The 2016 Singapore Budget was balanced, provident and visionary. Changes to corporate taxation were sensibly encouraging; for personal tax, edging towards more fairness without any violent swings was socially prudent. Most importantly the recognition that Singapore SMEs need help and support to grow into regional and international MNCs will be welcomed by those who see Singapore as needing to be more self-sustaining.
Growing a local business into an MNC is something I did when I took the tiny SME Brands Essence of Chicken and built it into Cerebos Pacific Ltd. I had two key assets working for me in this challenge. Firstly, strong cash flow is a huge advantage when floating your business, funding research and development and acquiring new ventures. In all these negotiations a strong cash flow puts you firmly in the driving seat.
Secondly, possibly more important was the support I had from my two biggest shareholders – RHM, the then very large British foods business, and the Abu Dhabi Investment Authority. Both gave me a free hand to develop in areas we were unfamiliar with, but which looked to be the profit earners of the future. The fact that neither of them at the time were familiar with Asia Pacific contributed too, but the basic willingness to experiment and fail was vital. After this recent budget I asked a distinguished panel of Singaporean financiers how we can change the mind-set of SME CEOs, boards and shareholders to make them less risk-averse. The answer, broadly, was that it is very difficult and that it will take a generation or more. But it can’t. Re-read the visionary budget and you will see how much depends on less risk-aversion and on being more adventurous. We do not have 25 years to make the change. What can you do to change this if you are one of those who doesn’t like taking risks? You may not like the answers but I will take a risk and give them anyway!
Understand that you must take risks
First accept that you are, instinctively and by education and upbringing, risk-averse. I am. Most people are. Doing what we know how to do is safe. It avoids unpleasant morale-lowering criticism. ‘Comfortable’ is a word we all like. How often do you say to yourself “I don’t feel comfortable with that” and use the sensation to avoid taking a risk? The answer should be ‘seldom’; in practice it is ‘often’. Recognise this weakness to overcome it.
Assess how important growth is to your business
Second, understand the importance of growth to a company. Forget the problems of countries growing and the Fed’s and Central Banks manipulation of international growth. They are different from companies and we have politicians to look after them. A company is always tempted to cut costs as the quickest way to redress downturns and hard times. Cost cutting is important and ongoing. But cut costs without growing the business and you are headed for disaster. I have seen it twice in my career and it is not a pleasant sight.
Find the support you need
Third, build the support you need to bolster your riskier decisions. Don’t wait for the influential members of your board to say “I told you so” when they have done nothing of the sort. Lobby them on the principle of growth involving risk. Their backing must be what you are aiming for, not for avoidance of mistakes. I was especially fortunate having Lee Kim Yew as my nonexecutive Chairman heading a thoroughly supportive board.
It’s essential to experiment
Fourth, prepare for your adventuring into unknown territories with small experiments. They don’t cost much and you learn a lot from them. You discover the importance of bringing in the right sort of experience – and how to avoid the wrong kind. Failed CEOs are not the basis of successful developments. Study how The Home Depot in the US rejuvenated itself when it became too big to manage. Making a swift and ruthless change and keeping the board on your side is a skill we all have to learn.
Be willing to kill the duds – quickly
Fifth, don’t get passionate about any one development. Enthusiastic, yes, and focused, committed, pushy, determined. But not passionate. You will have to kill some of them and you don’t want too much heartache in the process. We are all good buyers; few of us are good sellers. That often reflects in our personal share portfolios, too.
Be more agile than your competitors
Sixth, be very light on your feet. Decisions about developments need to be taken swiftly. Waiting for ExCo or Board meetings is out of the question. The project manager and the CEO, with possibly the CFO looking over their shoulders, must be able to make up their minds on the spot. Agility is the name of the game for almost all business now. For developments it is a top priority. What you miss today is gone tomorrow.
Change is a pain. We all hate it. We are surrounded by it as never before in human history. It doesn’t make it any easier to cope with. The leader who will pilot his or her organisation through today’s terrifying changes and keep it growing at the same time is a rare find. Seek more change agents who have already done it to help you grow your SME into an MNC. Pursue them more diligently than you do at present, devote more time to handling them than you do now, support the risks they takes more vigorously than you have in the past.
On balance you will win – hands down. Guaranteed.