Month: February 2020

10 Best Books to Read Before Starting a Business

Starting your own business can be incredibly rewarding, but it also comes with a great amount of financial risk. If you’re going to strike it out on your own, it’s important to arm yourself with as much practical business knowledge as you can. You certainly don’t want to be investing your life savings into your exciting new venture, only to have it struggling to survive because you didn’t know enough about the complexities of entrepreneurship. Here’s a list of 10 best books to read before you start your own business. This list has been categorized by the different functional skills all business leaders will need to master.

Finance

1. Financial Statements: A Step-by-Step Guide to Understanding and Creating Financial Reports, by Thomas Ittelson

Accounting is the language of business. As a successful business owner, you’ll likely be making many transactions every day – whether it’s selling to customers, taking advance orders, or paying a multitude of suppliers on different payment terms. This book will equip you with the finance skills you’ll need to keep track of all this money going in and out of your company.

You’ll learn how to interpret financial statements, and how to create them. If you think accounting is dry and overly technical, think again! This book gently guides you through all the important accounting concepts that business owners need, so you’ll always be on top of your company’s finances.

2. Investment Banking: Valuation, Leveraged Buyouts, and Mergers & Acquisitions, by Rosenbaum & Pearl

Beyond dealing with accounting statements, you’ll also need to know how to financially value whatever projects you’re running in your business, as well as your business itself. This is where Discounted Cash Flow (DCF) analysis comes in.

This book is the gold standard for learning DCF analysis, and is issued to all new investment bankers at top institutions like Goldman Sachs and J.P. Morgan.

Why is Discounted Cash Flow analysis a crucial skill for business owners?

1. It allows you to calculate the returns of business projects, so you know whether it’s a good idea to invest money into a project or not.
2. It allows you to decide which business projects will give you the best returns, so if you have competing ideas you can make an informed choice.
3. It is a more precise and rigorous valuation method compared to other means like profit multiples, and is a great complement to other return measures like Internal Rate of Return (IRR).
4. It allows you to precisely value your business as a whole, which is absolutely crucial if you plan to take on external investments, or want to sell your business.

Strategy

1. The Lean Startup, by Eris Ries

This book has become the de-facto bible for anyone looking to launch a new business. Ries draws inspiration from the scientific method, describing how the highest performing businesses are obsessed with measuring everything (because if you don’t measure something, how can you hope to improve it?) It lays out the now-famous “lean startup” methodology for achieving hyper-growth in any business: define a business hypothesis, test the hypothesis, measure results, and repeat – all within a rapid timeframe measured in weeks.

The book walks readers through how to employ this lean methodology across all parts of a company, and what results entrepreneurs can expect from using this method to run their business. It’s a strong testament to the sheer efficacy of Ries’ methods that some of the biggest technology companies in the world – from Google to Microsoft – actively use lean methodology to run multiple aspects of their operations.

2. Zero to One: Notes on Startups, or How to Build the Future, by Peter Thiel

Peter Thiel is a Silicon Valley billionaire who co-founded PayPal, and was Facebook’s first outside investor. In Zero to One, Thiel delivers incredible insights into the characteristics that the most successful startups in the world possess. He discusses various strategy topics like:

• Start your business in niche markets that are underserved, before expanding to bigger adjacent markets. Amazon is a good example of this – they started & conquered a very narrow market (books only), before moving into CDs, and more and more markets until they grew into the all-encompassing behemoth they are today.
• To be massively successful, you must escape competition. Compare the US airline industry to Google. In 2012, US airlines generated a total of $160 billion in revenue, while Google only generated $50 billion. Yet Google retained 21% of those sales as profits – more than 100x the airline industry’s profit margin. Because Google has moved so far ahead of its competition, its market value today is a staggering 8 times that of every single US airline combined. Individual airlines couldn’t find a way to escape competition, but Google with its superior technology did.
• To truly defeat competition, entrepreneurs must aim to develop a product 10x better than competitors so you can completely dominate a market; incremental improvements will not get you far enough.
• You can achieve this 10x improvement through various means: proprietary technology, branding, network effects, or superior unit economics.
• Sales is just as important as the product. You cannot adopt a “build it and they will come” mentality.

The book contains many strategy arguments written from a refreshingly perceptive point of view, built on the experience of an entrepreneur who built a global payments company, and helped oversee the growth of the world’s biggest social media company.

Sales

1. High-Profit Prospecting: Powerful Strategies to Find the Best Leads and Drive Breakthrough Sales Results, by Mark Hunter

How do you get more people interested in what you’re selling? How do you know which leads are most likely to buy what you’re selling? And what’s the right way to approach these potential customers? This book offers you a step-by-step guide to overcoming these fundamental sales challenges that you’ll face every day as a business owner. It teaches you the art of generating a constant pipeline of high-quality sales leads, and converting as many of them as possible into paying customers. Running your own business is an everyday hustle, so give yourself the best training possible with this book.

