Singaporeans are foodies. We all love to eat good food and it is our life’s mission to find the best food available all over the country. Whether it is high class French cuisine or our local hawker centre, we are always searching for the most delicious food to indulge in to reward ourselves after a busy day of work, or for students, school. Some of us occasionally bring up the topic of owning our own food business for ourselves but for those of us who are serious about doing so, do you know what to consider and the steps to take to enter the F&B industry? Here is a short introduction of what to take into consideration before entering the food industry.
Types of food businesses
Deciding on the type of food business that you want to set up is the first step that you have to consider. Differing food businesses have different types of strategies that they have to adopt. First you have to consider the profit margin that you want to achieve with each meal and the number of customers you want to turnover. We shall now look at the relationship between turnover rates of customers and the profit margin.
Fig 1: Profit Margin and Customer Turnover Rate
Food businesses in the top right hand quadrant consists of the Chinese, Indian, Malay restaurants, fast food outlets and cafes. These businesses sell their food at relatively high profits with a large customer turnover rate. The top left hand quadrant consists of premium restaurants, such as fine dining where there are few customers but very high profits. Bottom right quadrant consists of hawker centres and buffet outlets. These businesses cater to large crowds but at a very low profit margin. The bottom left quadrant would basically be food businesses that will not survive in this business.
By determining how your food business is going to operate, it will allow you to determine the type of food business you will venture into. It is always important to consider your expected rate of returns on investments too before deciding.
Price and quality relationship
The type of food business that you plan to venture into also determines the price and quality of your food that you will be providing to your customers. Quality of services is also taken into account. For example, hawker centres survive on their large customer turnover rates with their small profit margin for every meal served. The quality of their meal will meet the minimum requirements for consumption due to the large pool of customers that they will serve. There will be little quality of service to their customers too but will be acceptable for customers to continue patronising.
Looking at fast food outlets and food courts, there is a balance between quality of food and price. By providing better quality food compared to hawker centres, they are able to price their meals higher and have a large customer turnover rate at the same time. Quality of service is also at a minimum due to the large customer turnover rates.
For restaurants, they provide high quality food and services for their customers. By providing personalized services to their customers, they are able to cater to customer’s food preferences. Also, by carefully deciding on lighting and music, customers are exposed to a much personalised ambience which entices customers to frequent the restaurant. At this expense, the price for their food tend to be on the high side which allows them to have a small customer turnover rate compared to hawker centres and fast food joints.
Entry strategies for the inexperienced
For the inexperienced that are new to the food business and want to venture into it, here are a few strategies that you can adopt:
1. Know the business that you are venturing into
2. Sacrificing partial income for the business
3. Grow the business slowly
For the inexperienced or no experience, it is important to be willing to start from the bottom of the business and rise to the top, to learn the ropes as you go along. The importance of knowing the business from bottom to up is imperative as it will give you much insight on how to run your own food business. By being an employee in a restaurant or a fast food chain, you will be exposed to the operations of the business. You will experience how chefs and servers alike do their tasks required in order for the business to run. Ultimately, food businesses survive and thrive when customers are happy and hence, you must learn how to interact with customers, know their wants and preferences and learn to provide them with the services that they will be satisfied with. This experience will be invaluable when you start your own food business.
Are you willing to sacrifice your salary in order to grow a business? Some professionals are working full time jobs during the day but at night they run their own small food business at food courts. With the incoming salary that they earn, they have enough capital to run a small food business and support it until it become a viable business venture. This takes a lot of time and patience before the business takes flight and it is not for those who expects high returns in a short period of time.
Start your business small and slowly grow and nurture it. Starting out, you may be able to rent a small section of a store or a restaurant to do your business. Keep in mind that this rental cost cannot be more than 20-25 % of your expected earnings. Sell something that you know that the community likes, like pastries or bubble tea, and be open to customer’s suggestions on what to sell. By listening to their wants, you will be able to reach out to a larger pool of customers, reaping in more profits for your business.
Always be adaptable. If you are those kind of person who enters without considering risks, take that step first and then follow through with it. Learn how to run your business as you go along. Never stop learning and adapt whenever necessary.
Entry strategies for the experienced
For the experienced, you may want to venture into a new food business market where it seems lucrative with large potential. You may want to consider adopting these possible strategies before entering the market:
1. Taking over a business
2. Starting a new business of your own
3. Starting a franchise
Taking over an existing business is one way to break into the new market. However, before making any hasty decisions, it is important to know the reason why this particular business is up for sale. Is it due to its business not thriving due to competition in the area? The business owner himself was offered a better job prospect elsewhere? Is the business relocating elsewhere or was there a government policy implementation that affects your business? It is of utmost importance to know the reason why the owner wants to sell his business. This will allow you to be aware of possible business issues and take proper approaches towards rectifying them. The thought owning a business yourself is enticing and tempting but it is not wise to make such decisions hastily without doing your prior investigations about the particular business.
