Many Singaporeans chase after a degree. The government encourages us to upgrade our education and skills if we lost our job. Many Singaporeans heed the call and have taken this step. However, the fact remains that it is not a given that their paycheck will rise if a degree is gotten.
For example, management of people in sales, customer service will not bother if the person has got a degree or diploma or ITE certificate. All the company care is how much sales is done, how satisfied are the customers, how many customers are served today. For those in administration, operations, a new degree may mean additional responsibilities or new posting.
Thus, it will be wise that working Singaporean do not equate a newly gotten degree with a pay rise.
Thursday, November 29, 2012
Wednesday, November 28, 2012
Expansion of retail business
Today, I read the newspaper about a young company called “Twelve Cupcakes”. It is expanding rapidly. Within a year, the number of outlets rose from 4 to 8. It is encouraging to know that young entrepreneurs are doing well.
My concern is with this type of rapid expansion, the operating cash flow of the business may be negative as the business has to pay for rental deposit (3-6 months for a retail business), machinery purchase, staff training, etc…. in this situation, company need fresh funds from the business owners or bank loans. If the business owners are not careful, they may expand too fast and then run into countless problems later on. Issues like food quality is not maintained, staff are not well-trained, etc are problems associated with rapid expansion.
MacDonalds and Kentucky Fried Chicken took 30-40 years to achieve the result they had today. Twelve Cupcakes management would be wise to learn the lesson of MacDonalds.
My concern is with this type of rapid expansion, the operating cash flow of the business may be negative as the business has to pay for rental deposit (3-6 months for a retail business), machinery purchase, staff training, etc…. in this situation, company need fresh funds from the business owners or bank loans. If the business owners are not careful, they may expand too fast and then run into countless problems later on. Issues like food quality is not maintained, staff are not well-trained, etc are problems associated with rapid expansion.
MacDonalds and Kentucky Fried Chicken took 30-40 years to achieve the result they had today. Twelve Cupcakes management would be wise to learn the lesson of MacDonalds.
Tuesday, November 27, 2012
Same place different times
In 1997, Clark Quay in Singapore was jammed packed with people. It was a place to be seen and to see the night scene. Many couples and small group of friends can be seen sitting down by the river every few steps. It was a good time for business owners of Clark Quay. They must be laughing all the way to the bank.
In year 2003, things changed. Another visit there on a Saturday night, showed that the same Clark Quay walkway, has few people and shops are empty of clubbers and drinkers. In fact the place was almost deserted.
In year 2003, Dhoby Ghaut Northeast line MRT was not crowded on a Saturday afternoon.
In year 2011, the same Dhoby Ghaut Northeast line MRT was packed with people during peak hour that some passengers could not take the train. The interchange at Dhoby Ghaut was also very crowded with people switching trains. It was hard not to bump into another passenger.
What a difference a few years can do. Will things go back to the time when Dhoby Ghaut interchange is deserted?
In year 2003, things changed. Another visit there on a Saturday night, showed that the same Clark Quay walkway, has few people and shops are empty of clubbers and drinkers. In fact the place was almost deserted.
In year 2003, Dhoby Ghaut Northeast line MRT was not crowded on a Saturday afternoon.
In year 2011, the same Dhoby Ghaut Northeast line MRT was packed with people during peak hour that some passengers could not take the train. The interchange at Dhoby Ghaut was also very crowded with people switching trains. It was hard not to bump into another passenger.
What a difference a few years can do. Will things go back to the time when Dhoby Ghaut interchange is deserted?
Outlook from property agents
A recent chat with two separate property agents showed that they were optimistic and confident that the government will do anything to support the economy. I hear words like this from them:
a) “How can the USA government default?”
b) “The low interest rate is a secure and stable environment.”
c) “The Singapore government will not allow interest rate to go up too much because the economy will dive.”
From the annual reports of listed companies, we often hear:
a) “The operating environment is volatile and the US and Europe crisis continues to linger”
b) “Profit margins will be squeezed further because of lower demand.”
My question is what if the management of listed companies is right?
We need to prepare our portfolio to be prepared for all situations. My current opinion is to follow the advice of the management of listed companies and be prepared for all types of situation.
Just when no one believes that it will happen, things often happen out of the blue.
a) “How can the USA government default?”
b) “The low interest rate is a secure and stable environment.”
c) “The Singapore government will not allow interest rate to go up too much because the economy will dive.”
From the annual reports of listed companies, we often hear:
a) “The operating environment is volatile and the US and Europe crisis continues to linger”
b) “Profit margins will be squeezed further because of lower demand.”
My question is what if the management of listed companies is right?
We need to prepare our portfolio to be prepared for all situations. My current opinion is to follow the advice of the management of listed companies and be prepared for all types of situation.
Just when no one believes that it will happen, things often happen out of the blue.
Tuesday, November 13, 2012
Now and near future
Yesterday, I visited Katong Mall and it was filled with people eating and shopping. I noticed that many foreign workers are employed at many eateries.
Looking at the current good times, it is very hard to believe that next year will be a tough year as forecast by expert like Jim Rogers. Since the economy is mainly made up of consumption, a reduction in consumers demand will hit the economy hard. Then weak businesses like restaurants will close and foreign workers will be sent home. The extent of this will depends on how deep the recession is.
I can only hope we will take it well as it comes.
Looking at the current good times, it is very hard to believe that next year will be a tough year as forecast by expert like Jim Rogers. Since the economy is mainly made up of consumption, a reduction in consumers demand will hit the economy hard. Then weak businesses like restaurants will close and foreign workers will be sent home. The extent of this will depends on how deep the recession is.
I can only hope we will take it well as it comes.
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