2. The Science of Selling, by David Hoffeld

David Hoffeld is a renowned sales trainer who’s lectured at Harvard Business School and been featured in publications like the Wall Street Journal. His book guides readers on how to sell more to customers using an evidence-backed, science-based approach. The book explains that emotions are a far bigger portion of customers’ buying process than most salespeople recognise, and draws on an expert blend of neurobiology and economics to explain scientifically-proven patterns that consumers display when deciding where & how to spend their money.

The book walks you through how to employ key concepts like evoking specific emotions (rather than just ideas) to increase customer engagement and drive purchases, increasing presence of mind in consumers to reduce competitor mind-share, and using psychology to overcome objections and close sales. These are all actionable steps that entrepreneurs should leverage to sell effectively.   

Marketing

1. Contagious: Why Things Catch On, by Jonah Berger

Have you ever thought about why some products or services are used by millions of people worldwide, while others remain completely obscure? Jonah Berger, a Professor of Marketing at the acclaimed Wharton School of Business, lays out years of research to explain why certain advertisements, products, videos, and trends catch on like wildfire – yet others will never see the light of day no matter how inherently brilliant they are. This book discerns 6 key concepts that every viral product shares: from concepts like “social currency”, which are products that make the users look good to people they know, to intelligent use of marketing “triggers”, which keep your product front-and-centre of consumer’s minds. Want to create a business that millions of people will know and love? Make sure you give this book a try.

2. Hooked: How to Build Habit-Forming Products, by Nir Eyal

It’s often said that the best products are ones that users simply can’t live without. Do you want your product to be so good that your customers just can’t stop using them? If you say yes (and who wouldn’t?), then this book is a must-read. Nir Eyal investigates some of the most successful global startups, and the clever strategies they use to influence the behavior of hundreds of millions (or billions) of consumers every day. You’ll learn the real steps that business owners can take to make their products tremendously sticky – products that users will keep coming back to use, over and over again.

Culture & People

1. Work Rules: Insights from Inside Google That Will Transform How You Live and Lead, by Lazslo Bock

You’ve probably heard of some famous workplace benefits that Google offers its employees: free gourmet food, free shuttle buses to work, free childcare, and many other great perks. But material perks like these only go so far towards creating a happy workforce. What are the real fundamental reasons why Google employees are so content, and therefore so uniquely productive and creative in their jobs?

This book details the core people-management principles that Google practices for its 100,000+ global workers: an open & flat organization, honest & constant communication, recognition of employee contributions, and a commitment to work-life balance. People are the core of any organisation, and this book provides deeply insightful lessons that business owners can leverage to build a strongly motivated, high-impact workforce.

2. Principles: Life and Work, by Ray Dalio

Principles: Life and Work comes from the billionaire founder of Bridgewater, the world’s largest hedge fund that manages over USD140+ billion in assets. Dalio explains the key management principles that he’s found most effective in building Bridgewater’s 1000-strong workforce over the past 30 years, and how any company can use these same principles to achieve bigger, better results with its people.

Some of the best lessons include:

1. Radical transparency: Build a culture that allows the truth to surface beyond bureaucracy or ulterior motives, so that the best executive decisions can be made.
2. Accept that failure comes with innovation: A culture that punishes all mistakes will punish innovation, because getting some things wrong is a fundamental part of creating new ideas. Embrace failure as a natural part of growth – so long as you fail fast and recover, and avoid making the same mistakes twice.
3. Constant evaluation of human capital: Define clearly how you will measure performance and what tools you will use to track performance. Consistently analyse these metrics, and use this data to provide honest feedback to produce a workforce operating with maximal efficiency.

Study these 10 essential business books religiously, and the knowledge you’ll earn will pay handsome rewards. If you end up being successful enough, remember to write a book about how you built your amazing business – it just might end up on a list like this.

You’re tired of the corporate life.

You want to be your own boss.

You love drinking coffee, and want to share your caffeinated passion with everyone else.

So why not open a café? Well, hang on cowboy. Before you dive into the deep end of things, make sure you know what you’re getting into.

Here’s a handy guide on what it will cost to open a café in Singapore:

Rental

Leasing a space in jam-packed Singapore will be your single biggest recurring expense.

Central Business District (CBD)

A prime location in areas like City Hall or Raffles Place will cost between $10 to $20 per square foot. So for an average 1,000 square feet café, expect to pay $10,000 to $20,000 in rent each month.

Residential Suburbs

A popular strategy for would-be café owners has been to lease places in residential neighbourhoods – areas like Serangoon, Tampines, and Jalan Besar. Although costs are lower than in the CBD, rent here is still not cheap.

Expect to pay between $5 to $9 per square foot, for a monthly rent of $5,000 to $9,000.

Deposits

You will need to set aside a deposit when signing the lease – amounts will range between 3 to 6 months of rent. In addition to the deposit funds, you should also have 3-4 months’ worth of operational costs (rent, salaries, consumables, etc.) saved in case you do not generate sufficient revenue in the early stages of your business. This will be one of the largest components of your start-up costs.

Rent Hikes

Given the strong demand for commercial spaces, you will likely face rent increases from your landlord when your lease expires. Experienced F&B owners who have inside contacts in the industry may be able to negotiate caps on rent increases, along with other perks like lower rental deposits. However, if you are new to the F&B scene, or your café is too small to warrant more favourable terms, it is unlikely you will have much negotiating leverage.

