Twelve years ago, entrepreneur Tony Kwong struck out on his own
with $100,000 -- most of it borrowed. Little did he dream that he
would become a $65 million man. He shares some of the knowledge he
has gleaned along the way with LEONG CHAN TEIK
SO you dream of becoming an entrepreneur -- and a hugely successful
one at that.
Well, entrepreneur-multimillionaire Tony Kwong, 44, advises: Be
prepared for the toughest times of your life.
To be sure, Mr Kwong did not have the advantage of connections or
instant financing.
He worked as a technician for nearly three years after getting his
Diploma in Mechanical Engineering at Singapore Polytechnic and
doing national service.
Later, he joined the company of an ex-colleague and rose through
the ranks to become an operations manager. He stayed there for
seven years until he was 31, when he became disenchanted with his
job.
He went for interviews with prospective employers, but a relative
urged him to strike out on his own.
Mr Kwong recalls: "He said, 'You work so hard, why don't you become
your own boss?.' But I didn't have funds as I didn't come from a
rich family."
He counted $40,000 in personal savings, including his wife's. Some
relatives decided to back him up and pooled $60,000.
Little did he dream that his business would command a market value
of around $220 million on the Singapore Exchange today.
He is now chairman and managing director of Manufacturing
Integration Technology (MIT), with a personal stake in the company
worth around $65 million.
The firm designs and develops equipment for the semiconductor
industry and was listed four months ago.
WATCH CASHFLOW
Cash is never enough when you are a young and growing company. You
order parts to assemble your equipment and then you wait five or
six months before the machine is commissioned and you are
paid.
Mr Kwong recalls chalking up expenses of as much as $500,000 at one
point: "It was quite stressful. The expenses were rising but you
needed the work. And you had to pay your employees.
"I told customers point-blank that I could not take on the job if
they couldn't give me a downpayment." Some clients agreed; some did
not.
And when Mr Kwong was close to delivering the equipment or
finishing the work, he would tell them: "When I deliver, you please
settle cash on delivery."
BE A TIGHT-WAD
You have to be stingy if your profit margins are razor-thin, as was
the case with Mr Kwong's business.
"Customers are smart: they know you need the job and they squeeze
you on the price," he recalls.
He could not afford to waste a cent. "We counted every screw and
every bearing!" And he bought used furniture and equipment for his
office.
GET A BANKER
Gain the confidence of a banker: By nature, banks are selective and
cautious -- sometimes to a fault.
At one appointment, Mr Kwong was kept waiting for three hours by a
manager of a Big Four bank -- until he could not stand it anymore
and walked off. The next day, the manager called, apologised and
made another appointment, only to keep him waiting for two
hours.
He left for a small bank, where the manager greeted him warmly. He
secured an overdraft of $100,000. But it came with the proviso that
he kept $100,000 of the company's money in a fixed deposit
account.
Later, as the business grew, he felt he needed increased credit
lines and better terms. But by then a new manager was in charge of
the bank branch, and he did not take to Mr Kwong's request.
Laments Mr Kwong: "Every few years, banks changed their branch
managers. Some could be approachable but others later looked at
your account and considered it so small that they were not
interested." On a friend's recommendation, he turned to Overseas
Union Bank and has enjoyed a good relationship with it since.
It helped that his company's revenue grew in leaps and bounds: from
$1.5 million in 1992 to $3 million a year later and doubling again
the following year.
HIRE TEAM PLAYERS
When you are new and cannot afford better-qualified staff, you can
end up with people who are not a good fit.
Mr Kwong recalls some of the staff in the early days of the
company:
"It was frightening. I would tell them that there was a meeting,
and they would say 'it's a waste of time'.
"I would ask when they would be finishing their work, and they
would say, 'when I finish, I'll tell you'."
He gradually let these employees go and, as the company prospered,
dangled more attractive salaries in order to attract
better-qualified staff.
GOVT GRANTS
Mr Kwong emphasises: "The Government is pro-entrepreneur!" His
company applied for and received an Innovation Development Scheme
grant of $1.5 million from the Economic Development Board (EDB) to
develop some of its equipment.
A National Science and Technology Board grant of $856,000 in 1998
helped the company with research and development.
More money poured in when the company caught the eye of the EDB's
investment arm. In 1996, it took a 15 per cent stake in MIT for
$3.5 million, which enabled Mr Kwong's company to expand its
product range and hire better-qualified staff.
EDB's stake, now worth seven times its original input, reflected
the recognition MIT was gaining.
For four years in a row, from 1996, it was among the top 50
privately owned companies in Singapore, winning the Enterprise 50
Award.
In 1998, Mr Kwong was one of the 10 winners of the Rotary-ASME
Entrepreneur of the Year awards.
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TIPS: Getting funds
Impress on your bank that you know the business environment and
outlook in general and your industry in particular: for example,
the market size, competition and growth prospects. Highlight your
niche.
Share your business vision, plan/strategy and goals so that your
banker is aware of your aims. Goals must be realistic. Present your
organisational structure.
Show your commitment in terms of your investment in the company,
both time and money. If you are unwilling to commit yourself, no
bank will.
Over time, demonstrate your ability to meet commitments, to improve
earnings and grow.
Good credit references from customers, suppliers, business
associates will help.
Be prepared to show your bankers your existing/projected financials
and cashflow statements so that they have all the relevant
information to make a credit assessment.
Assemble a core competent management team with good business
acumen, relevant background, expertise and, most important,
integrity.
Keep to one or two primary bankers and help to build mutual trust.
An established cordial banking relationship will go a long way
towards helping you when your business expands. -- Contributed by
OUB
The Straits Times, April 2, 2000
