While small businesses can be quite different from one another, there is commonalty in some of the major lessons learnt in running each of the four small businesses.
The four owners agree that it takes up plenty of time away from one's self and family just to run a business and that opportunities wait for no one but it is how you pick it up when it arises. Thus, there is never a shorter way to get things done, everything require proper planning till execution in order to be successful.
The owners of Paw House and Mazzario believe that keeping an open mind to suggestions and critics could prove to be an important indicator of improvement in areas where the owners may overlook. The customers may be able to provide constructive feedbacks which will aid in improving the products or services provided by the small businesses.
As for the owners of IS@Work and Able Plumbing, they believe that the hardships experienced in running of their small businesses are necessity for growth as overcoming these difficulties have enabled them to be better prepared for future challenges. Furthermore, they also learn that there is a serenity that comes from having already considered the "what if" possibilities. In addition, they agree that it would be a greater failure by not trying at all.
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Being in the highly competitive market, the owners of IS@Work learn that it is vital to establish a brand identity in order to maintain traction with their customers. Thus, they settle on IS@Work as the name of their company with the message "Innovative Solutions that Worked" to the market. On the other hand, the owners of Able Plumbing learn that building up company reserve is the key priority to help funding in project undertaken. They would also try to avoid taking excessive projects from the same client, due to the reason that in the event of default payment, the financial impact on the company would be limited.
Standard Small Business Owners or Entrepreneurs
Entrepreneurs are individuals who discover new opportunities, evaluate and transform them into profitable products and services. A small-scale, autonomous firm is regulated, financed and operated by owners of the businesses, who are also known as standard small businesses owners.
Based on the definitions above, the owners of IS@Work are most probably concluded as entrepreneurs. The owners come out with new products and services continuously that create a niche market which aim to help their customers to improve their productivity. These have fulfilled one of the key attributes of an entrepreneur which include developing of innovative ideas and taking substantial risks.
As for the owner of Mazzario, Mimi exploits the opportunity to pursue her own interest and passion in fashion designs. Furthermore, she provides innovative design and differentiated personalized services, bringing a new perspective to make cheongsams a fashionable outfit for all ladies at all occasions. Therefore, Mimi is considered to be an entrepreneur.
On the other hand, the owners of Paws house are more likely to be standard small business owners as unlike entrepreneurship which have a vision of growth, they are not growth-orientated and do not intend to expand their own small business.
Able plumbing is a small scale operation focusing on generating profit for daily livelihood. The services provided are also similar to others within the same industry. Furthermore, there is no separation of ownership and management of the company due to owners' persistence in handling daily operations themselves. In addition, little innovations and relatively low risk involved resulting in minimum growth of the business. Thus, the owners of Able plumbing are concluded as another standard small business owners.
Factors that contribute to the Success of Small Businesses
It is important to determine the key success factors of running the small business as these are indicators which measure the business achievement and may contribute to the business entails in the future.
The similarity between Mazzario and Paw house is that they are located at a strategic location where by there are few competitors around and they will be able to attract the crowd within that region. Furthermore, the powerful tool of word of mouth help them in gaining popularity among other consumers. However, Paw house is heavily dependent on word of mouth as a form of publicity while on the other hand, Mazzario used a mixture of various media as their mode of advertising.
Always on Time
Marked to Standard
What is common between IS@Work and Mazzario is that both businesses seek improvement and innovations continuously to avoid being obsolete in the ever-changing market. Being the market leaders, improvement and innovation is their defense to maintain their market position and to deter entry of their competitors. Furthermore, they are characterized with the ability to risk take, being adventurous and with the strong desire to fulfill one's dream to help them to exceed their own current achievements in the future.
There is a slight distinction for IS@Work from the other three small businesses as one of the owners has worked previously for the Navy under SAF. This has benefited IS@Work in term of acquiring more business opportunities through established network as well as getting more acquainted with the marine industry it is dealing with.
