HR and Recruitment perspectives of SMEs

HR and Recruitment perspectives of SMEs 

For this issue I am discerning most of my theories based on personal experiences and experiments (personal case studies) while working with SMEs, including researches from studies and articles for example LinkedIn such as Inc or CPID (UK), Sandbox Advisors or Case studies from universities, TAFEP / WSQ and journals. I will have the links of these articles as I write about certain traits or characteristics that were highlighted in articles and studies.

Why do SMEs have problems in recruitment and retention for talent?

It always makes me curious as to why SMEs have problems in recruiting and most often difficulty in retaining talent. The answer is obvious that many owners or businessmen have no knowledge about HR or simply think that it is not that difficult or not important. That is just one element in the equation. The other elements are not having a proper planning on staffing and strategic planning of talent acquisition. In other words most business people in SMEs have no knowledge of HR process and its benefits.

In some ways it can be seen when most SMEs in Singapore do not have pay slips or having problem to process one with an Excel application. Many do not have confirmation letters nor letters for promotion and so on. Neither do they have appraisals. It does not matter if you have one employee or two employees, they are still employees. 

Scenario 1

Company A director once told that there is no need for a HR in his office. The reason being that there was only three (3) employees which included the director himself. The problem arise when three (3) got to four (4) and then to five (5) and then there were many. Without a clear directive nor mission nor objective to the need of having anyone.

Furthermore by not employing more locals into the fold made it more expensive hiring foreign talent who were more of acceptable talent than exceptional talent, as the need to provide accommodation and other benefits were a major cost. There were other considerations to the preference of recruitment too.   

The recruitment process turned the need to have more comfortable mindset of having to recruit a particular group of people as diversity and fairness was not considered or considered cumbersome. Other objectives are to other interest rather than the objective to recruit in accordance to the need of core business growth seem to be the trait. That led to many discontentment within the shareholders and growth declined as the HR and business focus shifted as the company slowly ate up on previous gains and winded down.

Here is an update on MOM findings.
http://www.todayonline.com/singapore/govt-identifies-more-50-firms-too-few-sporean-professionals?fb_action_ids=10152372272012141&fb_action_types=og.likes
Although I am curious in how they got the number 50, its a good start that there is work done as there are many SMEs in Singapore.

Scenario 2

Company B conducted an interview for an Accounts cum Administrator position, the director, a nice open minded individual, claimed that they are looking for one with lots of experience and that the future of the organization is about growing. They were trying to implement the POS and the ERP and also want a website for E-Commerce. It was great to hear that a company is looking to grow (not expand BUT grow within it core business perspectives).

He shared that the company hired a IT guy for about 8 months trying to do the website including the POS and ERP system for the company. The cost was S$1.8K a month. 

A mental calculation, 8 month on the project S$1.8K just doing the website that would be a total cost of S$14.4K'. Nothing was achieved. What went wrong in this recruitment process?

Then came another director out from the blue, in the 2 hours of interview. Within minutes the second director raised doubts that the candidate can do all the work as stated in the resume. He then proposed that they will pay the candidate S$XK a month which was S$200 less than what had been advertised or agreed upon by the first director. The salary will be revised after 3 months of the probation. The two directors also emphasised that they expect loyalty with a long term employment. The candidate accepted the challenge. The directors inform the candidate that they would need the time to do a job scope and have a clear idea of what is required of the candidate. Thus they will follow up with the candidate on the next working day.

There was no news or feedback after that.

Scenario 3

About 10 years ago, Company C, conducted an interview for a IT personal in a company.The director was impressed with the candidate's certificates and determination to upgrade. But she was also skeptical of the individual as he was from a different ethnic group. After going through some personal information sharing, the director came to know that the candidate's girlfriend is of the same ethnic group as she and agreed to employ him.

As the director handed the letter of employment to the candidate, she informed that the candidate was selected mainly because, there was something that the candidate's girlfriend see in him. This was the main factor for her decision to employ the candidate.  

I think three (3) scenarios are enough although there are many more examples, these three examples or case study would determine how SMEs recruitment process work.

What was the problem of all three scenarios?
(Lets sit back and think for a moment)
In all three scenarios we know that these people have extremely intelligent business acumen. Although two of the companies wind down or scaled back during the years. They know how to bring in revenues for the company and cutting cost. But they process HR in accordance to their experience, perception, reasoning, guessing and not having HR knowledge, was a weakness that cannot be disguised.

These organizations define their knowledge of HR in terms of experience, assumptions and perceptions instead of experiments, studies and understanding. This hampers them from further growth of their company. 