Starting a totally new business is always a challenge but there are so many benefits to reap from it. As a boss of your own, you are able to choose your own business name, location, basically any business decision by yourself. This gives you autonomy with regards to any business decision that you make. You are able to build your own pool of loyal customers and have good relations with them. You are able to busk in your own innovative ideas and take full credit for its success. However, nothing comes free of charge and without risks. The risks involved is that your business MUST be able to enter the consumer market. Your product must be something consumers want and are willing to pay for. Without said, your set prices and revenue earned must be able to cover all of your expenses in order for your business to survive or thrive. If these basic conditions are not met, your food business will inevitably come to an end. Thus, it is important to do prior market research, to know the reasons why your targeted audience might be currently unhappy with the current supplier and where you are able to tap on and improve on it.
Buying a franchise is also another alternative to break into the market. This allows you to build your business around an already established business name and to have their experience and support. However, there are misconceptions that buying a franchise will ALWAYS result in reaping in quick money and that you are able to leave this business entirely to your franchisor. In fact, buying a franchise still requires you to work hard and have good business ethics of your own. You are required to be present at the business venue and oversee its operations, ensuring that everything is going smoothly and make business decisions accordingly. One of the most common problems that franchises face would be employee theft. Hence, it is important to oversee your business properly and ensure that everything is smooth sailing. Never assume that such things will not happen to you. If things are not going well, the franchisor may buy back their franchise at a lower cost to prevent further deterioration of their brand, leaving you to absorb all the costs. That being said, the success rate of franchisees are relatively high as franchisors are very careful on whom they are entrusting their brand to. They may also provide training for inexperienced owners before letting them run their franchise.
Ultimately, it is your own decision on how you want to start your food business. Be it starting one of your own or buying a franchise, the success of your business depends on your own efforts and how much time you are willing to invest in its business development. There are always risks involved but with careful planning and market research, these risks can be mitigated, increasing your success rate in your food business venture. As writer and actor Ben Stein said,
“You must take the first step. The first steps will take some effort, maybe pain. But after that, everything that has to be done is real-life movement”.
With many large corporations taking on M&A as a potential growth strategy, business leaders are tempted to adopt the acquisition path to build a business empire. However, according to Mark Sirower, renowned M&A consultant in BCG, most acquisitions end up in spectacular failures. Many firms fail to see how new acquisitions fit into their overall strategy and have yet to find a way to build M&A capabilities that consistently harness value for shareholders. As such, it is imperative for top management to deliberate the M&A process to ensure long term success. In this article, we will explore the common motives of M&A and how it fits into the strategy of the firm.
A horizontal M&A involves acquiring a target firm with a similar business, operating in the same market. The target is likely to be a direct competitor of the acquiring firm with comparable products and services. The main reason for doing so is to enhance revenue by increasing market share and, at the same time, reducing competition.
This M&A strategy finds target firms with a similar product line but operate in a different territorial market as compared to the acquiring firm. The benefit of such acquisitions is the opportunity to enter a new market while staying in the core competency of the acquiring firm.
Vertical Backward Integration
A vertical backward acquisition seeks to combine the acquiring firm to its suppliers. The advantage is through cost savings arising from the purchase of supplies needed to run the business. A prime example is a clothing manufacturer taking over a yarn producer.
Vertical Forward Integration
Contrastingly, a vertical forward integration seeks to buy over the acquiring firm’s customer. The combined firm can value-add to their existing product portfolio and charge a higher margin to extract value. An example is a clothing manufacturer acquiring a fashion retailer.
Acquiring firms seeking product extension will look for potential targets in the same geographical areas but with different product lines. The main purpose is to add additional ranges of products and cross-sell them in the same geographical market. This strategy is best executed with complementary goods that increases the likelihood of cross-sell.
Under this form of strategy, acquiring firms take on all other opportunities to undergo M&A. The target firm typically offers different product lines while servicing an entirely separate geographical market. The main purpose is to diversify income into alternative sources which might smoothen the impact of economic cycles. However, this represents the highest risk of M&A failure as the management team would have to operate the two businesses quite independently which potentially limit the synergies of the combined firm.
Although M&A is a complex process and is not the answer for every strategic goal, executives can still realize the full potential for synergy of an acquisition. It is highly beneficial to enter the deal fully knowing the rewards and risks involved and, more importantly, knowing when to walk away when things no longer make economic sense.
