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One February 2008 Sunday
afternoon, I thought I would visit Peninsula Plaza with my Myanmar
agent rather than sit in my Surgery to wait for cases to come in.
My agent told me that a Myanmar business woman (Mrs X) wanted to
get into the real estate business but did not know how to do it.
I wanted to know more about the Myanmar culture and way of life.
Mrs X is very driven and ambitious. She is one of those people who
gets business opportunities (from Mynamar) falling into her lap
many times.
Mrs X is a very friendly and good looking woman in her forties.
She turned her hands palm up on her office table and said,
"Clairvoyants tell me I will succeed in real estate business. "But
so far, I have no luck," she lamented.
"How many fortune tellers did you ask?" I said. 3 opinions of real
estate success through tarot card reading, palm reading and
another method were given to her. This will be too much of a
coincidence. I was impressed. What do you think?
My agent laughed at her and told me that Mrs X showed a well
connected Myanmar businesswoman (Mrs Y) to see an old house at Yio
Chu Kang. Mrs Y wanted to rent it immediately. She wanted to
convert it to short-term rental for Myanmar tourists or people.
She would renovate it. The house was run down by renting to
mulitple Filipino tenants who could not bother to keep it clean.
So Mrs Y could rent it low. She wanted to put the deposit down
immediately.
Mrs X poured cold water on her shoulders. She told her the
location was not near the subway and too far from Orchard Road.
"How far can a small island like Singapore?," I said to Mrs X.
"Have you been to the U.S.A or Australia? Myanmar is a big country
and far means over 1 hour of driving. Yio Chu Kang to downtown is
around 10-minutes drive! Many Singaporeans who think of such long
distance in such a small country are like frogs living inside a
well and can only see the sky above the well!"
Mrs X did not think of advising Mrs Y to do further negotiations
with the landlord and follow up. After all, rentals are very high
in Singapore. This house would be rented at a low rent due to its
non-prime location and run-down state. After a small amount spent
on renovation, Mrs Y has the contacts to rent it out short
term to the numerous Myanmar nationals visiting Singapore to find
work and to visit.
As time proves it, short-term and hotel rentals are sky high in
2008 and probably 2009 and Mrs Y would be able to make a profit on
good quality short-term rentals to the better quality lodgers.
Mrs X did not follow up or show Mrs Y other alternatives as she
seems to prefer staying in her office to provide sales of phone
cards, money exchange and other items.
Mrs X did not seek real estate advice from me or others
actively or do further research. She did not close the deal.
In this situation, a Letter of
Intent to the Landlord with a
good faith deposit would
let Mrs Y do the necessary research and negotiations. Mrs X could
have sought my advice but she did not do so. Nor did she follow up
on real estate with Mrs Y who soon bought 3 Singapore condominiums
from a Myanmar national who is working part-time as a realtor.
That would be a sales of around $3 million or more and a good
commission for Mrs X.
So were the 3 clairvoyants spot on? I think so. It would not be
their fault if Mrs X did not receive the signals from outer space!
Acidic smells of Myanmar cooking wafted into her small office. "Do
you want to sublet your office?" I asked. She said she would. But
her husband would be starting a business and might need the space.
Her husband wanted to work part-time for his boss of many years
and offered to take a lower salary. But the boss increased his
salary.
The husband came to the office. Suddenly he asked me what to do
with his problem? He has a good boss who has just increased his
salary when he asked to be paid less. Since his boss had sold off
the ship, he had nothing to do now.
He wanted to start up his own company. But he did not want to
upset his boss by resigning. A good boss and a good employee.
What a good combination. But he wanted to start up his business
rather than being idle as an employee.
The husband said, "I strongly believe in what the clairvoyant
told me --- I will never
be successful if I start my own
business." He had just formed a company in partnership with
8 people. So, I guess he was not starting his own business by
himself and therefore the clairvoyant's predictions would not
adversely affect him.
"Do you need the 8 people's money? More partners mean more trouble
for the business," I said. "Many partners are lazy and they upset
the business operations. Will the 8 shareholders be contributing
to the business instead of just putting in the money? You are
better off starting up on your own."
"No, they will not be contributing to the business. I don't need
them," the husband shook his head. "How do I approach my boss to
tell him I want to start some business of my own without upsetting
him or resigning? We are family. He is a very good man and an
excellent business man with all the contacts."
I was thinking of Mr X's future and his belief in clairvoyance. I
realise he could not start up on his own as the clairvoyant had
predicted his doom in business if he did that. He had already
stated to me that he believed in his clairvoyant's advice. He
suspected me a non-believer in extra sensory matters though we
had not met before.
Sun burnt brown face due to many years of exposure to the sea, he
would probably be in his fifties or younger. Yet this tall quiet
speaking man looked dark and handsome if a bit stout. How to
resolve his problem without antagonising his kind boss and
aligning with his clairvoyant's advices?
I suggested the following business
arrangement.
1. Form a company with his boss only. 20% to his boss and 80% to
him. His boss would not lose him or feel offended.
2. The company employs him as the Managing Director. He signs a
service/employment contract with the company. The company pays
him (so that he still gets a regular income). He would be
responsible for the success of the operations.
3. His boss has excellent business contacts and would channel
business to this company as he has a share too.
Mr X has two problems.
1. Nobody will trust a start up
2. Where is he going to get $500,000 if the business requires this
amount to buy something?
My 2 solutions.
1. Business contacts of his boss will go to the boss' company. The
boss' company will then subcontract to the start up. Since the
boss has a share, the boss will have the motivation to refer to
the start up and his customers will give business only to him. The
boss would have had paid Mr X to do the business anyway, as an
employee with a fixed remuneration.
2. The $500,000 would be a loan to the company by the boss. The
loan would be with interest and payable to the boss from the
company, not from Mr X.
"How do you know what to do?" Mr X's furrowed forehead
smoothened considerably as if a heavy mental load had been removed
from inside his brain.
My proposals
appeared to resolve his issues of the boss' unhappiness if he
abandon his boss. "Are you a business consultant?"
"No, I am just a vet," I shook my head. I wish I had the
professional
accountancy degree and credentials to back up my proposals. Now, his happy problem is what to do with
the company he had started up with 8 people?
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