The first scenario (1) the owner did not realise if the HR perspectives were in the right order and having a HR mission statement, a HR directive, HR planning, HR objectives and strategy, the company would not skew or move away from the core elements in the business. If they have hired the right people, instead of hiring too many foreign employees, having them as directors later (increasing the pay in accordance to the required EP components), restricting hiring process for the need of doing the core business which eventually and completely derailed business into winding down.

The second scenario (2) the owner had no idea that to have his store have a POS, start a ERP and E-commerce website, he had to approach a professional outsource company to have a project done within 3 months and the cost and time would have been lesser.

Top it of, the government grant that they can make use for achieving growth. They could have employed someone who knew how to procure a IT project to provide more consultation and having the aspiration of the directors of the company fulfilled.
(see my blog previous blog on "How can SMEs benefit from grants such as PIC, PIC plus schemes, CDG, IPG and WorkPro http://michaelrsmorgan.blogspot.sg/ ).

The third scenario (3) the director, not only have lack of leadership but lack of knowledge in HR process. A personal perception and ideology approach without knowledge of HR. Lack of confidence in her ability to make strategic decisions. Overall more of guess work or gut feeling and not of HR knowledge and understanding.

There are more primary concerns on SMEs HR perspectives and recruitment which takes into consideration

- wages (which is an important component to consider. The question is do they want to grow or do they want to maintain the same standards). Just as their client will pay more for quality products and good services, for quality work, the same principles play the part.

- having no idea of a job scope (please do read "Worst hiring mistake : Misrepresenting the job" http://www.inc.com/flash-steinbeiser/hiring-managers-get-your-story-straight.html )

- shareholders              > personal interest (and not business objective or strategic business growth)

                                   > No planning for diversity 

                                   > No HR strategy

                                   > No knowledge to motivate and invest in HR (cost factor)

                                   > person centric and not business centric (No long term strategy for growth)

                                   > not taking calculated risk or plan for risk aversion. 

                   

- stakeholder concern  > person centric
                                     (wants only their race/age/religion/gender. Influence decision making)

                                  > influence in recruitment as SMEs build a culture upon the
                                     perceived experience

                                  

- Culture                     > micromanagement

                                 > fear to manage growth

                                 > fear of being open to knowledge base organization as they
                                    might be replicated. 

                                 > old school of understanding the next generation of workers such as Gen Y
                                 > they believe loyalty still exist when there are many layoffs in the economy.

                                 > not able to lead and manage DIVERSITY.

- Recruitment Policies > Follow entire MOM guidelines. ( No initiatives, No creativity Not bothered)

- Unstructured HR approach

"Alot of times hiring managers aren't trained, or if they are, they don't pay attention to the training." 

said Scott Erker, Senior Vice President of Selection System at DDI and author of the report, 

KNOW MORE GUESS LESS.  

  http://blogs.wsj.com/atwork/2012/12/11/what-you-wish-the-boss-had-said-before-he-said-youre-hired/?mod=WSJ_Careers_At_Work 

What, why and how SMEs can and must improve their HR perspectives? 

Before SMEs go onto the WHAT, WHY and HOW, SMEs must first change the mind set within. Here is a link on "Singapore SMEs Need To Change The Mindset" by Jeffrey Koh from SBR.
http://sbr.com.sg/markets-investing/commentary/singapore-smes-need-change-their-mindset  

Here is the "what" to improve in SMEs HR perspective. 

Here are some initiatives and case study by SNEF. Case study on Atlas Sound Vision Pte Ltd. 

http://www.hrcapability.sg/case-studies/atlas-sound-vision-pte-ltd-5/ 

Here is the "why" to improve SMEs HR perspectives.

Why is it important to have good HR strategies and recruitment policies for SMEs business growth?

Its important for SMEs to pay more attention to HR strategy or HR itself due to the rapid transformation in business growth. The right skills, talent and the right fit is needed to proceed with business growth from one horizon to the other.

I will look into the 3 horizon of business growth which is applicable to all business  and for SMEs it is crucial.  

In order to maintain a consistent growth or sustainable growth there are 3 horizons. Most SMEs, prefer to stay in stage one or horizon 1. They have the resources for that horizon as it is a core business perspective. Which means it was the reason for them to start the business.

As time goes on, other business or competitors may rise to the 2nd horizon by improvement in their strategic involvement in HR, IT. Taking the example of scenario two, the company wanted to improve process, and set the path for further growth. Having said that it is important to align their recruitment process in attaining the right candidate as they would be involve in growth enhancement. These candidates will be involved in growth enhancement building of the company to the 2nd horizon and would be involve in preparation for the 3rd horizon of growth.

