivated by an objective opportunity have a much better hit rate than those motivated by an internal psychosis, or an external requirement.

This last one breaks my heart, and I see it a lot. I get that you hate to disappoint your uncle Nunzio, or that you promised your spouse you'd make it work this time. But the fact is those things are irrelevant to the question of whether your idea will fly, and anyone willing to point that out to you is someone you can trust over the long run.

Don't be that person, folks. So much of the pain in life, over time, is caused by distance from the truth. And the same is true in business.

Ask these questions of yourself, and try hard to answer them honestly. If the news is bad and you deal with it like an adult, I promise you'll live to fight another day. If the same is true but you're a good enough salesperson to sell yourself eventually you're going to hit somebody else's wall, and create collateral damage you might otherwise have avoided.

There's a fine line between being the captain of your destiny, and the prisoner of your own wishful thinking. Use these questions to help sort out which side of it you're on, and please share what you learn with the rest of us here.

Source:  OnStartups,com

Are Malaysians really racists?

PUTIK LADA By RICHARD WEE

Race relations laws will assist the authorities to manage race relations, to clarify any uncertainty, but may to a certain extent suggest that Malaysians are, perhaps, racists.

IT is of crucial importance for the citizens of any growing nation to also grow intellectually. A mature nation is not just a nation of financial wealth, but a nation filled with people who can articulate their points intellectually and critically, and do so calmly and with poise.

In 2007 and 2008, the National Young Lawyers Committee of the Bar Council (NYLC) held a series of forums – known as “Siri Pemikiran Kritis” (SPK) – which encouraged open debates and discussions of issues which affected the people and the nation.

These debates and discussions included issues relating to the economy, civil liberties, and human rights. It was hoped that these forums would activate quality dialogues, over rhetoric and emotional outbursts.

The series was very well received. The panel of invited speakers ranged from national leaders to NGO members.

The attendees were mostly normal Malaysians who cared for the country and who were keen to hear the views of the panel speakers.

As the name of the series suggests, its purpose was to encourage critical thinking. The forums took a standard format.

The NYLC would invite a few speakers who were well versed with the topic, and have a moderator to host.

After each speaker presented his thoughts on the topic at hand, the floor would be open for the attendees to pose queries and sometimes debate with the panel speakers.

The very first SPK was held on Jan 11, 2007, and the topic was the New Economic Policy. It was a good start, and eventually, eight further forums were held.

This year, the NYLC is reviving the SPK series. This is part of the NYLC’s on-going community programme, which includes not only offering people legal and non-legal assistance, but also to educate and engage via public forums such as the SPK.

The idea of public forums where Malaysians can gather and listen to the ideas and views of others, and partake in open dialogues, drove the current NYLC team to re-visit the successful SPK.

To kick start the 2012 version of the SPK, the NYLC will host a forum on the issue of the proposed race relations law in Malaysia – “Race Relations Laws: Backwards or Forwards?”

Law Minister Datuk Seri Mohamad Nazri Aziz, announced that a Bill would be presented in Parliament, which would be in similar vein with the race relations laws of other countries.

What are race relations laws? In its simplest sense, race relations laws govern the relations of different races in a country. In the United Kingdom and the United States, laws governing race relations were passed and are used to manage the different races.

Do we need such laws in Malaysia? Does Malaysia not already have a sufficient legislative framework to govern race relations? How have we been governing race relations since 1957? Is our Federal Constitution a sufficient guide on race relations? Is it not enough for race relations be governed by honest and benevolent government policies?

Perhaps the new laws would assist the authorities to manage race relations. Arguably, there is an opportunity to clarify any uncertainty.

To a certain extent, the proposed race relations law suggests that Malaysians are, perhaps, racists. Only in countries where racism is rampant, or where it is damaging the roots of the society, would such a law be necessary.

Are Malaysians really racists?

That would be a question which only the Malaysian people can answer.

It is possible that this country is not, by majority, filled with racists, but instead that Malaysia has been subjected to unfortunate and sometimes insidiously enforced policies, which gives the impression that we are racists.

Taking a general view of Malaysian society, there is hardly any open, blatant racism.

