The 23 million USD Hotel Deal

Last week, someone told me a deal where someone is selling his three stars hotel for 72 million Malaysian Ringgit (Approximately 23 million US dollars). The hotel is located in downtown prime area. It has around 150 rooms. Getting at least 80% occupancy is definitely not a problem.

Unfortunately, the deal does not many any sense. Assuming that the hotel is paid in cash without loan and the occupancy rate is 100% throughout the year. An average room rates of 200 Malaysian Ringgit (65 US dollars) a night. The annual sales would be around 12 million Malaysian Ringgit (4 million US dollars).

If the cost of operation takes about 30% of the sales. That is a profit of 8.4 million Malaysian Ringgit (2.8 million US dollars). The buyer would still need 8.4 years to break even.

That is a very big if, as such deals normally involve certain amount of loans and hotels are normally required to be refurbished every three to four years. As such, the value of the property has far exceeded the value of the business.

My gut feeling tells me that the current owner was never keen in developing the hotel business. Rather they are using the property as a form of investment and sell the property when the price is right.

In my future blog entry, I will try to explain how to evaluate a project.

Holding Your Ground and Looking for Customers

My business has been up since April 2014. Until today, we made multiple bids for hotel projects and have also received some import/ export queries. So far, our success rate is zero.

If I tell you that I am not nervous and desperate, I would be lying to you. Every month, the cash burning rate is around 1000 MYR/ 300 USD. The longer time I have no business, the bigger hole that myself and other business partners would be in.

For those who aspires owning a business and wanted to quit the current job. It is vital to plan ahead.

1. Keep your job until your side business starts to make money.
2. Save up! Forget about the movies, or eating out. Before you spent the next dollar, think whether it can contribute to your business funds or savings.
3. Calculate your personal monthly expenditure and the business's. From the calculation, you would know how much your business needs to make in order to sustain yourself and itself. 
4. Be careful of cost! I am lucky that my business partner own the property, thus we do not have pay the rental now. Due to our small operations, the services that we use are either the cheapest or free. For example, we are only using Google Drive's free 5GB storage for our work. 
5. Plan to call or bid for business on a regular basis. There are not many hotel projects out there in the market. The partners make sure to have weekly discussions on who and where to look for customers.

The above five points are just my personal experience. The business journey ahead remains uncertain and precarious. This is what being a business person is all about. For the person who is thinking of starting or struggling with the business, I hope this blog inspires you and tell you that you are not alone.

Good luck in getting the first customer. 

Blogging Again

Have not blogged for ages. No, I did not stop because my business folded. Rather, a new chapter is now open for my business.

Since April, I have setup another company that deals with hotel supplies and consultation. It is called Stark & Bare. The journey of setting it up has not been easy, as this is essentially a three person company. Each of one us has our own unique responsibility.

As for my role, I have to work on the accounting system, web page, and legal matters. The other business partners would be doing sales and marketing.

There has not been any business yet. The most important item is now about getting sales, but making sure we have the necessary system and process in place. In the coming blogs, I will share more about how my business is being setup and lessons learned.

Stay tuned! It is good to be back!

It is Your Problem

I have met many friends who aspire to become a business person. Many have tried and failed. While some did not even started. One of the biggest difference between running your own business and working are the magnitude of the problems that you would face.

If you are running your own business, the survival of the organization is your problem. This may ranges from employee engagement to the cleanliness of the toilet. In work, you only need to worry about issues that revolve around your area of job.

Therefore, besides only having passion. Are you willing to handle whatever issues that are thrown at you, regardless of its sizes and magnitude? In your own business, there is no such thing as a small problem. If is not resolve, it will come back and may get bigger. Even if you have a team to support your business, you would still need to direct resources and have the right vision to solve the problem.

If you are already in business. Ask yourself, what are the problems that business is facing? How can you solve it? You better start to think about it now, as it will not go away and you will have to solve it. It is your problem. You have to own it.

It Does Not Matter Where You Are From...

I have been a big advocate about not giving up. Whether is starting a business or going through life's setback. It is important to dig deep in your heart and know what you want. Never get anchored down by your past experience.

What I have Learned from a Star Trek TNG episode called Tapestry.

I saw this episode nearly 15 years ago in Australia. This episode was a character driven episode about the show's main character -- Captain Jean Luc Picard. That time, I never really appreciate the lesson behind the show. I just find it intriguing to learn about Picard's past. 

Watching this episode again, I have learned something new. Who says, we cannot learn new things from watching television?



This is the speech from the show.

Au contraire. He's the person you wanted to be: one who was less arrogant and undisciplined in his youth, one who was less like me... The Jean-Luc Picard *you* wanted to be, the one who did *not* fight the Nausicaan, had quite a different career from the one you remember. That Picard never had a brush with death, never came face to face with his own mortality, never realized how fragile life is or how important each moment must be. So his life never came into focus. He drifted through much of his career, with no plan or agenda, going from one assignment to the next, never seizing the opportunities that presented themselves. He never led the away team on Milika III to save the Ambassador; or take charge of the Stargazer's bridge when its captain was killed. And no one ever offered him a command. He learned to play it safe - and he never, ever, got noticed by anyone.

In life, we have to learn to stay focus and seize each moment in life. There will be times where we have to take some risk and stand out in the crowd -- to get noticed. Getting notice it means doing a job well done. You may say, you are already doing a good job but you are not getting noticed. Yes! You could be right. Ask yourself, what have you done lately to get yourself noticed? There is no need to brag about yourself, but you will still need to reach out to the relevant people. This could be your teacher, your manager, owner of the company etc. Let them know about your passion, let them know who you are.

True, sometimes you may messed up and many people would see. In the future, would anyone really remember that you messed up? Ask yourself again, when did you remember your friends or other people messed up? Even if you did, what does it mean to them? Nothing! This does not stop them from pursuing what they want in life. So, you should not let it stop yourself as well.

Start right now, go out there and reach out. Take some risk. Be good at what you do. Be noticed.

You Need Passion Rather Than Money

Many people told me that they do not have the money to start something. This is partly true. The same time, I am also seeing this as lack of passion and interest to make the idea into reality.

No doubt certain business requires high capital expenditure. You can always start small. When I created the Better Dining site, I just have a three years old Ubuntu Linux machine. All the application that I used are part of the Linux bundle. Except for the hardware, the software that I used are free! The most expensive part of the setup is actually signing up with sitesell for web hosting and Search Engine Optimization. That cost 299 USD. The only running cost that I have is the internet connection.

Yes! I have not been making a lot of money through the site. Yet, I had a great time working on the site. I have learned a lot about web publishing writing up on topics that I like. Creating and researching content for the site is not work for me. Rather it is just something that I do outside of my regular work hours. Working on the site has become such a habit that I will uncomfortable if I miss a day.

Starting today, ask yourself. What is your passion? With passion comes creativity. That passion may someday help you to put food on the table.