As the business grows anticipation of growth (planning) by having the right talent with the ability to plan and forecast process, things will further improve as in the case of Atlas Sound Vision Pte Ltd ( See the SNEF link above ). This growth is a cycle, as environment changes and business innovation changes process will change and need of specific talent would be required.

Studies on SMEs in Singapore. The CIPD (UK) have done a study on Singapore SMEs which includes case studies of Atlas Sound Vision Pte Ltd, Home Fix DIY, Jason Marine and Mothercare Singapore 

(please refer to the link. The study is 85 page long so please do make time to read it. https://www.cipd.co.uk/binaries/6185%20SOP%20Singapore%20SME%20(WEB).pdf)  

And here is the "how" to improve SMEs HR perspectives.

There are many avenues for SMEs to take or make. Get your employees trained on HR perspectives or get yourself as employers to gain the knowledge first hand. There are courses for employers by SNEF and for the employees there are WSQ courses to enhance their value and gain more knowledge.

For employers :
http://www.sgemployers.com/
and
http://www.wda.gov.sg/content/wdawebsite/L102-ForEmployers/L208-WSQforEmployers.html

For employees (supported by WSQ/WDA) and with many grants available ( See my blog on "How can SMEs benefit from grants such as PIC, PIC plus schemes, CDG, IPG and WorkPro. http://www.michaelrsmorgan.com/#!blogger-feed/c1orn/posts?pageToken=CgkIARjAqv7j3SgQ-730wcSnsbAV ) 

The days when people look for a job is over. The future is where people look for a career. SMEs must learn to remodel their mindset, strategy, structure and stop blaming talent for their own weakness or fear. Its about time they ask what is wrong within and find the answer and strengthen their knowledge and lead rather than manage situations. When selection process is weak it is not that individual's fault nor every other employees fault, it is the selection process fault.

                SMEs must learn to find and know the answers. Know more Guess less

There have been many interviews and recruitment process that I have attended, and have even attended just to experiment and test interviews to know and understand the techniques that have been used by SMEs. Interviews are the most important process in selecting the right people. Brand of the company and culture is important for the potential candidates. Most interviews that I have attended during the 25 to 30 years have not change in the way they do it and have not made HR important for being competitive. Do it professionally and make it important in the culture of the organization.

Importance in having HR in your organization.
What must be understood is that when there is no knowledge or planning on HR in many organization. In the long run your competitors, will take the initiatives and walk all over you. Take the first step to change the mindset and perception about HR and make it as an important step of strategy for the company's growth potential.


For more help and information please click on the links :-
Singapore SME portal
http://www.singapore-sme.com/

IDA
http://www.ida.gov.sg/Business-Sectors/Small-and-Medium-Enterprises

SMF
http://www.smecentre-smf.sg/

ASME
http://www.asme.org.sg/

SPRING
http://www.spring.gov.sg/RESOURCES/Pages/sme-guides.aspx

SNEF
http://www.sgemployers.com/

Tripartite Juggling Policies
(Policies = Expectations)

This blog is about the influence of the tripartite policies on labour, wages and talent strategy of Singapore are being developed. I use the analysis of the macro scale of subjective matters ( in this case labour policies creation by tripartite as they influence businesses and employment )  to the perspective of the micro scale of HR strategy in organizations.

How my analysis are formed.
I am looking at equation of policies that undertakes or moves the massive structure of gears that combines and form a working unit or dysfunctional system (in which it may be efficient but not effective) of labour and business. I am looking at the parties as juggling balls to see the components where it can be successful and where it can be troublesome or problematic. I use the analogy of the inverted U.

To understand the perspective of policies being made we have to understand the equation or analogy from the inverted U perspectives. Having too much of good may not be good at a certain level or point as shown in the diagram.

Thus we have policies made for business and then counter policies made for labour in the macro perspectives that influences the micro perspectives of recruitment and human resource, in accordance to economic climatic change.

The shift or counter shift of policies I see it as a juggling process in the tripartite negotiation and policies change. I will call it juggling policies.

Juggling Policies 

The idea of tripartite is often associated with corporate, compromise and collaboration. In the Singapore context tripartism consitutes of three parties that are (as per MOM website http://www.mom.gov.sg/employment-practices/tripartism-in-singapore/Pages/default.aspx ), Ministry of Manpower, NTUC and SNEF.

In many ways they (the parties) may be different elements to the perspectives of a component in the equation but are all the same in the form of the main objectives and agenda of policies that juggles these elements like those balls in the picture above.

Thus the creation of tripartism guidelines (guidelines as in control) which in the example is like a ball juggling DVD which are practices to perform or guide, for the attributes of corporation, compromise and collaboration within the tripartite. Which works well depending on the agenda, objectives, priorities and focus of the interest group or groups.

