New Start-up Business (1)
My friend, Mr. Chan (not his real name) started his new business venture in making Premier Mao (former leader) of China, metallic coin in around 1989. He was making HKD 30,000-40,000/month running a store in HK. I was a bit shocked when I heard him saying that he had already started this business venture. He ceased his shop business and invested all his money in making the metallic coins. I told myself, if he had asked my advice, I would have advised him to first do a simple survey to about 200 people above age 40, those who know who Premier Mao of China was. Then he would know the percentage of people, who were interested in such coin and how much they were willing to pay. There is a saying says, “The wise go by knowledge.” Another words, it is not by guessing. Another saying says, “Plans fail for lack of counsel, but with many advisors they succeed.” Mr. Chan lost all his money and he had to ask friends to borrow money to pay for the rent. He had three children and was the bread winner. His wife was a full time housewife. Another saying also says, “Plan carefully and you will succeed.” If one wants to be rich, he needs to plan diligently. Mr. Chan did not seek advice nor plan carefully. Planning includes market research to have knowledge of the market and potential customers.
New Start-up Business (2)
In 1989, my 5 friends invested HK$ 1 million each, a total of HK$ 5 million (US$ 645,000), to start an innovative business of electronic food orders and generated bills at the same time at the counter and kitchen. Now this type of system is popular. But at that time it was too premature. My friends were either at top management or had years of experience of doing business. What was the problem? I believe they used their intuition that they were the first one to do such innovative business. There was no competitor. Eventually they lost all HK$ 5 million. If they had invested in property, they would have made plenty of long term profit. We call that “opportunity cost”. They should have done a market research by a professional market research company, which would cost about HK$ 150,000 (US$19,230).
New Start-up Business (3)
In 1988 before I joined the government, I thought of a new idea of starting Russian domestic helper business. There were about 120,000 Philippians domestic helpers. I told a Christian friend if only 1%, who would hire Russian ones, and charged HKD 10,000 each helper, there would be HKD 12 million (US$1,538,460) sales. He immediately showed interest and proposed to invest several tens of thousands HK dollars equally with me. I suggested to wait and do a market research first. Over 300 surveys were done and found out that there was only one person was curious. My friend was already a business man in property agency business. What could have gone wrong? Again it was by intuition or “guessing”. Guessing is no blessing.
New Start-up Business After Retirement
My friend Kenneth was also a civil servant. He put his entire retirement fund (over HKD 2 million) into a new business venture. Unfortunately, his business fail and he lost all his retirement money. I asked him, “Did you think of the possibility of business failure?” He replied, “No.”. Luckily, he has a herbalist license and can make a living on that career. But his whole family quality of life has suffered.