Malaysia Entrepreneurship

What Products Can I Sell?

This question gets asked a lot especially since anyone can now become an online seller simply by just opening a store using one of the many available marketplaces we have in Malaysia.

However, the question that one should be asking is, “What would people want to buy from me?” Although it might seems like I’m just paraphrasing the original question, but there is an important distinction.

When you ask “what would people buy”, you are thinking in terms of the demand. Every business transaction always start with the demand, although some hard-selling salesman might not agree with that, but that’s true for most of the cases. Traders who ask “what products can I sell” will be focusing on their perspective of what the market should buy from them. It’s sort of like an inventor mindset, where you go about creating a demand for a product that is likely not in the market yet. Not an easy path especially if you haven’t got much experience and not a lot of marketing dollars to burn.

On the demand side of things, it’s a lot more straightforward. You can use the reverse-engineer approach to work out a sourcing plan. Look at the items that are selling like hotcakes. It also likely means that they are a lot of competitors. But competition is a good sign because it means you are at least on the right track. Study the trend. If competition is too fierce and margin is razor thin, it’s probably better to switch your attention to something else. Also, it’s good to stay in the category where you are familiar with or products will shallow learning curves. Sourcing the right product is a numbers game- the more you try the better you get. Some people get lucky within the first few rounds of sourcing, while some would have to source down to their last dollar. So, it makes sense to source according to the capital you have. The idea is to increase the number of products you’re sourcing until one of them gain traction. This is the part where you cannot cut corners, you have to pay your dues. If a product fails to perform, try to understand why it didn’t fly. It usually always boils down to the issue of pricing, traffic and customer service. Every transaction and customer enquiry is an important learning experience.

You don’t necessary need to know your products in-depth because in the first few selling attempts, you should be concern with identifying the demands. Once you can identify a good niche, that’s when you double down on it.

As a final reminder, always source products according to your available capital and resources. The idea is to stretch your money for as long as you can until you hit your best-seller. A seller with RM10,000 and another one with RM100,000 will have a very different sourcing strategy.

Worst case scenario would be that you exhaust all your capital and still did not manage to identify a rift in the market. All is not lost, you can still give your unsold inventories during Christmas or use your experience to write a book on how not to source products.

Just like any business ventures, there’s no shortcuts. Do the work and keep learning.

 

2019-02-23T19:27:34+08:00February 28th, 2019|E-Commerce, Entrepreneurship|0 Comments

4 Essential Tools for Your e-Commerce Operation

As a small business, we don’t have the luxury of hiring a team of developers to develop and customize the tools we really want. Fortunately, the app marketplace fills this void with lots of choices.  The key is to ensure that these tools which are created by different developers are able to work seamlessly together to deliver the results we want.

Here is a list of tools which I’ve used to run my web business for the past 7 years.

1) Xero – accounting
This should be the most important decision you make for your business operation other than the brand of coffee you buy for your pantry. We chose Xero because there is a huge amount of integrations with other tools. This will make it easy for you to automate and reduce redundancy in your day-to-day operation.

2) TradeGecko – inventory management
We started using TradeGecko since 2015 and so far it has proven to be a critical component required to keep track of our inventory, orders, shipping and returns. It has a powerful reporting tool which is very useful to help in forecasting procurement. TradeGecko pushes sales and purchase orders to Xero automatically and saves us a lot of time.

3) OpenCart – shopping cart system
Simple one of the best shopping cart system out there. The core system is free but to get the most out of OpenCart, you need to purchase some extensions (add-ons) to suit the type of products you sell.

4) MailChimp – newsletter
E-mail has always been one of the most effective selling channel and MailChimp makes it very intuitive for us to launch campaigns and tracking their effectiveness. MailChimp connects to our Xero contacts which makes managing our mailing list easier.

There are a lot of other tools that are crucial in my daily operation workflow such as content creation and logistics solution. I did not include them here because these tools are usually business specific and company specific.

As a general guideline, the tools I mentioned above can be used for 90% of all small to mid-sized e-Commerce operations.

If you would like to find out how you can improve your efficiency for your e-commerce operation, drop me a line at yowchuan@meshio.com

2019-02-23T19:05:29+08:00February 19th, 2019|E-Commerce, Entrepreneurship, OpenCart|0 Comments

Understand Your Numbers

During the last few years of using Xero (a web-based accounting software), I have learned enough about accounting that I am able to do my own book-keeping. Of course, everyone have their own preferences for their own accounting software so I am not about to start evangelizing why Xero is better than your accounting software, but the main point is you should be able to read the key reports that is generated by your accounting software.

Some may argue that the most important metric in their business is their cash flow and they stopped at that. That’s like saying the most important organ in the human body is the heart. Of course cash flow is important but it doesn’t tell if you are profitable or not. One simple example is companies that get capital injections through external fundings and loans. Cash flow will be positive for a period of time until it’s not, and instead of going back to the drawing board to look at the viability of the company’s product, founders who only rely on cash flow to run their business continues to look for even more funding. A company that doesn’t generate profit for too long is not a very motivating place to work in.

An in-depth understanding of your business’s Management Report which comprises of your Profit & Loss, Balance Sheet, Receivables and Payables statements will give you a very clear understanding or your company’s financial position and assist you in making better decisions. You can definitely still be successful in growing your business without accounting skills but without actual data to back you up, you are at the risk of not being able to monitor your expenditures or expanding in categories where the growth is plateauing.

It’s hard to argue with facts and figures. So, don’t start.