And within the alliances there are other Tricoms (or sub-parties to handle individual policies) such as NWC, TAFEP, and so on. These are the smaller balls added or embedded to the three main balls.

Presently there have been two more balls (offshoots from the larger balls) as the trust towards those three main elements decreased. The two new balls that are or may be in friction for discontent are employers/ owners/ shareholders and employees (wanting more say in the structure of labour such as foreign talent or wage structure). It was a gradual break away as the juggler, moved policies from one side of an extreme scale to another. Sort of a Jeklle and Hyde policy making attributes that favours one time to a particular ball and another to the other ball. 

The discontentment towards the three balls may be (as in my perception or analysis) was due to that of the creation of policies to one extreme hoping or in their own expectation believing that the elements in the equation would pull the other extremes to the middle and balance on its own naturally. That was not the case as they needed to have other policies (not mandatory) to balance the equation in the inverted U. Thus having discontentment in terms of foreign talent policies, benefits, wages and so on.

Therefore they had policies base on CPF percentage cut for older workers and age group including status in terms of PRs etc (mandatory although discriminating with a reason that the discriminated will benefit in the long run) and grants to balance off that by having IPG and WorkPro to benefit and increase older workers value. As policies such as these are being created and the juggling of balls and their expectations (which also includes the tripartite interest as well), wage disparity and policies that are inconsistent discontentment arise. Discontentment or a psychological effect can be also shown in a way on a inverted U.




Are there three balls or just two in the tripartite?

Having said that I am still contemplating the notion as to who are the price takers and price givers? Or who juggles these balls? Who made those tripartite guidelines? Who controls those gears? If there are three balls as we all know or are there power moguls or one party that is stronger for decision making?

In another equation there could be only two balls. SNEF (employees) and NTUC (employers), while the MOM plays as the middle component and decision makers. Or is there another element that is a invisible control mechanism for juggling all three balls?

Since I would not be able to find out, I will assume that these balls are juggled by policies. How do I define policies? Expection? Interest? Needs? Wants? We could bring on the theories of Vroom, Herzberg, Maslow or Alderfer.Expectations define policy making.

More than just three balls

Having said that the balls are juggled by policies, and as I have considered that policies are expectations that have created many other balls such as the unexpected discontented balls of employees and owners / shareholders, there lies due to policies (expectations) new balls with larger expectations.

They are foreign talents, unskilled workers or labourers, ordinary residents, new citizens, EPs, SPs, WPs, further division within local employment such as young workforce, older workforce, unemployed and so on.

As new balls formed, new expectations formed, new policies were formed and needed. Change was not only rapid but was fast and furious too. As more and more balls appeared, it become difficult to juggle. As expectations increase and were embedded to the tripartite core balls, it became heavier to juggle.  

What seriously happen in the labour strategy/policies was that it tried to focus on the expectation of one or many of issues creating many other entity (in our case balls) in the process. The three core elements that called itself tripartite were unable to coordinate, cooperate, collaborate policies to satisfy the many elements that were not in line with tripartism and became entities itself. With that the environment, not experience of in the modern living standards saw strikes, riots and cracks of discontentment that began to see a whole new dynamism.

The juggling process slowed down or weighted down as policies focus on efficient means instead of being effective. Policies were lump together to make it efficient and easier for control. Talent acquisition had a new definition that moved from exceptional foreign talent to acceptable talent with ease to please one or many of the balls thus creating other balls that featured strikes and some ways even riots ( although it was blamed on other exponent ).

Policies would have to juggle many balls. It will not be sustainable if policies are made  in one size fits all or discriminating effects as it would affect and create further chaotic expectations in the long run. Change have to come in the way policies are made. It must not be made by juggling for the time of need and wants in a short run.

We must also understand that there are no good or bad ways to make policies. Having said that, we must also understand that there are better ways in making policies and not base on time and need in accordance to the business or economic climatic change in an environment or for an extreme cause.  

         

How can SMEs benefit from grants such as PIC, PIC plus Schemes, CDG, IGP and WorkPro in Singapore

How can SMEs benefit from grants such as PIC, PIC plus Schemes, CDG, IGP and WorkPro in Singapore to enhance activities in best practices and growth.

This information is not on how start-ups or SMEs acquiring funds for the business. This issue is on how SMEs can benefit from grants like PIC, PIC plus schemes, CDG, IGP and WorkPro to cover their expenses for growth of their business.

These grants should be and must be used for growth of SMEs in innovation and upgrading of employees. Companies/organizations who misuse these schemes from government will be facing dire consequences upon discovered. 

