I have conducted multiple Business seminars, workshops, training, coaching, etc... for the past 3 years with thousands of attendees. I am especially drawn to aspiring entrepreneurs who either about to start a business or already into the business or even about to "exit" from the business.
Out of these events, I often asked these few questions and gotten the following answers in general:
1) How much you invested and when is your return on investment (ROI)?
If you invested S$200k and plan to get back within 24 months, your business will need to generate pure profit of S$8.5k a month. This is not rocket science. Unless you get back all the monies you invested, only then, the next dollar is your returns. How much revenue is needed to achieve that? I will use a generic operation ratio for reference.
Out of these events, I often asked these few questions and gotten the following answers in general:
1) How much you invested and when is your return on investment (ROI)?
- S$200,000 with ROI 2-3 years (24-36 months)
- S$50,000 with ROI 2-2.5 years (18-24 months)
- continuously providing good services or products <<< most common answer >>>>
- do more marketing
- get more sales
- get investors
If you invested S$200k and plan to get back within 24 months, your business will need to generate pure profit of S$8.5k a month. This is not rocket science. Unless you get back all the monies you invested, only then, the next dollar is your returns. How much revenue is needed to achieve that? I will use a generic operation ratio for reference.
Assuming that you are operating a retail shop
A simplified breakdown of cost could be:
- Rental -15%
- Manpower -20%
- Cost of goods -30%
- Cost of operations - 10%
- Maintenance and Utilities - 5%
- Miscellaneous - 15%
- Gross profit 5%
This means that if your sales is S$200k, your gross Profit is S$10k. Now. This is a problem. A lot of starting entrepreneurs "accepted" the fact that it is ok for business to be slow, lower than expected sales volume or even losses for up to 6 months. To me, having this mindset is already very wrong, let alone sinking into reality of really making a lost. Imagine this, if the first 6 months are losing monthly or barely enough to make profit, your ROI will be lengthened. Remember, the real ROI starts when you start making profit. Henceforth, after losing 6 months, you need to add back 6 months into your targeted length of ROI. Wait, you also need to add on the losses you accumulated in these months.
Based on the assumption, originally, your ROI for a $200k investment will breakeven on the 20th month. Provided that you start earning steadily from the 6th month onwards for the next 20 months, only then you can get back your investment between 26th to 30th month, leaving only a few months to get REAL PROFIT (most tenure is about 3 years before next renewal).
Even if you can steadily see the flow of business and profits, BUT, 6 - 10 months of profits will bring you only S$60k-S$100k and divided by 3 years, you make between S$20k - S$33k a year. AND thats provided everything is smooth sailing. There is still an element of risk.
Are you better off working for people?
According to a recent statistic from Ministry of Manpower (MOM), current average income for mid-level employee is S$3770 (S$45k per year) see here. A mid-level employee already earn more money than you.
Do not despair. Not all businesses share the same statistic as illustrated here. Some new start-up like "Grabtaxi" grew and within 2 years, valued between US$750M to US$1.5B.
I will be blogging on Question 2 & 3 on my next post. Meanwhile, subscribe to my blog for new updates and SHARE with your friends whom may find it useful.
Watch out for next post.
---------------------------------------------------------------------------------------
About the Author
This multitasking, talented entrepreneur truly live his "creator" vision. Under some kind coincidence, a coffee spark went off in his soul. Mr. Ang brought together individuals who together with his divine business acumen birthed forth COFFEE:NOWHERE. Besides being featured on national papers, and live interviews, his passion was highly commended with a Merit Award by Shell LiveWire as an outstanding young Entrepreneur in 2007 and also multiple national awards.
A true believer of a journey of excellence in everything he touches, within months of birthright, Mr. Ang led COFFEE:NOWHERE to 4 countries and 7 outlets in Asia. This includes Singapore, Malaysia, Vietnam and Indonesia.
Based on the assumption, originally, your ROI for a $200k investment will breakeven on the 20th month. Provided that you start earning steadily from the 6th month onwards for the next 20 months, only then you can get back your investment between 26th to 30th month, leaving only a few months to get REAL PROFIT (most tenure is about 3 years before next renewal).
Even if you can steadily see the flow of business and profits, BUT, 6 - 10 months of profits will bring you only S$60k-S$100k and divided by 3 years, you make between S$20k - S$33k a year. AND thats provided everything is smooth sailing. There is still an element of risk.
Are you better off working for people?
According to a recent statistic from Ministry of Manpower (MOM), current average income for mid-level employee is S$3770 (S$45k per year) see here. A mid-level employee already earn more money than you.
Do not despair. Not all businesses share the same statistic as illustrated here. Some new start-up like "Grabtaxi" grew and within 2 years, valued between US$750M to US$1.5B.
I will be blogging on Question 2 & 3 on my next post. Meanwhile, subscribe to my blog for new updates and SHARE with your friends whom may find it useful.
that puts its valuation at between US$750 million and US$1.25 billion. And it took the start-up just two years to get here. - See more at: http://business.asiaone.com/news/grabtaxi-blazes-path-local-start-ups#sthash.5T5FQgVY.dpuf
Watch out for next post.
---------------------------------------------------------------------------------------
About the Author
Welson is a serial entrepreneur and has an impressive track record of running and building businesses from scratch (most of the time not knowing much about the industries and businesses) and growing it exponentially. He graduated from Edith Cowan University with a Bachelor of Business, Double Major in Marketing & E-commerce.
Welson came from a humble family background, started working at 13 years old and experienced near bankruptcy. He started his first business "Expressprint" at 27 with only $2000 and a mountain of debts. 10 years later, Expressprint grew to become the most sought after licensing brand in Singapore with more than 500 licensees. In fact, he now runs a diversify portfolio of businesses such printing, mobile apps, car wash, carpentry, laundry, training, gifts, packaging, F & B, etc... a whopping 33 businesses in total with an 8-digit annual revenue.
This multitasking, talented entrepreneur truly live his "creator" vision. Under some kind coincidence, a coffee spark went off in his soul. Mr. Ang brought together individuals who together with his divine business acumen birthed forth COFFEE:NOWHERE. Besides being featured on national papers, and live interviews, his passion was highly commended with a Merit Award by Shell LiveWire as an outstanding young Entrepreneur in 2007 and also multiple national awards.
A true believer of a journey of excellence in everything he touches, within months of birthright, Mr. Ang led COFFEE:NOWHERE to 4 countries and 7 outlets in Asia. This includes Singapore, Malaysia, Vietnam and Indonesia.
Awards & Accolades
Featured in
This post first appeared on O P P O R T U N I T Y | By | Welson Ang, please read the originial post: here