In this post, we will discuss everything you need to know about Gantt charts. We will be introducing what Gantt charts are, how they have come about, who should use it, and the pros and cons of using them. On top of that, we will demonstrate how you can create your very own basic Gantt Chart.
What are Gantt charts
Gantt charts serve as a scheduling tool which allows you to visually see your plan of action on a project. A Gantt chart helps to bridge the gaps of a plan by incorporating the timeline for when tasks of the project should be implemented. Essentially, by visualising project management timelines in cascading horizontal bar charts with tasks that may be interdependent on one another, it aims to help you get a better overview of the project.
How Gantt charts came about
The initial prototype of the Gantt chart was first developed in the mid 1890s by a Polish engineer named Karol Adamiecki. He created the first visual work flow chart which he called a “harmonogram.”
Around 15 years after Adamiecki, Henry Gantt further improved on Adamiecki’s “harmonogram”. With the goal of helping manufacturing supervisors determine if their work was behind of, ahead of, or on schedule, Gantt’s work formed the foundation of the tool we know of and use today.
Who should use Gantt charts
Gantt charts are for everyone who need to plan and schedule their list of tasks that fall under an overarching goal or theme. Hence, this useful tool can be used for personal management, team level coordination, as well as on the corporate level. In general, if you are working on a longer project with a high number of elements and tasks, the Gantt chart may be a tool which you would like to consider using.
Advantages of using Gantt charts
1. Simplified Summary of Tasks
The Gantt chart helps to simplify complex linear list of tasks by collating them into a single visual diagram which helps in understanding of the project as a whole, by illustrating these thoughts and ideas together in a pictorial format.
2. Visibility of Project Progress
With Gantt charts being visual in nature, it is much easier to view a project’s progress through the bars that it displays. This improves the accountability of members of the project as it allows the team leader to track the team’s progress and discuss forward-planning strategies during review sessions.
By understanding if a project’s task is on schedule, the project manager is able to use the Gantt chart to remind members to keep to the schedule for punctual delivery of the project. Also, by using bars to indicate the duration of a task, it gives you a better perspective of the total project, and the timeframe as a whole.
3. Clarity of Project Implementation
When you execute a complex project, you will have a great multitude of tasks. With a visual tool like the Gantt chart, there is clarity in implementing these tasks as they are displayed in a single document. It shows how the interplay of tasks come together towards project completion.
The clarity of mind to know how long a project should take for completion aids in the management of time, scope of work, as well as motivation. As Stephen R. Covey puts it “Start with the end in mind”. A clear plan which shows all that needs to be done and in what order helps decision-makers look farther ahead to ensure each given project is working toward the achievement the organization’s long-term strategic objectives.
The Gantt chart also promotes the concept of dividing and conquering, as it breaks project into smaller tasks and shows what is to be delivered in each project phase. This makes it much easier for the project’s tasks to be executed, and for the overall project to be successfully completed.
4. Concise Communication & Coordination
The Gantt chart helps to keep everyone involved in the project on the same page. This means that all stakeholders are able to possess the same information, where mutually understood expectations can be set and managed better. Project managers would then be better able to communicate concisely to subcontractors and lead them more strategically.
With this ease of coordination project managers would have the ability to sequence events and break projects into smaller manageable tasks, which ultimately prevents overburden
5. Increased Task Efficiency of a Team
A team member can start on another task while waiting for a dependent task to be completed by other members. The Gantt chart helps one to focus on what truly needs to be done, thus making you more organised and allowing for a more successful project.
With better focus, there will naturally be better time management. This useful tool helps to foster greater collaboration, with the ability to see the impact of delays of tasks through understanding task relationships. Eventually, this ensures optimum work flow, maximised productivity and overall project success.
Disadvantages of using Gantt charts
1. Danger of being too detailed
If you become too detailed, you might end up losing sight of the bigger picture of the project. Hence, it is always a good practice, especially for big businesses, to have project managers overseeing each project that they have undertaken.
2. Size of bar doesn’t indicate amount of work to be done
The Gantt chart serves to give just a general gauge of tasks. The bars of the Gantt chart does not show how much work each task will involve or the amount of people or resources each task will require.
3. Need for constant updating
A Gantt chart can be quite troublesome to update. As tasks are completed or reviewed, the chart will need to be updated frequently to reflect those changes. Any amendments to the chart takes time to be carried out, which can be better spent working on the actual tasks.
4. Difficult to see on one sheet of paper
On occasions where the project is more complex, it is difficult to show details of the plan, and charts can be too large and hard to read.