The grants we will be looking at in this blog are :-
    (i) PIC
    (ii) PIC+ schemes
    (iii) CDG
    (iv) IGP
    (v) WorkPro
 

We will talk about each grants that are available to SMEs. I hope it can help SMEs in their business.

PIC

PIC is called Productivity, Innovation and Credit Scheme. This scheme was introduced in budget 2010 and was enhanced in 2011 and 2012. The PIC scheme, which lapses in 2015, will be extended for three more years ( ie YA2016 to YA 2018) at the current support level. It was to encourage business to invest in productivity and innovation. ALL BUSINESS BENEFITS, ESPECIALLY SMEs.

There are 6 activities covered in this scheme:-

                       i.            Purchase / leasing of PIC IT Automation Equipment

                       ii.          Training of Employees

                       iii.        Acquisition of In-licensing of equipment

                      iv.         Registration of Intellectual Property

                      v.           Research & Development

                      vi.         Approve Design Project.

   - 

Under these 6 activities in the scheme there is 400% tax deduction /allowance on each of the 6 activities expenditure. SMEs can also opt for cash payout in place of tax deduction / allowances (YAs 2011 to 2015* New extension till 2018)

2011 to 2012 Combine	$800,000	800,000 x 400%	$3,200,000
2013 to 2015 Combine	$1,200.000	1,200,000 x 400%	$4,800.000
Budget 2014(NEW) 2016 to 2018 Enhancement	$1,200,000	1,200,000 x 400%	$4,800,000

PIC+ Scheme
In Budget 2014, from YA 2015 to 2018, qualifying business can enjoy 400% tax deduction / allowance up to $600,000 (previously $400,000) of their expenditure per year from each of the six qualifying activities under the PIC+ scheme. The annual expenditure cap of $600,00 may be  combine as follows :

2013 to 2015 (Combine)	$1,400,000	$5,600,000 (400% x $1,400,000)
2016 to 2018 (Combine)	$1,800,000	$7,200,000 (400% x $1,800,000

This includes for companies that are newly incorporated / registered business whose 1^st YA is YA 2012 and the expenditure cap per activity is $400,000. It can also be converted to Cash Payout Option.

Cash Payout Option

All eligible businesses can apply to convert cash payout option. Up to $100,000 of their total expenditure for each YA in all the six qualifying activities. The cash payout is to support small and growing business for their cash flow and in constrained to improve productivity or for the growth of their businesses or having constrained to innovate.

2011 and 2012 (Combine)	$200,000	30%	$60,000 (30% x $200,000)
2013 to 2015 (Cap cannot be combine)	$100,000	60%	$60,000 per YA (60% x $100,000)
2016 to 2018 (NEW) (Cap cannot be combine)	$100,000	60%	$60,000 per YA (60% x $100,000)

For SMEs to understand more of the grant and qualification of eligibility or to determine eligibility please refer to http://www.iras.gov.sg/irasHome/page04.aspx?id=15548 

To know more about how to apply for cash payout and grant please visit:http://www.iras.gov.sg/irasHome/page04.aspx?id=10572 

Capabilities Development Grant (CDG)

The capabilities Development Grant is a program aimed in helping SMEs in a form of financial assistance. This program is an enhance funding support by SPRING to support SMEs up to 70% of funding support for three (3) years until 31 March 2015.

Diagram from SPRING website

For more information on CDG please visit the website :
http://www.spring.gov.sg/Enterprise/CDG/Pages/Capability-Development-Grant.aspx#.U1aBb_mSzLk 




Inclusive Growth program IGP

 

The IGP was launched by the labour Movement in 2010 to have industry re-development, to promote inclusive growth and to ensure productivity gains to be shared with workers through higher wages.

It is a $100 million programme administered by the National Trade Union Congress e2i (Employment and Employability Institute) and partnered with government agencies, participating companies and the Labour Movement’s network of unions.

The programme's focus is on improving measurable productivity towards the lower 20% of the workforce who earns less than or equivalent  to $1400 monthly.The programme is to increase value of low wage jobs, without down-sizing the local workforce and lengthening working hours of staff. Company’s management will have to pledge to share gains with workers through the productivity improvement project prior to the approval of scheme.