For example, in the US, at the peak of racism, African Americans were not allowed to share seats in buses with White Americans in some states.

That was a dark moment in American history and their Senate had to intervene with laws to legislate that.
Policies in America also changed to discourage segregation.

Unlike in the US, any Malaysian can hitch a ride on a bus and share seats with people of different races. This is, of course, a simplistic example. Perhaps Malaysians may feel otherwise.

People may feel that we need such laws. Malaysians may also feel that we should discuss and perhaps debate on this proposed law.

So, do we need race relations laws in Malaysia? Or do we actually need race relations policies instead? And if we do introduce race relations laws, what would they contain?

So many questions. So many issues.

That being the case, we invite you make your way to the upcoming SPK Forum, which will be held on Saturday, March 31, at the Bar Council Auditorium in Kuala Lumpur from 10am to 2pm.

The forum will be initiated by Senator Gan Ping Sieu who is also Youth and Sports Deputy Minister. The speakers will be Datuk Ambiga Sreenevasan, Farish Noor, and Faisal Moideen. It will be moderated by Syahredzan Johan.

Please register with the Bar Council by contacting Janet Nathan, the Executive Officer in charge at janet@malaysianbar.org.my, as seats are limited.

> The writer is the chairperson of the National Young Lawyers Committee. PutikLada, or pepper buds in Malay, captures the spirit and intention of this column – a platform for young lawyers to articulate their views and aspirations about the law, justice and a civil society. For more information about the young lawyers, visit www.malaysianbar.org.my.

NFCorp loses mall lease in 'Cowgate' scandal! "COW" CONDO IN SINGAPORE

S’pore mall cancels lease to NFC-linked Farmhouse Supermarket

By TASHNY SUKUMARAN tashny@thestar.com.my

KUALA LUMPUR: A shopping mall in Singapore has cancelled the lease of its planned anchor tenant – Farmhouse Supermarkets – as the store, which is linked to Datuk Seri Shahrizat Abdul Jalil, did not get its premises ready on time.

DAP national publicity chief Tony Pua said according to a report in a Singapore newspaper, the “concept supermarket” at Roches­ter Mall was owned by Datuk Seri Dr Mohamad Salleh Ismail, who is executive chairman of the Natio­nal Feedlot Corporation (NFCorp) and husband of the Women, Family and Community Development Minister.

“We must make sure the losses will be covered by the family and not the NFC, which is, essentially, taxpayers’ money,” Pua said at the Parliament lobby yesterday.

The Opposition has accused Shahrizat’s family of allegedly abusing a RM250mil federal loan given to NFCorp to fund personal business ventures.

PKR had earlier alleged that the rental for the supermarket – which would have occupied the entire second floor of the mall – would have cost RM22mil per month.

Mohamad Salleh had said the cattle-rearing firm was building up the market in Singapore.

Salleh pleaded not guilty on Monday to charges of criminal breach of trust and violating the Companies Act in relation to mismanaging federal funds given specifically to manage the NFC project.

This was after Shahrizat said on Sunday she would relinquish her cabinet post when her term as senator ends on April 8.

"COW" CONDO IN SINGAPORE

 

NGO secretly films NFC-linked S'pore condo

Aidila Razak 4:34PM Dec 29, 2011

Saying it will leave no stone unturned, PKR-linked NGO Jingga 13 made the trip down to Singapore to prove to Malaysians that the luxury condominium owned by cabinet minister Shahrizat Abdul Jalil’s family is as luxurious as it was made out to be.
“We were shooed off when we tried to take a photograph from the front, so we tried going through the back and were berated by a security guard from another building, who said photographs are not allowed as it is private property,” said Jingga 13 leader Fariz Musa.

Braving the zealous security guards, it took seven of the Jingga 13 members three attempts to get into the compound of Orchard Scotts on Anthony Road. They finally succeeded by tailing residents when the guards were not looking.

What they found inside was something “worth the RM9.9 million paid by Shahrizat’s family”, Fariz told a press conference at PKR headquarters in Tropicana today.

