Taiwan

Would you gamble? Would you start a business?

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This follows an interesting discussion we’ve been having on Forumosa about starting businesses.

Of course, though, I wouldn’t equate gambling with starting a business. Why? Apart from the odds issue, there are far more factors that you can control when you start a business. If you gamble, esp. in a casino, the odds are absolutely stacked against you: the house controls the cards, the house controls the dealers, the house controls who plays, the house monitors ‘cheating’ strategies (and bans anything that is mildly profitable, even ‘card counting’…)…

Gambling is for suckers

Basically, if you gamble, you’re a sucker. But in business, you actually have a good chance of ‘being successful’ and keeping your original stake at the very least. However, there are many reasons a business ‘fails’ including the fact that the owners just get tired or sell out to others or close up one day or die… None of these in particular suggests that the business was an unprofitable one.

It’s in the blood, or not

It’s likely that as Brits, we tend to shy away from doing business, worry about the undue risks, plan until there’s no breath left to actually run the business, borrow lots of money to go into business (IMHO, a huge mistake and a massive risk, but common in the UK), are unusually PESSIMISTIC about doing business, and (even now) still ‘look down’ on entrepreneurs as a breed.

Keep your ass covered

When we started our school, we didn’t worry so much about the risks (and there are many), we just wanted to try it ourselves after seeing so many people screw up royally (is that an adverb?)… we didn’t overly plan except that we knew we could pay the rent on our school for six months without ANY income at all even after setting up the school, we paid ourselves no salary either, we didn’t borrow any money to invest (a huge relief), and we were neither pessimistic nor optimistic about our chances, … Did we have a concrete business plan? No, we didn’t. Did we need one? Not really, we already knew the business in many respects.

Manage the risks, not the luck

IMO, most unsuccessful business owners here fail to manage the basic risks first, don’t make these kind of decisions, and wince at the first hurdles. How? They fail to secure a source of personal income (that covers life expenses, not including their business) first; they overly underestimate the expense of starting up and running for months with little income preferring to spend as much as possible in the first few weeks, and reserving nothing or having nothing to draw on afterwards; aren’t willing to pay themselves a pittance to get things started because they (likely) see a salary for themselves as ‘deserved’; don’t really market themselves well enough except through discounts (a prime strategy) that does NOT work well here… attracts the wrong customers, diverts attention, undermines your profit structure (esp. if you haven’t done your work properly); and so on…

While many seem to believe luck plays a role in starting a business, I like to think of it as luck comes to those who are ready; if you’re not ready, then it’s wasted largely.

Working Hard Not Smart

Usually, restaurants are cheaper to open, require less capital to start up, most believe they ‘can’ cook, and reasons like that… but restaurants are bloody hard work, esp. if you focus on doing a lot of meals or full-day service. My sis-in-law had a restaurant for six months or so, I remember working in it, but they really didn’t know how to run it optimally. Instead they opened at 11:30 and ran it until 11:30pm every day. So they nearly killed themselves doing it, too.

Focus, focus, focus

While I had no access to the financials, it didn’t make much sense to work so long, esp. as lunch hours were always the most busy. I would have preferred to have very busy lunches where people were served quickly, afternoon teas, and close up at 5pm each day. Instead they did dinners, bar hours, etc… and I’m not sure why they thought it was necessary. There is the belief in business here: more is better; you’ll see it everywhere, too.

Cram schools here open multiple classes including math/art, Chinese, Science … instead of focusing on one thing. Restaurants try to serve all kinds of food (I know restaurants that sell rice, noodles and spaghetti!) to all customers at all times. Stores sell everything… there is a lack of focus in many businesses here. Market stalls sell fresh pork and underwear… it’s quite amazing how people relate two disparate businesses.

In the end,…

In reality, it’s the ones who take their money (or someone else’s) and actually try to do something with it in the creation of their SMB, they will learn the experience of being IN business. Most serious entrepreneurs are also SERIAL entrepreneurs, in other words, they will try and try again till they get it right, even if that means they run 5 or 10 businesses in their lives…

No guts, no glory

And I’m sorry to say, no matter what MBA you take, what business course you attend, what class you take, no matter what you read or study, it won’t make a jot of difference unless you actually try to set up and/or run a real business. Fundamentally, Entrepreneurship is a practical skill; so whenever I see academics on TV lecturing on business fundamentals, I really have to wonder what they bring to the table when they themselves don’t bear any risk at all. It’s that willingness to bear the risk that illuminates who will be entrepreneurs and who won’t. That’s what separates entrepreneurs from salaried workers, … the knowledge that next month, if there’s no profit, you won’t take a home salary.

Hope the ramble influences you to think about starting your own business. Drop your comments here.

Of Business, the Web 2.0 and Taiwan: Does it all fit together at Nozkidz.com?

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Recently, Adam Rahman from Singapore wrote and asked if he could interview me. Of course, I was flattered. Adam is a student at the Singapore Management University. It turns out he was interested in the growth of social media in the Taiwan and its applications to businesses. I only hope that I don’t disappoint him with my answers. Anyway, here goes.

"I hope the answers are helpful, though some are not obviously relevant. My school site is http://nozkidz.com (be sure to have Chinese enabled on your PC/Mac when you view it, otherwise you won’t see much!)

– What was the reason for deciding on blogging about your personal experiences in business and financial ventures?

Partly context, partly opportunity, partly interest. I had been blogging for a while on my main blog (investorblogger.com) when I found that it was quite an interesting and challenging task. So in 2006, I moved my blog to a new location, and refounded InvestorBlogger as a more focused blog. By then, I was noticing things that I found interesting and began to develop more of a content. The opportunity came in the form of PayPerPost which started paying bloggers for certain posts, and I found the spur to write was the need to have solid content between paid posts, and for paid posts. That was when I really started to see improvements in my blogging. Of course, in 2006, I had been a co-business owner for quite some time, and a very poor investor for a decade, so these were contributing factors. There was no overarching reason or motivation. Life is not that simple.