For case study on the project here is a recent link for more information :- 

Yellow Submarines' Productivity Going Swimmingly 

http://www.ntucmembership.sg/wps/portal/dbssu/home/workingforu/workingforudetails?WCM_GLOBAL_CONTEXT=/content_library/ntuc/home/working+for+u/4dac082f-8736-4813-86ee-f627464e5455 

To join IGP please click on the link provided :-

http://www.ntucmembership.sg/wps/portal/dbssu/home/workingforu/workingforudetails?WCM_GLOBAL_CONTEXT=/content_library/ntuc/home/working+for+u/4dac082f-8736-4813-86ee-f627464e5455 

WorkPro

WorkPro is a scheme jointly developed by Ministry of Manpower MOM) and Singapore Workforce Development (WDA). SNEF and NTUC will manage and administer the program for 3 years from 1st of April 2013 to Mar 2016.

WorkPro aims to provide funding support for employers and employees, by helping employers improve their workplace practices and enhance work-life harmony. It is also to help employers to attract and retain back-to-work locals, as well as mature workers.

The Age Management Grant (20K per company) :-
- It requires employers to acquire necessary skills and knowledge on age management.
- The grant is paid in two (2) tranche.

Job redesign Grant (Max $300,000 per company)
- Purchases of equipment to automate certain work process.

Work Life Grant (Max $160,000 per company)
- Implementation of WLB flexible strategies.

New Hire Retention Incentive (Max $50K per company)
- To implement measure to better retain newly hired workers.

OJT training allowance
- Encourage employers to conduct OJT for newly hired back-to-work locals above 30 years of age.

To know more about these grants and initiatives there is a SUMMARY OF FUNDING SUPPORT PROVIDED BY WORKPRO. Please do take a look at how your business can benefit not only in having fund to enhance the organization culture but to encourage a culture of good practice to evolve in your policy making and structure for better growth.
http://www.mom.gov.sg/Documents/employment-practices/WorkPro%20funding%20summary.pdf

Here is a brochure on WorkPro
http://www.sgemployers.com/public/WorkPro/WorkPro-Brochure.pdf

SMEs can take these initiatives to use the grants available to have better policies and best practices and build a culture to maximize growth potential and enhance their business.

Starting a company / business - Complete blog from Part 1 to 4

Starting a company / business – Planning (Part 1 of 4)

Working for many SMEs and doing business of my own have made me realise how important planning is in starting a business. It is a managing perspective and skill requirement of starting a business.

The equation for starting a business is the same as the skill set for managing.

Planning + Organizing + Leading + Controlling 

Here I am going to write about why these four elements are important with real life experience of incidences and issues.

Managing a business is not about when you start a business. Managing business starts from the time you even begin to start your business. An awful lot of people think that managing a business begins when you have an office and people working for you.

Or are operational process of purchasing and selling. In reality, that is not how it works.

Managing your business starts the first time when you get all the facts, figures, research, and then writing your business plan. Many businesses do not have a Business Plan.

Without a business plan they do not have a business Mission Statement and Strategy. Many of them do not figure where they would position their business.

These are extremely important elements in starting a business.

My experience began with a mobile disco business with a friend (partner). We were young and had no experience. We thought only about enjoying and making money. We didn’t have a business plan and both of us were not highly educated (I had only Secondary One and my partner had O levels). We didn’t have anyone to mentor us and we learn from assumptions and information.

The mobile disco business had many competitors and in the 80’s it was a business that was like the Bubble Tea Craze later in 2000s. The equation was there were not too many mobile disco set-up but there were lots of parties and functions. From birthday parties to D&D and school functions even army battalion functions. The 80’s was a time for parties.

To have more guidance, you could have a check list such as the one that EnterpriseOne a Singapore government institution link http://m.enterpriseone.gov.sg/en/Business%20Stages/Plan/Business%20Start-Up%20Checklist.aspx

In any case without a business plan or MOU or agreement our partnership deteriorated. Overall, a good market prospect but with a lack of direction without a Business Plan, things can be chaotic.

The drawing board business litmus paper strategy
Today, I do it very differently. I take a drawing board of papers and draw a circle in the middle. I would write all the various ideas from me and my colleague and clients on the white paper. All the ideas that comes to the mind. It does not matter if it looks ridiculous. I just write it in the white paper. From there, we connect all the bubbles of ideas to the main core business purpose. Those ideas that are not related we cancel it later. I call it the drawing board business litmus paper. If the basic necessary requirements are not feasible, we redo the planning stage and if it is not feasible we stopped the planning process and re-draw the plan again.  

Business Plan

What is a business Plan?
The best was described by Entrepreneur : ttp://www.entrepreneur.com/article/83818.

1. It sets specific objectives for entrepreneurs or manager.

2. It shares your strategy, priorities and specific action points with your partner and even your future employees have them understand the company culture and objectives.

3. It helps you would have to do Financial Planning in advance and allocate funds for your fix cost, such as rentals, wages, assets leasing or purchase and so on.

