Be Your Own Boss
Asia's economic crisis makes it harder than ever to go solo. But it also offers new opportunities

By AMY BICKERS

What do you need to succeed as a small business owner? "You name it, you need it!" says Tan Ahsoon. He should know. Tan owns Info-Tech Computer Systems, a computer networking and consulting company in Singapore. He lists access to finance, technical know-how, marketing skills and a solid sense of how an industry is developing as the vital ingredients for turning an entrepreneurial dream into a money-making reality.

Tan started out on the technical side of the computer business in the 1970s, and after a decade he decided to test his design concepts by creating his own products. He recalls a few lean "bread and butter" years, even though his company made money from the start. Profits grew just 3% a year in the early days, eventually reaching 10%. Tan says it has not been easy. He credits his success to focusing on one area of information technology: service and consulting on networking and software solutions. It's this specialized expertise, he says, that has allowed Info-Tech to thrive despite increasing competition from large multinationals. "If you measure a small firm against the big boys, they have all the advantages," Tan says. "But when it comes to capabilities, that is where we shine. We have a very specific focus, and that is how we are able to compete."

The Asian financial crisis has been especially tough on small players. Despite the economic uncertainty, however, this could be a good time to start a small business, or at least research the prospects for one. The recession has actually created opportunities--for instance, the new demand for services like retraining and due diligence (the examination of a company's assets and liabilities before another firm takes it over). Many companies, keen to keep costs low, are outsourcing work that once would have gone to full-time staff, fueling a demand for consultants in a vast array of fields. Besides, working as an independent contractor or consultant might be the only option available to people who have lost their jobs. So, if you've always dreamed of owning a business, this could be your moment.

Your first objective, of course, is to come up with an idea that fills a market niche and wins a steady customer base. Often, the key lies in being different. Take the example of Howard Elias, whose eponymous Hong Kong human-resources consultancy offers training courses for business executives. He credits his success to his unusual course offerings. "I don't do things like time management and meeting skills," he says. "There are hundreds of corporate trainers in Hong Kong offering these kinds of courses, so I don't touch them." Instead, Elias teaches senior managers to assess staff performance and evaluate whether workers' skills could be put to better use elsewhere in the company.

Elias worked for a mid-sized technology firm before opening his own operation last October. "I could not find a job as interesting as one I could create for myself," he says. "I was going for interviews and seeing jobs in the newspaper, and nothing seemed as fun or as challenging." The qualities he views as crucial for an entrepreneur include resourcefulness, creativity, determination and, most of all, a passion for the business. That last attribute is crucial during the first few years, when every day can seem like a test of your survival skills.

Rogelio Go would certainly agree. He heads Customcraft Collection, a maker and supplier of wooden furniture in Quezon City in the Philippines. He set up shop in 1987 and immediately ran into trouble. "First I had to find clients and then get my product line in order--I really experienced a tough time," he says. "After three years it got easier, since our client base was established and we were more secure about the goods we were offering."

These days Go sells most of his products to customers in the U.S. and Europe, regions that have largely escaped Asia's economic turmoil. As a result, Customcraft had a good 1998, better than the previous year. "So far we have not had to cut costs," Go says. To keep down one of his biggest costs, labor, he often relies on subcontractors. He maintains 12 full-time staff, mostly carpenters and wood carvers, but hires up to 60 more workers when a large order comes in. He hopes that savings in labor costs will allow him to expand his business this year.

Most small businessmen, especially those just getting started, would be glad merely to stay afloat in these troubled times, let alone expand. Experts predict a hefty number of failures this year in a wide spectrum of businesses, including retailing, restaurants, engineering and architecture--areas in which small players have the added challenge of going head to head with much larger companies. All are highly competitive fields in the best of times, and business has diminished along with the drop in consumer spending.

Chris Clarke, who manages Southeast Asia operations for consulting firm A.T. Kearney, says the Asian Flu has created difficult circumstances for many small businesses. "The first problem is that consumer demand has been hit, and that spills through to small companies as well as large ones." But the problems don't end there. "A dual cash crunch is squeezing many small players," Clarke adds. "If they have borrowed money from a bank, interest payments can pile up and start to cause big problems, and then their credit lines get restricted because banks get more strict in tough times. Also, the large companies that supply them with goods and services they need to make their products tighten their credit lines as well. Many suppliers are trying to cut the risk of selling on credit by insisting on cash terms."

But the hard times also present some small players with opportunities. Consultant Elias says the nature of his training courses ensures he works despite the downturn. "What I am finding is that even though there is a recession and companies have cut back, the remaining employees desperately need training, since many middle managers are gone and there is now a knowledge gap," he says. "Also, companies are not giving salary increases, so training people helps keep them motivated."

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