The economic outlook is bad, people are being laid off, financial markets are suffering, and credit is tight. It sure seems like a pretty bad time to start your own company, right?
Wrong. At least that's what some of the top young entrepreneurs in Asia believe. "Now is the best time to start a business," claims Patrick Grove, 33, one of the nominees for BusinessWeek's annual search for Asia's best young entrepreneurs. Grove, founder and CEO of media group Catcha and real estate portal iProperty.com, a subsidiary of Sydney-listed IPGA, believes that a lack of competition due to the economic climate, as well as cheaper inputs such as lower rent and wages, make it an ideal time to start a business.
Vivek Pahwa, 27, another nominee, agrees that there will be less competition in every market, but "it's a better time for people who are already in the business to thrive if they have long holding power." Pahwa, who owns matrimonial networking site Secondshaadi.com and car research site Gaadi.com, is also optimistic about the online business, which he thinks is relatively untouched by economic downturns.
Despite the opportunities presented by less competition, there are still challenges in entering and staying in the market. "Our margins are getting thinner, and we can't expect employees to accept lower salary packages," complains Leonard Tan, 30, founder and director of Internet search company PurpleClick Media. Yenn Wong, 27, founder of boutique hotels JIA Hong Kong and JIA Shanghai, also thinks that during difficult times, "bigger companies with stronger cash flow will definitely be challenging smaller companies to obtain a bigger market share."
"Take Care of Current Customers"
Tan cautions aspiring entrepreneurs and small startups to be wary of their cash flow and notes the importance of tiding over the bad times. "Once this is over, companies will start looking to spend money again, and it's important that small companies are ready for the opportunity," he says. Tan advises startups to "take care of current customers and keep them happy with value-added services, because once they rebound, they will be good to you if you rode through the crisis with them."
For these experienced entrepreneurs, two main challenges exist: how to find the right talent, and strategies for growth. "Without good talent, it's hard to scale the business further," says Tan. Grove finds that the strategy of spending a lot of time on ideas is the wrong way to go: "Entrepreneurs spend 80% of their time brainstorming and 20% building an excellent team—it should be the other way around."
Once a company is past its initial hurdles, the struggles are different. "The challenge today is no longer survival, but growth," says Pahwa. Wong believes scaling has its own challenges. "New entrepreneurs like us are expanding very carefully to make sure we do not get stuck in a bad financial situation."
One suggestion that remains constant: perseverance. Grove's company endured losses for the first four years. "People told us to shut down," he says. "But when we finally started making money, it was good to be able to justify the painful experience in the early years."
Click through our slide show of Asia's Best Young Entrepreneur nominees for 2008 and vote for your favorite.