The result was a two-minute, 20-second video clip that featured Fariz taking viewers on a tour of the common area, including the swimming pool, bathroom and toilet.

“This is just the common bathroom, and it already has a spa (a small pool, believed to be a jacuzzi). Imagine how it is like in the actual condominium units,” he told reporters during the screening of the video.
Earlier this month, PKR revealed that Shahrizat’s husband, Mohamad Salleh Ismail, and two of their children jointly own a RM9.9 million condominium unit in downtown Singapore.

The family of the women, family and community development minister are under fire for alleged misappropriation of a RM250 million government loan for their company, National Feedlot Corporation.

However, PKR could not produce proof that the condominium was paid with NFC funds, except for the fact that funds were transferred from NFC to the family’s Singapore-based companies.

Empty seats in Meatworks

The group members, who paid for the Dec 23 to 24 trip out of their own pockets, also visited an upmarket restaurant owned by the family, known as Meatworks, in ION Orchard Mall.

“We were there from after 11 in the morning to right before 1pm and there was no one else but us. The Japanese and Chinese restaurants next door had many customers.
“Without NFC’s assistance, Meatworks in Singapore would have gone belly up,” Fariz said of the restaurant that specialises in steak and has a branch in Kuala Lumpur.

Fariz, who decried the exchange rate between Singapore dollars and the ringgit, added that the group did not order anything because they were “afraid”.

“There was no halal sign, and liquor was sold at the premises,” he said, adding that they kept stalling the waiter by saying that they were still waiting for friends.

The group also shot a two-minute video of the restaurant, showing the empty seats and the hallway, which they claimed was also rented by Meatworks.

NFC a symbol of misappropriation

“We will blast out these videos on Facebook and other sites to show... the misappropriation and criminal breach of trust by Shahrizat’s family, including the land purchases, condominiums, Mercedes Benz cars and overseas trips,” he said.
Jingga 13 has lodged a report with the Malaysian Anti-Corruption Commission on two plots of land in Putrajaya, allegedly bought by the family using NFC funds.

NFC had also purchased two luxury condominium units in Bangsar through its subsidiary, National Meat and Livestock Corporation, which it claims are investment ventures.

Also present at the press conference was Ampang MP Zuraida Kamaruddin, who said the NFC fiasco would be go down as a “landmark case” in Malaysian political history.

“We will continue to unearth evidence to turn this case into a symbol for the next general election, so people will realise how dirty the BN government is and how it misappropriates the rakyat’s money,” Zuraida said.

Related post:

NFCorp Boss Charged With CBT in 'Cowgate' scandal!

Malaysian big GLCs headed by foreigners, how dismay!

 GLC head the subject of row

By SIRA HABIBU sira@thestar.com.my

PETALING JAYA: The British citizenship of Raja Idris Raja Kamarudin (pic) who has headed two powerful Selangor government-linked corporations since April last year has become an issue of controversy.

Selangor Umno secretary Datuk Seri Mohd Zin Mohamed has questioned why and how Raja Idris, 58, was picked to be the chairman of Kumpulan Perangsang Selangor Bhd (KPSB), Kumpulan Hartanah Selangor Berhad (KHSB) and executive consultant and adviser of Kumpulan Darul Ehsan Berhad (KDEB).

KDEB is the investment arm of the Selangor Govern­ment while KPSB is a full-fledged water services provider. KHSB is an investment company with many land assets.

Mohd Zin said Raja Idris, the brother of fugitive blogger Raja Petra Kamaruddin, was listed on the official website of KHSB as a British subject.

“Raja Idris is a British citizen. It raises a big question as to why he is selected to head several big GLCs. Can’t Khalid, who is from the corporate circle, find any local talent to run the show?” he asked.

In an immediate reaction, Raja Idris admitted that he was still a British citizen but said he assumed that his appointment was in line with the country’s initiative to bring back Malaysians from abroad.

“Well, I thought that was why Talent Corp was set up – to bring back Malaysians who have left Malaysia and have taken up other jobs and obtained new citizenship in other countries,” he said, adding that he was a non-executive director.

