Thursday, November 24, 2011

Difficult to operate a small business

Dear Mr Tan,
I am just starting a new business of importing some baby products. I have done some market research and was intending to send a proposal to NTUC Fairprice to consider. Can you advice - is this the right way to go about doing it?

I have also seen in some forums, it is not easy as a new comer who has no connection or do not know anyone inside beforehand. I really hope you could share with me how I should approach them? Or who should I contact?


REPLY
Three years ago, I approached Fairprice to sell some of my products. They required me to pay a joining fee of $1,000 and to go through quite troublesome procedures. They also want to take a big cut from the sales amount and require me to handle the delivery to all their outlets and collect back the unsold stock. I abandoned the idea. (Note: connection does not count -as I knew the managers. Only money count!).

It is not easy to sell products to these big retailers. They want to charge you a lot of money before you make the first dollar. Their payment terms are also quite bad. (I had to wait one year before collecting payment for the sale of my books though a book distributor!).

If you wish to go into this business, make sure that it is a big business, otherwise, the costs will kill the business.

2 comments:

  1. A 50+ man is working as a coffee shop helper recently. People who do not know his background might thought he is a low-income worker.

    In fact, he has a unit of HDB shophouse. In past 20 years, he was running a provision shop. His business can not compete to a nearby Fairprice.

    Recently, he come out a good strategy to fight back Fairprice - lease the ground floor to 7-Eleven.He collect rental. His child work part-time at Fairprice!

    15 years ago, Trans Island emploed many Malaysian to work as bus driver. Many bus drivers are small businessmen in Malaysia ! They earn S$ and buy houses in JB for rental to earn 3rd income !

    Why go into busines if cost is higher than income?

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  2. Reply to KTM. Yes, it is good to be a property owner and to collect rental. But the high rental is pushing up the cost of doing businesses and the price that consumers have to pay. The high rentals, which are out of proportion to wages, will be unsustainable in the long run.

    The government has now realised the damage and is taking steps to moderate the housing cost, and also the cost of stalls in HDB markets. I expect property prices to moderate.

    ReplyDelete