Closure of Kampung@Simpang Bedok: Team lost $1m, man faces bankruptcy

Helping the disadvantaged can be disadvantageous.

For one well-intentioned man, it cost him a whopping $1 million.

That's what Kampung@Simpang Bedok, meant to help aspiring hawkers run their own business, cost Mr Lionel Lye's team.

The 800-seater, 10,000 sq ft, 32-stall place opened in 2012.

A food and beverage (F&B) group called Best of Asia, made up of 12 friends from various professions, invested $500,000 to kick-start Singapore's first privately-run hawker centre.

Mr Lye, a renovator, was the managing director.

A second group of sponsors pumped in another $500,000.

Mr Lye, 54, said of their not-for-profit model: "We need to have a place in our society where the less well-off can make a living for their families, learn to stand on their feet and be proud of themselves."

Initially, he thought of hiring former convicts after contacts from halfway houses told him about their struggles to land a job. But juggling their probation timing was tough, so Mr Lye worked with disadvantaged families instead.

Under his watch, a handful of tenants paid monthly rent of more than $2,000, depending on their financial background, and kept the profits.

Those unable to pay rent were paid a salary to operate the stall until they were able to take over.

The venture folded last October, before its lease with Far East Organisation was up.

As the venture's personal guarantor, he may face bankruptcy.

High price

Another social entrepreneur, Dignity Kitchen founder Koh Seng Choon, also spent $1 million to run his hawker training school for the disabled and disadvantaged. It was, in his words, the "equivalent of buying a Ferrari".

The venture made a profit of almost $4,000 last year, more than three years after it started in 2010.

But the path can be rocky.

In 2009, about a third of the 73 social enterprises in funding schemes failed, The Straits Times reported.

There are about 400 social enterprises here, industry watchers like the Social Enterprise Association estimated. Covering a range of causes and business models, they are bound by the common aim to create social impact in what they do.

Mr Koh estimated he lost about $1,000 a day initially.

"People asked me whether I ever wanted to give up. Of course, I did. Every single day."

Another social entrepreneur, Mr Benny Se Teo, founder of Western food chain Eighteen chefs, said: "F&B people are crazy people. It's quite normal to lose $15,000 a month when you first start. Not everyone can take that."

What went wrong

Property experts like Mr Eugene Lim said it was possible to run up a $1 million tab, depending on the size and condition of the place.

"The amount is not a lot, especially if built from scratch," said Mr Lim, who is ERA Realty's key executive officer.

He was referring to the number of stalls, infrastructure set-up and renovation costs.

Said Mr Nicholas Mak, head of consultancy and research at property consultancy SLP International: "Operating costs can hit five figures every month, with expenses like cleaning, pest control, insurance, etc."

Previous experience

Despite having previous experience running a cafe, Mr Lye admitted that his naivety and lack of backup plans cost him dearly.

"Though everybody was telling me not to (run a social enterprise), I thought people would see the goodness in it," he said.

"But I ended up wasting almost two years of my life doing this without pay."

He faced problems such as stallholders operating when they wanted, buying ingredients for those who could not afford to, poor accessibility (see report above right) and being personal guarantor for the venture.

Despite the setbacks, Mr Lye hopes to share the lessons learnt with other entrepreneurs to create "an improved model".

He said: "You can't describe the feeling you get, seeing people's joy when they make money and know that they can fend for themselves."

'Women wearing heels won't climb stairs'

As they climbed the stairs to the hawker centre, her mother turned and told Madam Fion Phua: "Girl, the food here better be worth the climb!"

The matriarch, in her 70s, was panting by the time she reached Kampung@Simpang Bedok.

Singapore's first privately-run hawker centre was hard to reach, tucked away on the second storey, with no lifts or escalators.

"Accessibility was a problem," said Madam Phua, a club membership broker.

"The lack of lifts put off the elderly, mothers with prams and those in wheelchairs.

"Women wearing high heels were also not keen to climb the stairs."

She had a charity flea market at Kampung@Simpang Bedok. The money raised from the second-hand items was used to top up needy children's ez-link cards. The clientele came from the surrounding homes and factories and were a mix of residents, domestic workers and construction workers.

Kampung spirit

"The place had a nice kampung atmosphere, with live bands performing during the weekends," Madam Phua, 44, recalled. "Where else can you dine, listen to music and dance?"

But the management pulled the plug last October, after she had operated less than two months and they gave her two days' notice to vacate the premises.

"It folded in such a sudden manner," she said. "It was too fast. Even the people working there had no idea and suddenly, they were out of a job."

In hindsight, having a committed team of qualified people to organise more activities might have helped, she said.

Lessons learnt

Here is what can help sustain a business, whether it is for good or for profit, according to those in the industry

Enforce specific working hours:

Previously, Kampung@Simpang Bedok stallholders ran their business as and when they wished. Having standard regulations in place, such as a minimum number of operating hours, would ensure the place has a certain buzz to it.

Have a core team in place:

Hire suitably-qualified people to run day-to-day operations, rather than rely on volunteers. That means hiring a core team with relevant F&B or logistics experience, who are committed to the venture.

Make it accessible:

If the business is above street level, make sure there are escalators and lifts to take people in. If not, you run the risk of potential customers avoiding the place.

Innovate:

Have backup plans, in case problems crop up.

Tweak the products/services offered according to what the audience prefers. Or identify a gap in the market and come up with the desired goods or services.

Tap on technology and social media to reach out to more people.

Get subsidies and support:

Social enterprises find it hard to sustain low rentals.

Approach agencies that can offer subsidies or longer-term rent controls. Mr Lye said: "Even easing the licensing process for events would help."

This article was first published on June 23, 2014.
Get The New Paper for more stories.