– What has the response to your blog been like? Is there a demographic trend in your readership?

The blog response has been lukewarm at best: why? Mostly because I failed to establish the blog in a clear and obvious niche market, I really didn’t know anything about SEO until recently, and I didn’t track my stats properly for the longest time. So in fact, I was just doing it for the writing and didn’t care that much about my readership. In that sense, it was very personal.

– You mentioned that the blog consists of three "nodes" of interest: blogging, money and technology. Do you view your blog as an important communication platform for aspiring business people?

No. Because I’m not teaching a course in how to be a business person or investor or blogger. It isn’t organized that way. Though perhaps it could be.

– What is the social media scene like in Taiwan? What role does it play for individuals who wish to invest in Taiwanese businesses?

Social Media is recently becoming very popular in Taiwan, though there are some weird ideas about its role. FaceBook just took off because of the games, though it had been gaining ground for quite a while. Twitter is a non-event here, largely (thank god). But the bigger 2.0 properties seem to be Plurk (which I never use). I would say: for average individuals, it plays almost no role at all. Why? Because technology here is largely dependent on which age group you are in contact with: with over 50’s faxes are all the rage; with over 40’s it’s email; with over 30’s it’s FaceBook; with over 20’s it’s the mobile Internet…. With under 20’s it’s all gaming… on PC, XBox, PSP, etc. But if you are wishing to invest in businesses here, unless it’s Technology, you’ll need serious face time: to understand who you can do business with, who you should avoid, and the cultural mores.

– You mentioned in one of your posts that you were utilizing a dual strategy of promotion (on and offline content) for the Dickson English House. What are some of the challenges faced with both traditional and online forms of communication? Have you considered using other social media platforms such as wretch.cc or Facebook? Why or why not?

We have a FaceBook and Wretch Page as well as a couple of others, though that was mostly for SEO reasons. The sites are largely undeveloped compared to the main blog. Simply because I lack the written fluency to write for them, and the other people in the business are already too busy or too uninformed to do it. Since improving the SEO of our main site, though, we’ve noticed a big jump in rankings on Yahoo! TW and on Google as we targeted about a dozen keywords and now rank on page 1 for most of them. We also experimented with Hubpages, Squidoo, WordPress.com, EzineArticles etc. but frankly speaking building SEO placement and traffic is relatively more difficult (fewer options) in Taiwan and much more about on page optimization than anyone admits than external linking (that goes for Google, too!). Offline, options are limited for small businesses like ours: ads on radio/tv – too expensive, too ineffective; newspaper – irrelevant; AdWords – ineffective so far; posters, flyers and word of mouth are the most successful means for reaching customers; and our website is helping increase our profile but only in our own narrow niche "English Schools in Tamsui".

– People are usually critical about corporate blogging and other affiliated online content. Do you think this is so in Taiwan? If yes, how can businesses go around this?

I’m not sure about that. But perhaps because of my own personal opinions, we do not dress up our site or our students particularly when we feature their speeches (Youtube) or writing on the website. I try to portray as accurately as possible what our students can (and can’t) do… I leave it to our competitors to lie and paint rosy pictures (like Hess Schools) that delude customers. So our videos are largely what happened (rarely cut or redone), and never retouched. If I had the resources, perhaps I would do more with the postings/content, but I think our website is attractive because it’s ‘au naturel’, as it were. If potential customers come looking for rosy visions or impossible dreams (for their kids), then they are not our customer type. They don’t get what we’re about. Luckily, we see few such customers, and we chase them away in the end.

– What should businesses know before they engage the social media in Taiwan?

Perhaps the only thing: if you want to build a static site, then you shouldn’t use any social media. Why? Social media requires that there are people and resources available to monitor and run the operation. Most Taiwanese sites (ESL types) tend to focus on static type sites, and are much more formal. We chose to set up a blog because it made thing easier to operate and manage. Then it turned out that we were able to capitalize on that in a number of way: riding the 2.0 trend, creating a more vibrant site, and that it was something we cared about, not just a way to attract more students. But it’s that commitment to making the site uptodate and relevant to what we’re doing that is needed. Too often, people start 2.0 type sites and then months go by and nothing is updated at all. It just looks stale. Static sites don’t look stale by comparison.

If I may, I’d like to share some of my answers with my readers, too. Hope that helps.

Kenneth"

Cash vs. Credit Cards: Cash is nearly always better value for customers

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InvestorBlogger says in response to a post on Bargaineering about Credit Cards vs. Cash.

We run a business here in Taiwan, and we specifically don’t take credit cards in any form. Why? Our best prices are for cash purchases, and that’s what we give our customers.

While we may win a few extra dollars from additional transactions, having that extra middleman just isn’t worth the hassle of letting someone else look after our money.

With installation fees, monthly terminal fees, fees on each transaction, and numerous penalty fees that may apply, plus the risk of the credit card company NOT paying up promptly due to chargebacks, we could actually end up out of pocket for transactions that, cash-wise, would already have been ‘settled’.

The upshot is that, for the foreseeable future, we are not likely to take credit cards, in any shape or form. If we were to, we’d likely have to increase our prices for ALL of our customers by at least 5% to cover most costs. This is not an unusual choice in many more cash-based economies, such as Taiwan’s but in the UK/USA it would be quite an unusual position for a retailer to take.

I really don’t understand why consumers think credit card spending is better. It’s not. It’s not better for you, it’s not better for me. And it’s not generally better for society. Do you know any businesses that specifically reject credit cards for purchases of goods and services? What reasons did they give?