Despite the slight distinction, the common attribute among all the four small businesses is that customer service has always being their core concern as it is one of the major factors in determining the survival of small businesses in the long run. Thus, the four small businesses are responsive to consumer's feedback and preferences as they believe that creating customer values and satisfaction is the key to retain existing and acquiring new customers. Furthermore, they went the extra mile in building mutual trust and loyalty to secure their individual customer base.
Moreover, the presence of a positive and friendly working environment for the four small businesses help in establishing stronger and happier working relationship between management and employees, which in turn contribute to the improved efficiency in performing their individual duties. In addition, employees are critical to any business and these have also resulted in low employee turnover, particularly for small businesses that compete with those larger companies that can provide better pay and more benefits.
Major Threats faced by Small Businesses
Small businesses have faced many threats, not just day-to-day management, and will be continuously dealing with multitude of challenges ahead in the near future to keep their businesses afloat and to ensure their long-term viability.
Both IS@Work and Able Plumbing have to deal with the radical changing technology as well as the rising cost of operation, especially for the niche market operated by IS@Work. The demand in cost reduction combined with quality enhancement, technological advancement and shortened deliveries by their customers may potentially increase the company's cost of operation. Moreover, competitors with lower manpower and establishment cost often like to offer competitive lower rates which may results in certain R&D area untenable. The threat of losing some of these customers may force the small business to give in their pressing demands on pay cuts and struggle to survive.
As for Able Plumbing, it has to compete effectively in attracting and retaining its quality workforce with their larger counterparts who can provide better benefits and higher salaries to their workers. In addition, demographic trends in the coming years might exacerbate the challenges for small businesses like Able Plumbing in terms of employee recruitment and retention.
The major threat faced by both Mazzario and Paws House is the stiffed competition among their individual counterparts. The high entrepreneur spirit and skill of the Singaporeans will certainly give rise to many new competitors. Although generally competition is healthy to keep all the players on their toes, especially for Paws House, a competitive environment will definitely curtail Paws House's profit. This is not helped by the new introduction of online pet stores such as the famous "Doggyfriend" which may offer relatively lower prices by operating through the free and easily accessible internet without incurring rental expenses.
As for Mazzario, the owners are likely to face an increase in the rental and overhead cost which are beyond their means to sustain and may require relocation of the business to a more affordable premise. While relocating may help in alleviating these expenses, Mazzario also has to consider on the risk of losing their initial client-base which may lead to declining sales in the future. Other than the potential customers, other factors of consideration include the population, their economic base as well as competitors. In addition, the owners have to bear the additional expenses incurred without any income generated during the relocation process.
Methods used to determine the Sales Price of each Small Business
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Selling a small business can be a challenging undertaking. Though there is no one magic solution that will come out with the absolute correct price, there are still several different ways in which the sales price of the small business can be set.
Asset-based valuation method such as adjusted book value is preferably used in determining the sales price of IS@Work due to the complexity of calculations involved and numerous uncertainties present in the market which make it harder to predict its future earnings. Furthermore, it is relatively easier to determine the firm's asset and liabilities and adjusted to reflect their current worth as the company was formed for only 5 years which make it easier to track back its historical data.
Similarly, Able Plumbing could also adopt the same valuation method by deducting its liabilities from the total tangible and intangible assets of the business calculated. Even though the company undertakes projects based on the market's demand, it is often too difficult to obtain accurate information about market price, due to the special circumstances of the individual business being considered.
Being an entrepreneur like the owners of Mazzario who focus on innovation and risk-taking, it is essential to weigh the future cost and benefits. Thus, Earning-based valuation method such as Return on investment (ROI) approach will be chosen to valuate Mazzario. ROI method evaluates Mazzario's survival, their ability to expand, repay debts and obtained capital growth which may be the core interest of the present purchasers. Furthermore, it provides a good benchmark for purchasers in their decision making process and is commonly used by different industries.
As for the owners of Paw House who are not familiar with valuation methodologies, going market rate method would be the best alternative used to valuate Paws House. As this method avoids the need to undertake detailed calculations or complex financial analysis, the owners may find it relatively easier to understand. Moreover, it does not take into account the future earnings potential of the business or the value of the assets in hand.