Spirit of Enterprise 2008 Nomination
24 Oct 08
PBA Regional Director Derrick Yap was nominated for the prestigious Spirit Of Enterprise Award.
Below is an interview Mr Derrick Yap conducted by Nur Basyirah Bte Mohd Tamami on 26-Mar-2008 for the award nomination.
PBA's goal is to spearhead technological advancement through partnership with their principals and valued customers. PBA understands just what customers need and its strength lies with its people and partners. One can only produce the best by partnering with the best.
Mr Derrick Yap is a natural-born leader as well as an aspirational entrepreneur. He gives out this positive aura of confidence during the interview. He has taught me the importance of cooperation and that being an entrepreneur has its ups and downs just like an exciting roller-coaster ride.
1. What is the nature of your business?
We are a manufacturing, sub-contracting, trading, servicing, software company. In other words, we are in business to business
2. When and why did you decide to become an entrepreneur / take over your family business? NOTE: If it is not a family business, ask: Do your parents have their own businesses too? Have they inspired you in one way or another? (Select appropriate question according to the entrepreneur being interviewed.)
Yes, my parents have their own businesses. My dad is a constant inspiration to me. He started the business from nothing and I am very motivated to bring it to new heights. I am constantly learning from him and at the same time, modifying strategies that he has used. Times are different and PBA is also at a different level. We used to work with no capital, no experience, no international network and low stock. However now, we have reached a different stage and I am modifying strategies to work with current situations.
3. What are your reasons for choosing to do business in this particular industry?
Business is business. My dad left me a platform. Having which, we can move in any direction that we deem fit. We started with the trading of mechanical items but now, we have our fingers in a variety of industries such as aerospace, software, flat panel display, high technology manufacturing and high precision assembly. There is much opportunity in business to business industry. Rather than to re-invent the wheel, I worked with what we are already good in and build on the strong foundations of PBA.
4. How did you put together all the resources needed to start your business? For example: getting the start-up capital, hiring staff, doing sales and marketing, advertising, etc.
For our new business ventures, we need to raise capital, recruit people and also line a start-up. The PBA Group also provides a successful history and network. Recruitment of staffs is done by inspiring them and convincing them on the direction PBA is heading. We share our profits with our staffs by having a fixed percentage of our profits redistributed as profit sharing. Hence, our staffs are like family. We are not a giant company. Therefore, we attract talents by getting them involved with key issues in our companies. Staffs here do not feel like they are just a number as they can feel and see the decisions they had implemented. This, to many is more important than just salary. There are many creative ways of doing sales, marketing or advertising that do not cost a lot to the company. We create win win situations for everyone. For example, we have advertisements in the papers. But we pool in all our manufacturers including ourselves and launch a full page article at a low cost. We have PR companies that will contact magazines and papers for us. In exchange, our software department offers them a ERP program for free (barter trading). To make something from something is good but a true entrepreneur makes something from nothing.
5. What are some interesting stories you have about your first few customers/first few years in business?
We go out of our way for our customers. We had a case in which our customer needed some parts from Germany very urgently. One day delay was costing them hundreds of thousands of dollars. So, we contacted a local in Germany, paid for his air ticket, hotel stay in Singapore and expenses for the duration he was here. We picked him up from the airport and rove straight to the customer's place at 10pm at night. The customer was waiting for us at the factory gate and all production workers were all on standby just awaiting our parts to reach. This customer has been our loyal supporter ever since.
6. What ignited the spark in you to start a new business venture or to make significant changes in an existing business? How did the idea for your business come about?
The business ideas and inspiration comes from all things in life. For example, I was watching a hawker stall owner. All he did was collect money. I asked him if he knew how to cook and he replied saying that he did not even know how to hold a wok. Then, he explained to me how he manage to make his business so successful without even stepping into the kitchen. Hence, I adopted his idea and use it in out company. Many of my friends are from banking, finance or insurance. I was always curious as to why these industries can pay such big bonuses, or attract good calibre. So, I studied their pay scheme and modified it for PBA. A great source of idea came from everywhere, different industries, novels and inspirational books and movies. When one is obsessed with work, we seem to be able to connect the dots. The reason to make improvements is to better the company. Business is interesting because it is ever-changing, the customer requirements, tools that you can use, people's mentality, the economic environment etc. we make changes to anticipate changes. If changes mare made to catch up with the time, then, we are already late.
