This article first appeared in Forum, The Edge Malaysia Weekly on July 13, 2020 - July 19, 2020
There have been many news reports highlighting the plight of small and medium enterprises (SMEs) because of the Covid-19 crisis. Stories of businesses closing down, people losing their jobs, companies cutting pay and the shrinking economy will make many run for shelter and pick up every penny on the floor, figuratively speaking. This reflects the current uneasy sentiment.
There will be a certain group, however, that will look at entrepreneurial opportunities or at starting a business — a positive spirit to be applauded. This may include people who are still gainfully employed, those affected by pay cuts or retrenchment, others looking for a reason to venture out as well as some who feel really charged up to go.
To put things into perspective, Google Trends (trends.google.com) indicates that recent queries on “starting a business” spiked to the highest level since it started collecting such statistics in 2004. Surprising? Not at all. The reasons could be manifold, including a “push” factor, the need to do so for survival and, perhaps, for alternative income. Chances are that the world may see a wave of new start-ups over the short to medium term.
My current employment responsibilities include valuable opportunities to meet many business owners, including those involved in start-ups. Discussions with them inevitably touch on the core topics, including of why, what, how and when they started or took over the helm of their businesses. Most of them started with very little, grew over the years and learned a lot during recessions. Interestingly, a common element of all these entrepreneurial journeys is that there will never be a perfect time to start a business.
Timing, or the “when” part, remains relevant but is not, unexpectedly, the most critical factor when it comes to starting a business. On the contrary, many of them speak passionately about the “why” part as equally, if not more, crucial. Most ventures invariably come with, from the entrepreneur’s point of view, an innovative “how”, an acceptable “when” and a realistic “what” in place. To put it all into context:
• Why — Purpose and motivation to start my business;
• What — Business I am going into;
• How — Means and avenues to get my business started; and
• When — Timing to start my business.
In the current challenging Covid-19 environment, if the idea of becoming an entrepreneur appeals strongly to you, it is natural that “not now” is likely to be the first thought. The “when” part of the equation may effectively become the sole determinant. No one will doubt the importance of timing, but the how, why and what parts of the formula are vital as well. Not considering these core elements, among others, before coming to a decision may be unfair and a source of regret.
The proverb “In every crisis, there is an opportunity” has never been disputed. The majority will be discouraged because the world is in, or going into, a recession and we do not know how long or severe it may be.
A recession comes with its own characteristics — largely negative but some positives as well. The negatives are fairly obvious, including the fact that most of us will not want to be in one. As a starting point of any entrepreneurial journey, however, let us realise that some negatives may have a “positive” spin.
The main ones include:
• Favourable regulatory policies for economic recovery purposes not seen during good times;
• Additional public and private funding for start-ups to support the employment market;
• Ample statutory grants, tax rebates and investment incentives to encourage business sustainability;
• Availability of more talents arising from unfortunate layoffs;
• Generally lower set-up costs when sourcing for materials and premises to kick-start because of competition for business;
• More options to take over or buy out existing businesses when others intend to exit;
• Leaner operations typical of start-ups are an advantage in manoeuvring despite tough times; and
• Ready resources meant for start-ups are generally underutilised during better times.
In short, a crisis is a difficult time, but it is not entirely doom and gloom. The Covid-19 pandemic has created some initial winners who were able to successfully pivot their businesses. With proper planning and committed execution, the “positives” above can be supporting pillars for entrepreneurs-to-be to take a leap of faith and possibly play a part in the overall economic recovery efforts.
Entrepreneurship is about taking risks, and it is obviously different from being a salaried employee. Weighing the pros and cons will definitely be part of the thought process. Some entrepreneurs may start their voyage on a modest scale or part-time while others may have the support of their current employers as seed investors, suppliers and customers.
There has been much research and stories about successful businesses that started during past recessions. Unfortunately, many went under as well during times of crisis. There are also numerous articles and write-ups on a wide range of subjects with regard to starting a business during a crisis, as well as on the concept of “timing is almost everything, but not everything”.
In essence, the likelihood of a start-up being born, even during a crisis, making it through, developing into a unicorn, or growing into a sought-after brand really depends on the entrepreneur’s understanding, appreciation and execution of the why, what, how and when.
A crisis per se is not the sole determinant — although most will view it negatively — of entrepreneurship opportunity, but one of many factors to be considered collectively.
The sweet taste of success never comes easy and budding entrepreneurs, understandably, face a struggle in coming to a decision. If the thought of becoming an entrepreneur crosses your mind, however, perhaps you should not consider starting the process with “stop” in mind. Instead, begin by researching and seeking advice on the why, what, how as well as when.
Putting all these considerations logically into a business plan will be the next step. Assess all factors fairly, and if you resolve to firmly move forward, then committing to the execution of the plan will be the last step before joining the world of entrepreneurship.
Lim Kee Yeong is director of SME banking at Affin Bank Bhd
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