Mohd Zin said there was much unhappiness about how Selangor GLCs are being run, including the removal of senior officials.

He was referring to the sacking of two KHSB company secretaries in relation to the ongoing controversy over the “loss” of a 234ha piece of land in Gombak worth RM250mil belonging to a fully-owned subsidiary of KHSB. Two other officials have also been given show cause letters.

Malaysian Trades Union Congress president Mohd Khalid Atan said it would not be fair to others if the appointment was politically motivated, adding that “priority should be given to locals”.

“Why trust outsiders more than locals? This is an insult to locals,” he said.

MCA central committee member Loh Seng Kok urged Raja Idris to give up his British citizenship, asking whether it was wise for him to have access to so much information invol­ving state assets.

Related post:

Don't have experience to lead, appoint a British?

Google plans major revamp for search engine

The Web giant has been working on the "next generation of search" over the last couple of years and now it's ready to start rolling it out.

Google is about to embark on its biggest renovation in history. In order to keep up with increased competition and new technology, the Web giant is working to keep ahead of the pack by completely revamping its search function, according to The Wall Street Journal.

Google search executive Amit Singhal told The Wall Street Journal that the new Google search will look more like "how humans understand the world."

Changes are expected to roll out over the next few months, the Journal reports, but the full makeover to "next generation of search" will likely take years. A Google spokesperson told CNET that there is not a specific timeline and the company's philosophy is to launch things when they're ready.

The plan for the revamp isn't necessarily to swap out the current keyword-search system but rather to provide more relevant results. This process will work by using technology called "semantic search." With semantic searches, people's searches will be better matched with "entities"--or people, places and things--which the company has been building over the past two years, reports the Journal.

For example, the Journal reports that people who search for "Lake Tahoe" today get links to the lake's visitor bureau website and a map; whereas with the makeover, they will see key "attributes" about the lake, including location, altitude, average temperature and salt content.

Google is basically building an infrastructure layer or a knowledge graph that would underlie many aspects of Google, a spokesperson told CNET. The idea is to make more possibilities with search using these entities.

According to the Journal, this renovation most likely comes with changes to how the search engine actually works, including search engine optimization, advertising, and page-ranking results. Some 10 percent to 20 percent of all search queries could be directly impacted by the change, the Journal reports.

Over the past few months, Google has been making various changes to search, such as showing search results before a person finishes typing their query, adding Google+ to searches, adding concert dates to music queries, and saving searches across platforms with the new "recent" icon.

By Dara Kerr

Dara Kerr, a freelance journalist based in the Bay Area, is fascinated by robots, supercomputers and Internet memes. When not writing about technology and modernity, she likes to travel to far-off countries. She is a member of the CNET Blog Network and is not an employee of CNET.

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De-stressing with Jojo Struys

Mind power: Struys will walk participants through some of the de-stressing exercises at the fair.

By REVATHI MURUGAPPAN revathi@thestar.com.my

PETALING JAYA: If you're having sleepless nights of tossing and turning in bed, then head to the inaugural Star Health Fair 2012 next month to pick up de-stressing tips and techniques from TV host cum producer JoJo Struys.

She will be conducting two workshops daily, which are especially beneficial for insomniacs and highly-strung individuals.

“All of us have some type of stress, whether it's related to family, work or deadlines. I'll walk you through some exercises to squeeze the stress out of your body. They are simple and you can do it at any point of the day. You just need to find a quiet spot,” said Struys, 36, who is also an accredited Reiki master.

Struys, who studied units of psychology in varsity, has always been fascinated with wellness and the power of the mind.

“It's not always that you are what you eat but what is eating you is equally important.”

At the fair, Struys will also launch her inaugural guided relaxation CD entitled “Letting Go”, which contains her voice with soothing background music. If you sleep off while listening to the CD, then you are totally relaxed, which is a good sign.

“Come dressed in comfortable clothing because we'll be doing some basic stretching exercises. I'm hoping that you'll walk out of the workshop a much calmer and more positive person,” Struys said.

The fair, organised by The Star, will be held at the MidValley Exhibition Centre from April 6 to 8 from 10am to 7pm. Admission is free.