Entrepreneurship - Lesson Well Learned

When I started my business, I always believed that a person past records and current professional outlook are mutually exclusive. How wrong I was !

I started my business on a shoestring budget. However, I was very passionate about the idea that my business should deliver products and services on the basis of “best quality & best price packaged with best after sale services”. The first three years saw me selling off my house and car and without any paycheck to sustain the business. It was tough but in way I was successful in creating a reputation for the business.

The business grow from a turnover of RM 180K to RM 5Million a year, I thought it was the time to step back a bit and relax. I start hiring so called “professional” manager to run my business. I hired a senior manager. Prior to hiring him, I was told by his ex-colleague of his suspicious track records. I refused to believe them on the simple reason that a person should not be judged purely on his past to decide his future professional performances.

Needless to say, the first year was okay. I guess I do have my weak spot. I began to trust him too much to the extend of leaving all the day to day operations to him. Probably because I need to take break from the sweats of the early years. However, on the 2nd years, I start to receive calls from customers claiming that we priced ourself too high and start losing business. At the same time, the business also starting to have problem making payroll and missing the dateline to pay strategic suppliers.

Not sounding to be too alarmed. I begin to conduct personal investigations. At the end I was shock to find out the followings hanky panky :

• my trusted manager negotiated with some suppliers to have a cut from purchases made resulting in the company having higher costs of goods and thus becoming uncompetitive. We lost almost 60% of our existing customers
• my trusted manager extending unauthorized credits to his friends to make purchases without collecting a single cent. The bad debts cost the company approximately RM 100K.
• my trusted manager worked with his friends to siphoned off company businesses and passing strategic project information resulting in the company started to lose most of the project we bidded.
• my trsuted manager made unauthorized payment with fictitious claims.
• my trusted manager signing and authorizing Delivery Orders without sighting the goods

I estimated the whole fiasco cost the business no less than RM 500K. There is no way I can recover the losses. The only option I can take is to cut off the cancer and move forward to minimized the damages. I finally has no choice but confronted him during Chinese new year eve. Of course he denied the wrong doings but finally admitted to his guilts. We have a gentleman agreement that he be allowed to leave quietly. This I did to remove the cancer and some of the sidekicks associated with him as soon as possible. The subsequent one and a half years was no less easy. I was threading on a very frightening position. The company was running on negative cash flow again with all our major customers switched to competitors. The company's tank was dried and I have no money left. The company almost went bust. Needless to say, I was a very lonely and desperate CEO. But somehow, through the dedication of some remaining loyal personnel going all out, we managed to secure most of our old customers back and gain new customers. I was indeed very lucky this time because out of this unfortunate incident, we come out stronger with less overheads. I am now back on course to achieve my targetted turnover.

The funny thing is, my fired ex-manager did called me a few times after the company is back on track wanting to deal with me on passing some of his current company's projects to me for a cut on commissions. Old habits does indeed die hard. I guess some people have no ethical outlook at all. Money does do all the talking sometimes !

The moral of the story is, as an entrepreneur, you need to be in control of every aspect of the operations and not to be too trusting. Set the direction and procedures, and made it fully complied by everybody. You only got yourself to blame if you leave any room for your personnel to be tempted to commit breach of trust. Do not allow your suppliers to find excuses to pay incentives to your personnel. Cut off the suppliers if you have the slightest suspicions no matter how legitimate the case was presented to you. And another point I need to highlight is, before hiring any key personnel, please do not allowed yourself to be sweet talked by their fictitious accomplishments. Do a thorough check on all his previous employers and associates. And equally important is, no matter how trusting you are, never, I repeat, never let your personnel to have free hand running your business. You should be the driver, you decide the direction and policies, do not take the easy way out by allowing your personnel to decide on your behalf and let them to have “freehand”.

Entrepreneurship is a long term passionate commitment and not for the faint hearted.