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
