How to turn retrenchment into your first start-up business

Dr Biz • October 16, 2020

Necessity, as the saying goes, is the mother of invention, and so a start-up business is often the result of necessity. The current Covid-19 pandemic is wreaking havoc on the global economy, with workers everywhere facing new challenges as businesses struggle to keep their heads above water. In Singapore alone, a total of 11,350 people faced retrenchment, or redundancy, in the first half of 2020, which is higher than the number of job losses recorded during the SARS epidemic of 2002-04.

The crisis has, however, also presented opportunities. Between January and September, for example, a total of 40,011 new businesses were registered - a net gain of nearly 7,000 after closures were counted, with even hard hit sectors like food and beverage growing during the Covid-19 period. The challenges presented by the circuit breaker measures, as well as the increased hygiene requirements that are now part of our daily lives, have also prompted the launch of start-up businesses in sectors from healthcare to beauty.

From laid-off to start-up business

Retrenchment, while a difficult time for most, can present a unique opportunity to launch the start-up business you have always dreamed of, but never had the time or money to actually do. According to the Ministry of Manpower, nine out of ten eligible Singaporean employees received retrenchment payouts between April and September. Around 84% of those workers were typically given at least two weeks salary per year of service, with others enjoying further retrenchment benefits depending on the length of their service.

For some workers, a retrenchment payment might be a significant sum of money potentially totalling months’ worth of wages. For others, of course, it may be much less. The good news, though, is that a start-up business today actually requires very little capital to get going. Rachel Lim, founder of Love, Bonito, for example, invested just $400 in her online fashion business to start with, yet today her business boasts operations in four countries and recently raised USD $13 million in its latest investment round.

It’s all about (start-up) ideas

Even with a large amount of capital to start, ask any entrepreneur and they will tell you that – actually – the most important thing when it comes to launching a business is the idea. Rather than simply open a cafe or restaurant, for example, successful owners think about the stories they want to tell through their products. Dr Biz client Sushi Koike, for example, is a Japanese restaurant that specialises in Edomae-sushi, a special type of the national dish that runs in Chef Koji Koike’s family. Every dish served is an attempt to communicate the story of the founder’s childhood and his love and passion for his family business.

Similarly, knowing your “why”, is also important, according to founder of Olsen Bakery Phua Jiamin. As Jiamin explained in a recent interview with us, having a firm grasp on the reason why you launched your business, what it stands for and why you keep going will help a start-up business in the long-term. She says: “There will be tough times: times when you lose money, lose people you thought were your friends and lose things that you thought were important. Knowing your why will help you through even your lowest moments!”

Deal with the details

While big ideas are important for a start-up business, though, facts, figures and finer details are important too. Indeed, recent research suggests that start-ups that launch with a business plan are twice as likely to succeed than those that don’t. Important components of a business plan include a company description that features your “why”; a market, customer and competition analysis; your management breakdown; a marketing and sales plan; and, finally, some financial projections. You will likely deviate from this plan and you grow and develop, but it’s a great starting point. New founders can head over to Enterprise Singapore’s Business Toolkit for help and guidance.

While not the most exciting part of launching a start-up business, administration is also important. Singapore is one of the more friendly places to start a business in the world, however there is still plenty of paperwork to do. This includes incorporation, the appointment of shareholders, corporate secretarial and - of course - accounting, among other tasks. Busy founders can be tempted to rush through these tasks, but this can cause problems later on. Instead, consider hiring a start-up business specialist like Dr Biz who can guide you through the smallprint while you focus on turning retrenchment into the start-up business of your dreams.

At Dr Biz, we provide tailored and comprehensive solutions for our client's business needs. From incorporation to accountancy, tax and payroll, to professional advisory services, we help businesses in Singapore assess potential risks and become more cost effective and efficient.

To find out more, please feel free to contact us.

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