7. What are some of the challenges you faced when you first went into business?
To understand this you have to understand our product range which can be found at our website. Our product range in terms of cars and automotives, if you got to compare, ours was somewhat at the higher end like Mercedes and BMW. This means that we would have to sell it at a higher price. So, the market is more niche and this was one of the challenges as most of them were cost sensitive. The second challenge was when we first started a lot of people were not willing to join. They were insecure because the company was smaller and was just starting up. As a result, the good calibre people will feel insecure because they can go somewhere else whereas for the bad calibre people, we probably don't want them to join but are rejected by other companies, ended up joining us. Lastly, high turnover. This is because if you are a small company, it takes some time for you to grow to keep a maturity date. So, before that day comes a lot of people change and when they change, we need to find someone else to cover the jobs. In big companies, there might be four people working on the same thing and are able to cover each other's parts of the job. However, being a small company means being lean and as small as possible. Therefore, having one person to one job.
8. How did you overcome these challenges? Please share some specific examples of the action you took to overcome the challenges.
Firstly, we give our staff equity and after a while we started giving them shares in the company. By giving them shares, they are part owners of the company. Unlike other companies where they can easily fire their workers, our staff do not have to worry (being part owners of the company) about such things and this make their working life much more worthwhile. We came up with a lot of marketing schemes which were more like pay schemes enabling our staff to earn their own commission. Our staff are encouraged to sell products which they think are sellable under the company's name and in return they get their pay commission. If a colleague of theirs decides to sell the same product, he or she will also get a pay commission. In other words, our staffs become their own bosses. Besides that, we also came up with a self governing pay scheme which allows our staff to get both basic and variable pay. Lastly, we are open to suggestions given by our staffs. In many companies, most staff are not heard or even given a chance to carry out their ideas. For us, we listen to our staff and eventually carry out what they had suggested. In other words, implementation of staff ideas.
9. Can you remember your worst day in business or a time when you felt like giving up? What happened that made you feel that way and how did you triumph over it?
There was this period of time I had to take over a shell company. By the time I took over, the old staff had left and two had remained. The people I recruited kept on leaving and customers were complaining about issues beyond our means. It turns out that the old staff had given the company a bad name and we needed to start from scratch. More likely to start from negative because we could not even scrap off the company's name to give it a new one. So, the company's reputation was already very bad. We manage to pick up the company and put it up and running by investing a lot of manpower which was a big risk. I recruited the more experienced people, high calibre people who had PhDs and Masters. This is not a one day thing, in fact, it took us a year for the company to regain its good reputation. This is definitely a long process but when you see another person putting in as much and see how motivated others are and how they are dependant on you, you can really feed off their energy.
10. What is your greatest fear, and how do you manage it?
My greatest fear would have to be fear of the unknown; going in blind. This means PBA venturing into new fields not knowing what kind of uncertainties to expect and the kind of direction we are heading to. Therefore, we started planning, scheduling and setting reachable short to middle term goals. By doing this, we can predict roughly how the future will be for the company instead of long-term goals which we will have problems predicting, being a newbie in this field.
11. When was the moment you realised the business would work and support you?
The moment I realised the business would work was when we started getting referrals and overseas distribution rights. We started as small boys playing with the big boys. But, eventually we ended up beating them at their game. So, from there we began getting referrals which lead to overseas distributors asking PBA for distribution rights.
12. What are some of your proudest business achievements to date? And why are they so important and meaningful to you?
One of my proudest achievements to date would be the Malaysia market. There was a point in time that we worked so late every night. We really enjoyed working together. As a result, we managed to turn the company around in one year's time. Besides that, the working culture is fantastic. We manage to inculcate such a working culture in Malaysia and seeing that it is still there after so many years, gives me a great sense of achievement.
13. How do you define success?
Success is when the business operations move smoothly without the boss involved. And the boss just strategizes and hunts new ventures. In addition, it is also defined when every employee has a sense of belonging to PBA.
14. To what do you most attribute your success? What would you say are the five key elements for starting and running a successful business?
Success depends on the people around you. Without them, the company is worth nothing. To me, there are three key elements. Firstly, a good product that can sell. Secondly, good people who supports you like mentors, partners and employees. Lastly, a good leader that has the right vision or right execution. A leader who inspires his workers to be more hardworking and motivated. Like what Senior Minister Lee Kuan Yew mentioned, a conductor does not have to know how to play all the instruments, but he needs to know what instrument is lacking. From there, we know where to find the musician and how to piece the team together. Success of a conductor depends on the musicians and vice versa.