4. Develops and new business alliance, having suppliers and clients understand your business, dealing with professionals for examples like banks, business institutions, investors and even government aid.

5. Helps you understand your own business strength by evaluating your resources and knowing your strength.

6. Helps you to analyse the future development for growth.

7. It helps you map the future.

8. Support growth.

9. At times secure funding can be bank overdraft and bank loans, which may take two years of business existence. Other funding can be available for new start-ups, such as in the form of family loan or business angels.

10. It also helps manage cash flow. Monthly cash flow allocation.

11. It also plans and support strategic exit.

To know more about Business Plans you could read ‘Entrepreneurship and small business’ by David Deakins and Mark Freel.

My experience in doing a Mini Mart business in Jurong was based on a Business Plan and was successful (you could view some pictures of it in my website). The other element was the experience in working as a salesperson in Yaohan Supermarket.

The most important planning process in the Business Plan is the Financial Planning. You could read more about the Business Financial Planning from books. It all depends on your criteria to know which are important fixed expenditure and forecast revenue.

Starting a company – Conclusion Planning an equation of learning and to gain more knowledge.

“There is only one good, knowledge, and one evil, ignorance.” 
― Socrates 

Before we move on to organizing we shall take a look at the purpose of planning. The learning and information gathering stage in fact. 

Planning is the part to gain the knowledge of your business or company set up. It is the most important part in starting a company or business. I use to have one or two pessimistic individuals and ask them questions on the business and company I would like to start. As I am an opportunist, it would be better to have someone who is pessimistic about the business, who is full of doubts and to have the answers to those pessimistic statements or questions.

In these discussions we could use a “problem base learning” or PBL method in learning how to solve the problems of the new business or company setup. It develops critical thinking and creative skill in solving the pessimistic statements and questions. Improves problem solving and motivates undertaking the project.
Before I went into the mini mart business I talked to the owners whose shops I frequent and made friends. This helped me to get first-hand knowledge of the business from the ground zero perspective. It is like a situated Learning theory whereby I get to socially interact with the players of the business. Although we may be competitors we are not direct competitor as the business is in a different area or town. We become involve with the way the business community of mini mart are being manage.

At the planning stage we should have the type of company setup, name of the company, all the information from the research that would be in the Business Plan. If you have been following the steps, from the ‘Business Start-Up Checklist, we would be in No 7 of the EnterpriseOne, Singapore government institution link guide. 

http://m.enterpriseone.gov.sg/en/Business%20Stages/Plan/Business%20Start-Up%20Checklist.aspx 

Now that we understand the reason and purpose for planning we can go on to the next stage, ‘Register Your Business’ or organising as our title for Part 2 of 4.

Starting a company – Organizing (Part 2 of 4)

After planning and writing your Business Plan, you would need to start organizing the theoretical concepts in the Business Plan to action plan but before that, we have to choose the right business structure. You also have to find the name for your business and begin to register your business.

There are many secretarial companies that handle these areas for start-ups. We will talk one of them at the end of Part 2 of 4. In this part we would be looking at (i) Organizing all your plans, (ii) Steps or checklist and formation of a Singapore Company (iii) choose the right business structures, and (iv) Registering your business.   

By now you would have got the Business Plan, the name of the company, financial planning of the business needs, objectives and so on so forth. We now need to have them organized in a form of task. Let’s have them in a check list format.

- Choose the right business structure

- Having your business / company registered in ACRA. Remember by local Singapore law, if you are a foreigner, you would need to appoint a registration agent. A company secretariat can come in handy for this too.

- Getting a company secretary

- Get a registered address

- Open a banking account

- If your expected turnover is a million dollars, registration of GST is compulsory

- Obtain any business licenses and permits

- Find a office space

Choosing the right business structure.

There are certain types of structures in business. These can be found in the ACRA websites too. Here is a summary of the type of structures.

- Sole Proprietorship,

- Partnership,

- Companies,

- Limited Liabilities Partnership (LLP)

- Limited Partnership

- Public Accountant

http://www.acra.gov.sg/SoleProprietorship_Partnership/Know+More+About+Sole-Proprietorship+Partnership.htm

You could choose anyone of these structures in accordance to your business. Most of the details can be found in ACRA websites. You could do it on your own if you are a Singaporean or engage a secretariat service if you are a foreigner.

Having your business / company registered in ACRA

Once the business structure is done the next step would be to register your company in ACRA. The Accounting and Corporate Regulatory Authority (ACRA) is the national regulator of business entities and public accountants in Singapore. It also plays the role of a facilitator for the development of business entities and the public accountancy profession.

Its Mission is to provide a responsive and trusted regulatory environment for business. It was formed as a statutory board on 1 April 2004.