2018-07-31T16:21:45+08:00July 29th, 2018|Entrepreneurship|0 Comments

On Diversification

The whole point of diversification is to reduce risk, because if we are 100% sure of the gain in our choice, we wouldn’t need to insure ourselves against the possibility of loss. Alas, there’s not many events in our lives which we can be 100% sure we will come out positive and thus we employ various tactics to ensure that we do not lose everything that we have or to a certain extent, to at least protect what we’ve already gained.

However, diversification on its own is not sufficient. For instance, you set out with RM1 million to invest in start-ups which have no track records. The closest thing you can rely on is the personalities of their founders. You are given the option to invest a minimum of RM100,000 in any of the startups, or you can choose to invest the entire RM1 million in a single start-up.

In order to reduce your risk to the minimum, the ideal strategy is to spread out the RM1 million into 10 lots and invest them in 10 different start-ups and to ensure that all 10 start-ups belongs to very different industries. We also assume that the RM100,000 will give all 10 start-ups enough runway to last for the next 12 months, which should be enough time to proof the demand of their ideas with real paying customers.

If you think after signing the cheques to each of your investees is the end of the story, then you’ve missed the whole point of diversification. Spreading out your risk is only the first step, but by having stakes in 10 different companies, you also have an added advantage- the opportunity to learn from 10 different companies simultaneously. This does not mean you have to get your hands dirty and meddle with each of the start-ups. Instead, you now have a chance to get up close and personal with the development of the start-ups, observe the decisions that the founders make in the critical phase of their start-up, and most important of all- the mistakes that they committed during this period.

Only by actively monitoring and studying your diversified interest like a lab experiment would you be able to make the best out of your RM1 million investment, and having 10 companies to learn from is definitely better than just one.

Yet, there’s also the chance where all 10 companies is going to fail but if you have been taking notes during the entire process, you should have acquired enough experience to help you make better decisions in your next investment.

In short, while you diversify, you must also leverage on the opportunities to learn critical lessons from each diversification which you can apply on your future investment. Don’t just diversify for the sake of diversifying because if you do that, it’s no different from playing a game of roulette in the casino where you are just betting on sheer randomness.

2018-01-24T00:08:39+08:00January 24th, 2018|Entrepreneurship|0 Comments

Top Line vs Bottom Line

balance sheet

Enterprises are paid to create wealth, not to control costs. But that obvious fact is not reflected in traditional measurements. First-year accounting students are taught that the balance sheet portrays the liquidation value of the enterprise and provides creditors with worst-case information. But enterprises are not normally run to be liquidated. They have to be managed as going concerns, that is, for wealth creation.

To do that requires information that enables executives to make informed judgments. It requires four sets of diagnostic tools: foundation information, productivity information, competence information, and information about the allocation of scarce resources. Together, they constitute the executive’s tool kit for managing the current business.

Peter Drucker, an excerpt from ‘The Essential Drucker’

Very often, I find myself trying to cut down expenses at the expense (pun not intended) of long term growth. There’s only that much savings you can implement on your bottom line. Every resources you throw at maximizing your bottom lines is an opportunity cost to your top lines. That is why it can be a dangerous habit seeking business advisories from your accountant. Leave your accountants to bookkeeping.

In my own experience, I have seen business owners who don’t give much thoughts on their operating expenses. To be fair, they do not splurge on fancy furniture and grandiose renovations in their business premise. But these business owners are very focused on the revenue aspect of their business. They spend a lot of time on customer acquisitions,  working on their sales pitches, training their sales team and perfecting their sourcing strategies. They spend very little time comparing quotes that don’t have much impact on their bottom line. Electrician A might be 5%  more expensive than Electrician B, but if A can fix the problem right away, he gets the job.

They also don’t worry too much on how much they are taxed. Rather, they worry about the sales they are missing out if they spent too much time agonizing over their tax relieves and deductibles.

In their head, they just keep telling themselves, “The show must go on!”

2017-04-07T14:27:08+08:00April 7th, 2017|Entrepreneurship|0 Comments

Entrepreneurs Are Risk-Takers?

Cliffhanger

This pretty much sums up what I’ve always felt about running your own gig. When you’ve decided to stop living on the security of regular paycheck and charting out your own path into unknown, it’s all too easy to let your adrenaline do the planning.

A year or two ago I attended a university symposium on entrepreneurship at which a number of psychologists spoke. Although their papers disagreed on everything else, they all talked of an “entrepreneurial personality,” which was characterized by a “propensity for risk-taking.”

A well-known and successful innovator and entrepreneur who had built a process-based innovation into a substantial worldwide business in the space of twenty-five years was then asked to comment. He said: “I find myself baffled by your papers. I think I know as many successful innovators and entrepreneurs as anyone, beginning with myself. I have never come across an ‘entrepreneurial personality.’ The successful ones I know all have, however, one thing – and only one thing – in common: they are not ‘risk-takers’. They try to define the risks they have to take and to minimize them as much as possible. Otherwise none of us could have succeeded. As for myself, if I had wanted to be a risk-taker, I would have gone into real estate or commodity trading, or I would have become the professional painter my mother wanted me to be.”

This jibes with my own experience. I, too, know a good many successful innovators and entrepreneurs. Not one of them has a “propensity for risk-taking”.

The popular picture of innovators- half pop-psychology, half Hollywood- makes them look like a a cross between Superman and the Knights of the Round Table. Alas, most of them in real life are unromantic figures, and much more likely to spend hours on a cash-flow projection than to dash-off looking for “risks”.

Successful innovators are conservative. They have to be. They are not “risk-focused”; they are “opportunity-focused”.

Extracted from ‘The Essential Drucker’, by Peter F. Drucker

 

 

 

2017-03-27T04:20:05+08:00March 13th, 2017|Entrepreneurship|0 Comments