Painful advice the recipe to save failing business

Painful advice the recipe to save failing business
Laksania founder Sim Sin Sin and her mentor, businessman Lim Soon Hock, at her outlet in Bugis+. She took his advice to close two outlets. The business has since cut its losses by half and is starting to break even.

CLOSING two outlets in four months was a tough decision for Ms Sim Sin Sin, founder of Laksania, a food business which hires people with disabilities.

But she heeded advice from her mentor, businessman Lim Soon Hock, to close the outlets.

Laksania has since cut its losses by half and is starting to break even.

"What made me most happy is that we've managed to survive, not only on the business side, but also in our social mission," Ms Sim told The Straits Times.

Laksania is one of five social enterprises mentored by business leaders in a pilot by the Ministry of Social and Family Development (MSF) from November 2013 to December last year.

All five said they have benefited from the guidance.

Months before the programme started, Ms Sim was struggling to keep Laksania afloat, and feared that her staff - half of whom have mental or physical disabilities - would be out of work.

Set up in 2008 as a tiny kitchen in the Institute of Mental Health (IMH), it is one of Singapore's first food and beverage social enterprises, and specialises in laksa dishes. It had as many as four outlets in 2013.

But it started facing financial troubles from 2012. It lost the tender for its kitchen space that year, and had to pay much higher rent at its current central kitchen in Kampong Ampat.

Sales at its Jem outlet in Jurong also fell in 2013 when the mall's first-floor ceiling collapsed.

Outlets in East Coast and nex shopping mall in Serangoon had very poor sales.

"They were draining cash. Cashflow was negative and pushing the company to insolvency," said Mr Lim, managing director of corporate advisory firm Plan-B ICAG.

He was previously vice-president at Compaq Computer Asia Pacific, where he helped raise sales from below $60 million to $2 billion in seven years.

Ms Sim said closing the outlets was "one of the most painful business decisions" she had to make. The East Coast outlet closed in December 2013, and the one in nex closed three months later.

"I felt very sim tia (heartache, in Hokkien)," she said.

Acting on Mr Lim's advice, she changed her business model to focus more on catering. This helps to create more jobs for her disabled beneficiaries, most of whom work in the central kitchen instead of her current outlets in Bugis+ and Jem.

A wider variety of food, beyond just laksa dishes, is also offered in its catering service.

The other four social enterprises - Bettr Barista Coffee Academy; Bliss Restaurant and Catering; Eighteen Chefs; and events agency Adrenalin Group - said they got useful tips from the mentoring programme.

Eighteen Chefs founder Benny Se Teo said: "We learnt how the big boys do business, and what their mindset is."

The mentors for the scheme included Mr Suhaimi Rafdi, former chief executive of Cathay Organisation, and Mr Andrew Khoo, director at ABR Holdings which runs businesses such as restaurant chain Swensen's.

Mr Khoo said: "I found it very fulfilling. I see it as a form of skills-based volunteerism, too."

Mr Lim added: "Many social entrepreneurs sacrificed more than necessary in pursuit of a social cause... We should not do nothing when there is a compelling cause that needs help."

An MSF spokesman said similar mentoring programmes may be offered at a new social enterprise centre to be set up by June.

The centre will be led by MSF and three other key agencies in the sector: the Social Enterprise Association, the Singapore Totalisator Board and the National Council of Social Service.

goyshiyi@sph.com.sg


This article was first published on Feb 21, 2015.
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