15. How do you differentiate your business from your competitors? Please provide specific examples.
Our competitors are mostly part number sellers and so what they will do is that they have no value add and buy a lot of stocks. Holding only stocks makes them very vulnerable to changes and attacks in the market by competitors. What if someone comes in with half your price and in the end you lose customers. We don't want that. That is why for PBA, we do hold some stocks but we value add by going down and visit each customer. We provide technical support after the sales service. Everyone in PBA from logistics to purchasers to sales and accountants, go out of their way by exceeding expectations to make sure that our customers are properly served. Thus, doing all extra steps to make sure our customers are happy with our service. Even if someone comes in half the price, customers might think twice because these people might not have the same service as us.
16. How do you build a successful customer base?
It depends a lot on the kind of business that you are in. First, we hit the big companies and the overseas market and then we tap down and convince all the related companies. It will then spread and this will be based on word-of-mouth by customers. Besides that, we also maintain a good reputation with existing customers. As a result, our customer base grows.
17. What are some business ideas you have implemented that created great results in your business?
We have drafted a scheme in which both the Singapore and Malaysia companies can work together. All the subsidiaries and HQ had to work together for overall bonus. Therefore, allowing everyone to work with each other creating a healthy relationship between the two companies. This avoids the typical head on collision where related companies are eager to outshine each other.
18. What do you see for your business in the next 5 years, and does it include any plans for expansion?
We will be listing within the next 5 years doing a lot of merger and acquisitions by adding value to the old supply chain and consolidating all groups into one. We will start going into subcontracting and manufacturing and will be going into the higher end products like flat panel displays and solar panel manufacturing.
19. What is your favourite aspect of being an entrepreneur?
Favourite aspect would be to connect the dots, finding the connections in terms of business opportunities that others cannot see. Thus, looking at the bigger picture. Being an entrepreneur has allowed me to branch out into other fields because everything is a possibility. A quote worth mentioning: A good businessman makes money out of money while an entrepreneur makes money out of nothing.
20. How has being an entrepreneur affected your family life?
Basically I really travel a lot and half the time, I am travelling around. It is bad because I don't have much time spent with the family. Good, in a way that I treasure the moments with my family whenever we have the time.
21. What do you feel is the major difference between entrepreneurs and those who work for someone else?
Entrepreneurs believe a lot in themselves and sometimes they are overconfident. They dare to take calculated risks. Besides that, they like stress, they are addicted to stress. Entrepreneurs are also ambitious and they are able to see far and wide.
22. What are some entrepreneurship qualities that you have which has helped you come this far?
Foresight, ambition, confidence, courage and luck.
23. Do you believe there is some sort of pattern or formula to becoming a successful entrepreneur?
Yes. Another line worth quoting: Secrets to his success are his failures. Entrepreneurs failed sometimes in their life and these failures could have been massive or a lot of small failures. Being a successful entrepreneur is being able to see or learn from past failures.
24. In your opinion, what other qualities does a person need in order to be successful in business? And why? (eg. Educational qualification, work experience, family influence, attitude, etc)
Educational qualifications are not so important but maybe only in the professional line of work like doctors and engineers. Work experience is also not that important because we can accumulate work experience while being an entrepreneur. Family influences also do not contribute to a person being an entrepreneur. The most important, I would have to say would be the attitude. It is more about getting what you want most in life.
25. In one word, characterize your life as an entrepreneur.
26. Who or what motivates and inspires you?
27. What are some of your business values and what would you like to pass down to others, particularly the younger generation?
I believe that if someone does good, you have to return the good favour. Besides that, employees should have the endurance to stay with the company and not jump to another company. There is this Chinese saying: When you drink water, you have to know where your water comes from and remember it. Don't just go for short term gains. Success does not have to be built on betrayal, it is better build on the sturdy foundation of cooperations.
28. Can you share some of the more significant events / incidents that affected or shaped your business philosophy and the way you conduct your business? i.e. SARS, new competition or shifts in market behaviour and trends, etc.
China invasion. Prior to china coming in, everyone was having a blast of a time selling at a high margin and do everything tat we want do. When China came in, they have become more aggressive, selling at half of the price even though quality was not as good however now, it's becoming better than before. We then started to think how to position ourselves so that in future we know how to sustain. That is why we started shifting our company to the very higher end sectors.
29. With the changes in the market today, do you think it has become harder or easier to succeed in business? Why do you say so?
It is becoming harder and harder to start and succeed in a business at this time and age because now is the era for mergers and acquisitions. Everyone is buying everyone up and it is hard to start because every big boy is getting bigger and every medium boy is disappearing. Small boys get edged out of the race. This would not be a problem if they have already carved a niche out for themselves.
30. What advice would you give young people who want to start their own business?
Be passionate. Do not just do anything for the money. If you want to start own business, you have got to really really find a niche or find something in which the big boys would not bother looking at.