25 July 2014
Maximising chances of start-up success
Hong Kong’s famous can-do spirit and the relative ease with which a new venture can be established have inspired thousands of entrepreneurs to take the plunge and launch their own businesses. But as many budding Zuckerbergs have discovered, it takes more than a good idea to achieve lasting success.
Intrigued as to why some aspiring entrepreneurs hit the jackpot while others somehow stumble, respected business professional Hermus Siu Hing Kwan sought answers by focusing research for his DBA (doctor of business administration) thesis on the similarities and differences which characterise entrepreneurs running successful SMEs and start-ups.
The research showed, for example, that those who do well make motivation a priority, have a clear understanding of their business goals, and define the strategies needed to achieve those goals. Other young entrepreneurs can display the same passion for their projects, but lack the practical problem-solving skills and may not have the drive and determination to overcome challenges.
In undertaking the research, Siu wanted to answer three main questions. These centred on why so many young entrepreneurs still meet with failure, what characteristics are common to those who succeed, and what the Hong Kong business community and government could do to offer more support.
If a start-up business is going to fail, it usually fails within the first three years
By analysing government data and general business statistics, as well as conducting interviews with successful SME owners and potential entrepreneurs, Siu developed a ranking and reference system. The main objective was to produce a series of 60 checkpoints for people planning to start a business. This enables them to see if they have the right characteristics, when compared with those who have made it, and if they are sufficiently prepared to strike out on their own.
"My research aims to provide a tool that can help young entrepreneurs to be better prepared and ensure they are as ready as they can be before launching a business," says Siu, who is president of both America High Tech Company (Hong Kong) and Zhuhai Whole Perfect Technics (China). "I was also looking for ways to make better use of the social resources to support suitable young entrepreneurs."
Hermus Siu Hing Kwan was invited to present his research findings in ABMC 2013 the Fourth Asian Business and Management Conference held in Osaka, Japan
The research criteria focused on SMEs with a successful track record stretching back more than three years and young entrepreneurs under 35 years old. "If a start-up business is going to fail, it usually fails within the first three years," says Siu, who is studying a DBA at Hong Kong’s City University. The programme is designed specifically for senior executives keen to undertake rigorous research in areas of business which have a practical impact and implications for society at large.
Often, Siu notes, it is not the type of venture or conditions in the industry sector which determine whether a start-up rises or falls. As important are the characteristics and abilities of the individual entrepreneur. For instance, among young entrepreneurs, there can be a tendency to believe they are smarter than their competitors and that this "smartness" will win customers. However, according to Siu, this is not the case.
"From my personal experiences and the findings of my research, trust is one of the most important elements of entrepreneurship," he says. "A loyal customer base is built and sustained by trust."
In general, Siu believes there is a need for more soft skills training to complement business training in order to develop the necessary characteristics. "The type of training currently available may help entrepreneurs with a few years’ experience, but may not be so useful during the early stages of entrepreneurial activities."
He adds that positive characteristics such as self-discipline can make a significant difference when seeking business financing from venture capitalists during the initial start-up phase. To further improve their chances of business success, Siu advises potential entrepreneurs to learn continuously from the markets they plan to operate in. They should keep a close eye on developments in the wider business environment and be aware of moves made by actual or possible competitors. It also makes sense to take every opportunity to talk to and learn from successful business people. "Potential entrepreneurs can increase their chances of success by spending more time preparing," Siu says. "The key focus is how to get the venture set up and in a sufficiently strong position to maintain the expenses of running the business."