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Archive for October, 2010

Please read this with an open mind. It is to be looked at from a MACRO economic perspective (xmicro) and not from a political point of view.

I have 3 months to go before I complete my masters of entrepreneurship and during these academic years, I decided to pursue my own venture to match academic knowledge and real life practices. Navigating through the rough waters without financial assistance made me realise many important things in transforming my life from being in a middle class family (working with others) into an entrepreneurial family. This was what I found based on the ventures I got into.

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1. Hardship and marginalization accelerates entrepreneurial creation

Let’s put aside racism discussion but let’s look from the psycho-social-analysis context. Being a minority in a society helps to make one be more creative in achieving their objectives. Successful Indian businessmen in the United States / UK, the Malays in South Africa, Germans/Japanese in South America and the Chinese in Southeast Asia. When one stumbles into a position where he must survive and other resources are controlled by the majority of the society, he would think all ways, high and low, to ensure he can survive. For example when the British recruited Chinese labourers where majority are farmers from China during the Boxer rebellion into then-Malaya, the residents owned all lands for farming. So what can the labourers do since farming is no more available option?

Engage in trade, bring in products from China and create new business establishments in new industries. That was how the Chinese in Malaysia became known as great entrepreneurs in new industries. Multiplier effect came when entrepreneurs who are few in the industry group together to create new opportunities, hence giving rise to trade associations. The myth spread by the English at that time, that Malays are lazy is incorrect because they had to bring in labourers to work in their tin mines and the Malays are owners of their own land for farming and trade. Why should someone who owns his own land and get economic benefits from it, work for others? So, in a way, Malays at the times were also entrepreneurs because they controlled the economy.

The issue here is not to be taken at a racial context, but to understand that being a minority in a majority based group could help one to be more creative and create new economic opportunities.

2. The Craved Partnership

A person with all the entrepreneurial character and an investor which understands the business he is venturing into, is a match-make in heaven. A venture falls apart when the person do not have entrepreneurial values and the investor just think that he is the boss. A simple acid test is to look at those who purchase shares in the stock market without understanding the company he is investing money in, would stand a higher chance of losing money due to market speculation and lack of market information.This was particularly true the financial crisis in the late 90s.

3. Government’s Role

So what must our government do? We can’t let entrepreneurs be those who are marginalized and suffer to succeed? The key here is to smoothen the process of doing business related to government; getting licenses, establishing business, recruiting labourers, etc. This helps the entrepreneur to accelerate his venture. The government must provide creative education not text-book theory for to-be-entrepreneurs. A simple example is a course of “how to make money” which teach students how to make new revenue streams, potential income and investments. Not those management, marketing or theoretical books.

The government must understand that society’s behaviour plays a larger role in any outcome. Policies effect how a society behave and grow. One thing for sure is this: entrepreneurs are built upon the pillars of strong internal locus of control, belief that they could do something even if obstacles are there. So they in essence are those who are constantly needed to solve problems therefore policies which decrease their problems directly would not help to develop their attitude. If they lose the edge of solving problems, then they could not compete in a globalized world. If they can’t compete, Malaysia can’t trade effectively hence brings our economy to a halt or slowdown and everyone loses.

It’s kind of tricky for the Malaysian government. On one hand entrepreneurs need to be developed but on the other hand preferential treatment and open market creates both good and bad effect. I believe entrepreneurs should face hardship in aspects of trade and not hardship in economic distortions. Distortions such as monopoly of a supply chain by a corporation or group, monopoly of a certain segment, cost killing in a group (cartels) to kill new entrants must be stopped. Entrepreneurs can only succeed when they face hardships in terms of advancing their business, but when politics & distortions comes into place, it kills everyone. No entrepreneurs should be discriminated against by any group when they enter the market to create new economic opportunities, be it by the government or businessmen.

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Yesterday I had a chat with another micro entrepreneur which sells honey chicken wings by the road side without a license. They came from Sabah, without any education and decided that they must strive to survive. Today, they have a chain of “gerai without license” in Taman Kosas, Ampang Point, Pandan Jaya, Temerloh and Johor Bahru. These are the entrepreneurs. And they will be successful because of hardship. It proves that without politics and economic distortions by any group, they could grow. What they need, is creative education, not just education.

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