How to create a basic Gantt chart
Now, let us explore more into creating a basic Gantt Chart.
Step 1: List down the main phases of your project
Step 2: List down the tasks associated under these phases
Step 3: Fill in the start date and the estimated duration (days) which you think you can complete these tasks
Step 4: Insert a 2D stacked bar chart as shown in the picture
Step 5: Click on “Select Data” under Chart Tools > Design
Step 6: Click “Add”
Step 7: Enter “Start Date” into the series name field and select series values as shown
Step 8: Click “Add”
Step 9: Enter “Duration” into the series name field and select series values as shown
Step 10: Click “Edit”
Step 11: Select the range of cells as shown
Step 12: Right click on the y-axis and format it
Step 13: Check “Categories in reverse order”
Step 14: Right click on the x-axis and format it
Step 15: Use the following settings for the formatting
Step 16: Right click on the “Start Date” series and format it. Select “No fill”
Step 17: Right click on the earliest “Start Date” and click on “General” as the category. Note down the number (eg. 42370) and then click “Cancel”.
Step 18: Right click on the latest “End Date” and click on “General” as the category. Note down the number (eg. 42442) and then click “Cancel”.
Step 19: Right click on the x-axis and apply these two numbers under “Axis Options”. This is to accurately frame your Gantt chart.
Step 20: Adjust your Gantt chart to the most suitable size and you’re done!
Here are two video walkthroughs to help you better understand the steps.
The Innovation and Capability Voucher (“ICV voucher”) was introduced in June 2012 to help Small and Medium Enterprises (“SMEs”) cope with the rising labor cost by increasing productivity and improving their capabilities. The increased revenue would help SMEs maintain their profit margins.
The government set a budget of SGD 32 million to be utilized over four years (Year 2012 – 2016). In 2014, an additional SGD10m was earmarked in the budget for this scheme. Initially, ICV vouchers could only be used to engage consultancy services. However, based on SMEs’ feedback, SPRING Singapore enhanced the existing scheme to include solution implementations in 2014.
Why should I claim my ICV Vouchers?
ICV vouchers are a good starting point for SMEs to be exposed to consultancy services or integrated solutions. Based on the current scheme, all qualified local enterprises would be given eight vouchers valued at SGD5,000 each. These vouchers can be used for projects in selected areas including consultancy projects and integrated solutions.
Consultancy solutions are classified into four categories, namely financial management, innovation, productivity and human resources. Some of the popular services include financial planning, customer insights, intellectual property and ISO certification. The full list of consulting services is available here.
There are various integrated solutions provided under the ICV scheme. Some of the more popular solutions include appointment scheduling and booking system, document management system, point-of-sales system and restaurant wireless paging system. The full list of integrated solutions is available here.
How do I qualify for ICV vouchers?
All local enterprises that are registered and operating in Singapore can apply for ICV vouchers if they meet the following criteria:
At least 30% local shareholding
EITHER Group annual revenue of SGD100m and below OR 200 employees and below
Things to note about the ICV scheme
ICV vouchers allow you to claim 100% of the project cost, if below SGD5,000
SMEs are allowed to claim the full amount of the ICV voucher. The Productivity and Innovation Grant (“PIC”) and Capability Development Grant (“CDG”) only allow SMEs to claim 40% (for cash claims) and 70% of project value respectively. On the contrary, you will have no cash outlay if your project or solution costs less than SGD5,000.
There will be no risk of non-approval as all projects will be pre-approved before the start of the engagement . Unlike PIC, clients will have certainty on whether the project is claimable.
The vouchers have an absolute value of SGD5,000 each
There could be cases whereby the local enterprise would seek a project of a bigger scope. In that case, the project fees could exceed SGD5,000. This excess would have to be borne by the SME. On the other hand, there will also be no refund/rebate for projects below SGD5,000. In a nutshell, a voucher can only be used once, regardless of the project value.
SMEs can only engage accredited service providers for consultancy and integrated solution projects
To ensure that your projects are handled by experienced providers, SPRING Singapore has pre-qualified a list of service providers/consultants. However, the project scope is determined through discussions between you and the providers.
Each SME will only have eight vouchers
Every local enterprise that meets the qualifying criteria only has eight ICV vouchers in the whole life of the company. You can only use two vouchers for each category. Hence, it is advised that you use these vouchers wisely and only in areas with real business needs. Also, we advise you to be selective with the service providers. While all service providers follow the standard scope provided by SPRING Singapore, the methodology and depth could differ.