If it is your first time starting a café, it would be advisable to go with a shorter lease of around 6 months or so. Although it is likely your rent will be hiked at the end of your contract, a shorter lease minimises your sunk costs. Most importantly, it allows you to test how many customers your new business will actually be able to pull in.

If you find your business is not taking off, at least you have the option of either pulling the plug or investing more capital to keep the business going – a long lease would prevent you from exiting a failing business without incurring significant handover costs.

Relocation Costs

You must also consider costs for when your lease expires, and you plan to switch locations. Most leases will include a clause stating that you must restore the location to its original state. Restoration fees typically run around SGD 5,000 for a 1000 square feet café.

Renovation

What happens after you find a great spot for your café? You need to transform those four walls into the place of your coffee-tinted dreams. Expect to pay at least SGD 40,000 for renovating a 1000 square feet café – that includes design consulting, construction work, and furniture.

Given the power of social media in advertising your café, it pays to invest in a chic interior design that is Instagram-friendly. Many popular cafés in Singapore have paid great attention to crafting an alluring space:

Such attractive photos shared by happy customers will be one of your primary advertising channels – it would be wise not to skimp in this area.

Manpower

Labour will be your second biggest recurring expense. The number of staff required will depend on whether you serve cooked food and drinks, or beverages only.

Do note that the above roster only accounts for minimum staffing required.

A full-time Singaporean or PR will cost between $2,000 to $2,500. Given the difficulty in finding full-time staff for F&B jobs, you will likely need to hire part-timers for $7 to $8 an hour.

Training

A basic barista course starts at around SGD 400 per participant. These foundational courses will teach you the basics of proper espresso extraction, milk frothing, and latte art.

If you want to differentiate your café by serving truly exceptional coffee, consider taking professional-level courses. These will teach you advanced brewing and roasting techniques, and how different coffee bean processing methods affect the flavour of the drink. These advanced courses start from SGD 1,000.

If you are at least 25 years old and are a Singaporean/PR, it is advisable to choose a Skillsfuture-accredited course, since you can use your Skillsfuture credits as a subsidy. All Singaporeans/PRs receive $500 in credits upon turning 25. If you have not used your credits yet, it is likely that you will not have to pay anything out of pocket for a basic barista course. (link: https://www.highlandercoffee.com/coffee-academy/skillsfuture-professional-barista-workshop/)

Equipment

Coffee machine costs will vary significantly depending on the make and brand. Top of the line machines from renowned brands like La Marzocco start from $25,000. If this is your first café, go for entry-level commercial machines, like the Lelit PLS2 Giulietta Espresso Machine (url: https://www.amazon.co.uk/PL2SVH2-Giulietta-Espresso-Coffee-Machine/dp/B078YPZRDK), which­­­­­­­ costs $3,500.

A good coffee grinder is just as important as the coffee machine. Many coffee shops will have two grinders – one as a primary, the other as a backup. Lean towards burr grinders rather than blade grinders – the former produces more consistent grinds that make for better coffees.  A good quality grinder, like this one from Anfim starts from SGD 3,000.

If you are just starting out in the coffee scene, it is best to go for more affordable equipment. You can always upgrade your machines once you have built up a solid customer base.

Also, plan to set aside $5,000 for refrigerated display units – you can sell baked goods and chilled sandwiches with these. If you are serving cooked food, allocate another $25,000 for kitchen equipment like stovetops, hoods and ovens.  

Consumables

Using quality beans will make all the difference in the coffees you sell. A great way to keep customers coming back (and new ones coming in) is to consistently invest in great beans. A 1kg bag of good pre-roasted beans will cost $15-20, and will produce about 120 espressos. Set aside at least $500 each month for beans.

Utilities

Water and electricity will cost around $1,000 a month for a typical café that operates around 8-10 hours daily.

How many customers will you need to serve to break even?

The big question. Minimum startup costs are around $120,000.

Let us apply the following assumptions:
1. You sell only coffee (we exclude food for simplicity)
2. A cup of coffee is priced at $4 (market rate)
3. You want to recoup your investment by the end of your lease (6 months)

You would need to sell a total of 30,000 cups of coffee.

If you operate 7 days a week, this means you must sell at least 166 cups every day, on average, to break even.

Protect your investment

Starting a café is expensive. Suffering accidents while running your café is even more expensive.

Your coffee machines could break down. A customer could fall ill after consuming your drinks or food. Your barista might burn himself while making a latte. All these business interruptions will cost you extra money to resolve.

Given the $100,000+ you will spend building your café, make sure you protect your investment with a good F&B business package insurance policy. These all-one-one policies start from only $180 a year! They will provide you several hundred thousand dollars’ worth of insurance covering common F&B risks like:
1. Fire/water leaks damaging your cafe and inventory
2. Loss of business revenue due to inadvertent store closures
3. Customers accidentally injured in your cafe, or falling sick from your food/beverages
4. Employees getting injured while working
5. Employees stealing money from the cash registers
6. …and many more protections to keep your business running smoothly

Cafe insurance package from as low as $180/year. Same-day quote and buy – reach out right now!