Getting a company secretary

If you need support in registering and would want to acquire a secretariat there are many available. Some have audit service too or may recommend you an audit firm. The price range depends on many factors and the services you require.

Get a registered address

All Singapore registered business or companies MUST have a registered address. P.O. Box address, are not allowed. Some secretariats do provide a registered address for a fee. 

Open a banking account

After registering you company in ACRA you are advice to open a company bank account. It would be good if you could purchase your accounting software with a payroll function that would print the employee salaries as well. It is compulsory to have printed employee salaries made mandatory by the Ministry of Manpower (MOM)

Registration of GST

If your business or company expected turnover is a million dollar or more, there would be a need to register your company for GST with the Inland Revenue Authority (IRA). It can be done online.

Licences and permits

If your company deals with liquors, or chemicals and such there are requirements to apply for license and permits. There are three types of licenses.

(i)                Compulsory License

(ii)             Occupational License

(iii)           Business Activities

All these licenses can be obtained from ACRA.

Finding a office

After all these task of have been done, it’s time to have a place to start business.

Starting a company – Leading (Part 3 of 4)

“Management is doing things right; leadership is doing the right things.” 

― Peter F. Drucker, Essential Drucker: Management, the Individual and Society

There is a difference between leading and managing. In this stage we will talk about leading which is doing the right things. The next one or stage, when we come to control it is more about managing, which is doing things right.

This is the stage where the new start-up will have few people working handling and many task. It is also a stage where budget gets really tight that sometimes due to opportunity cost there are things that would need to be compromised. 

From the type of furniture and fittings to the type of paper quality is determine and defined in this stage. Even defining the type of employees you want to have to build and shape the culture of the company. Defining the type of HR policies the company would follow or implement. At times not getting the most skilful and knowledgeable candidate due to financial obligation and running in a tight budget. 

The reason for this stage to be a leading stage is because most of the process and operations are in its infancy. It is also your beginning and starting stage. The model may have worked in some other organisation or business but not in the current business. Due to many factors it may not run smoothly. Accounting software may be inadequate to do some task, like for example, creating the type of debit notes or formats or the payroll software does not have CPF calculated automatically and must be done manually. Even work process may not be in sequence. Therefore, one must lead with an open mind for change if the equation or the elements in the equation such as company policies, culture, processors or operations may not be successful as planned and need to evolve and change.

This is the stage where entrepreneurs would put their operations live and all those test and plans may not work in real time. And in this teething period, one must be able to lead the team in the right direction by doing the things right. Understand the employees, hard work and the need to change when processors do not succeed.

Each department may have some form of difficulty as it is the start. Experiences in working for other organizations, can have successful operational process in other environment or culture but may not work in this new company. Experience staff may feel disappointed. As many other emotional influence may take place. Therefore, as an owner or entrepreneur, one must lead.

Most times LISTENING to those on the ground and those hands on with the task or work would be ideal. It is the time where the company may evolve and make changes in accordance and make small allowance and sacrifice for time.

There are different style and approaches when it comes to get a job or task done.

(i)                Telling – when people or employees are reluctant to do the job or lack skills

(ii)             Delegating – when employees are willing to get the job done and have the skills and knowledge.

(iii)           Participating – when employees are reluctant but can contribute and have the skills to get the job done but need support.

(iv)           Selling – when employees are willing but not confident that the process would work and need support. 

The diagram below shows the gears of leadership and management to integrate.

When the process, operations and function have found the right balance, the management will control processors from then on.

Starting a company – Controlling (Part 4 of 4)

This is when the company have fixed all the crisis and chaotic issues in the beginning (Leading stage). Some entrepreneurs may be good at leading and are better leaders but may not necessarily mean they would be better managers and therefore may need a manager to manage and control the day to day issues of the company. Some may be good at managing day to day issues.

This is the last stage of the start-up. This is the stage where the company is up and running. It may take a few months or even a year. 

The daily process of regulatory controls, financial controls, operational controls and HR controls will be now managed on a regular basis and any troubling issues in processors will not be many as most of the task would have change to form a smoother process into a Standing Operating Procedure.  

These Standard Operating Procedures (SOPs) would benefit the company/business:-

(i)                establishing performance standards

(ii)             reporting and monitoring performance

(iii)           identifying performance and managing standards

(iv)           controlling standards from being deviated

(v)     to uphold best practice and standards

We have come to the end of the steps of Starting a company. Remember the basic elements in the equation are Planning, Organizing, Leading and Control.

“Victorious warriors win first and the go to war, while defeated warriors get to war first and then seek to win.” - SunTze