Two or more ICV vouchers can be used for each consultant
The benefit of using the same consultant for different projects is continuity. While you can engage the same consultant with two or more vouchers, it has to be scoped in phases. In fact, each SME can only use one ICV voucher at any one point in time until the phase is completed.
ICV vouchers can be used to test the suitability of engaged consultants
SPRING Singapore views ICV vouchers as a stepping stone for SMEs to try out consultancy engagement. Its intention is to push SMEs to engage consultants for a bigger project scope under CDG. As one consultant put it, ICV vouchers are for sampling a consultant’s service. After you are satisfied and comfortable with this consultant, then you can proceed to a bigger project that can be claimed under CDG.
ICV vouchers can be used for up to two years of an integrated solution subscription
For integrated solutions, an ICV voucher can cover onboarding services, customization, related training, certain hardware and up to two years of subscription. The supportable component differs between solutions.
Speed of approval varies
While it is stated that the estimated approval process will take six weeks, the speed of approval varies. It can take as little as two days and as long as a few months. The approval is processed by a small group of experts engaged by SPRING Singapore, and they determine the speed of the process.
Project length has to be less than six months
The prescribed length of each project is a maximum of six months. Typically, most consultants will finish the project within one to two months. If you need an extension on the project, you will need to appeal through SPRING Singapore.
How can Olea help you?
Olea Private Limited, a sister company of Excide, is a boutique consulting firm founded in 2011. It is accredited by SPRING Singapore to provide financial advisory services under Innovation and Capability Voucher (“ICV”) scheme. Over the years, Olea has served over 30 clients under the ICV scheme.
In the scheme, you would be able to obtain a financial model tailored to your organization. If you are interested in getting more details, please feel free to email Sam at [email protected] / [email protected] or call at 96981755.
Projects that can be covered under the ICV scheme include:
Financial assessment and planning for growth: To assist SMEs chart out and validate their financial needs, given their business expansion plans
Planning and budgeting: To assist SME structure and implement proper planning and budgeting practices in managing overall financial resources
Cash flow and working capital management: To assist SME to identify, assess and address gaps in cash-flow and working capital management
JIT Holdings Ltd (JIT) was founded in 1987 by Tommie Goh and William Goh. It started out as a trading firm dealing with Printed Circuit Boards (PCI) components. Business was difficult as it required them to conduct face to face selling of their various principal’s products. Hours were long and traveling across the Singapore Island was extensive. William Goh would clock an average work day of more than 12 hours and an average mileage of more than 100,000km a year. This would include making deliveries in the company van while wearing a tie.
JIT was fortunate to experience substantial business in the first year. A large majority was ploughed back into the company and the two directors took only a subsistence salary. JIT invested these retained earnings into a factory that did contract manufacturing and assembly of electronic components in a communal office in the Jurong. In order to cut cost, the directors did the internal renovations by hand where possible including painting the factory themselves. When overtime by the staff was needed, they would personally fetch and return them to their respective homes.
Becoming a global powerhouse
Business steadily improved and soon they were running operations around the clock. Finished goods manufactured at night would often be placed in the common walkway and the service elevators. It got to a point where the finished goods were placed in front of other company’s main entrance which incurred numerous complaints and safety hazard warnings. This served as the impetus to construct their buildings in Kallang and Changi, with the latter being the headquarters.
Due to their reliability and efficiency, many Original Equipment Manufacturers (OEMs) outsourced most, if not all, of their manufacturing operations to JIT. At JIT’s peak, they were manufacturing 100% of Motorola’s cellular phones globally. In addition, they were the largest contract manufacturer for HP worldwide. Their good reputation and work ethics would put them in good stead for the rest of the company’s lifespan.
This astronomical growth saw JIT’s revenue of $100,000 in its first year of business grow to exceed the $100 million milestone within three short years. In addition to being the number 1 contract manufacturer in Singapore, JIT Holdings attained a global ranking of 17th of top global CEM providers with 4,500 employees and operations in China, Hungary, Indonesia, Malaysia, and Singapore.
Sale to Flextronics
Flextronics acquired JIT for SGD1 billion in a share swap. Through this deal, Flextronics hoped to expand its manufacturing capabilities in Northern China (Tianjin and Shanghai) to cater to the nation’s nascent and fast growing technology sector, large engineering talent and be closer to the customer. This would complement their existing operations in Southern China. In addition, Flextronics would also expand their geographical presence in the ASEAN region with JIT’s factories in Malaysia and Singapore. Lastly, the acquisition would allow Flextronics would expand their customer base. In November 2000, the acquisition of JIT by fellow CEM Flextronics was finalized and this marked the end of JIT Holdings.