So you’re done with the 9 to 5 and are ready for the entrepreneur life. Although starting a business is one of the most exciting (and rewarding!) things you can do in life, not many know exactly how to go about it. Of course, you’ll have to start by coming up with a business idea, but what’s next? To get your questions resolved, read on to learn how to start a small business in Malaysia!
Step 1: Refine your business plan
Before you get down and dirty with loan applications and hiring initiatives, you must consider your business idea, how much time you will be able to put into it, the time it will require, and the amount of money you are ready to invest in it.
Most people will tell you to monetize what you love doing. However, is what you love doing profitable? And if so, are you good enough at it to beat your competitors? For example, you may love baking, but how viable will that business plan be if there are three other big shot bakeries down the street? All in all, coming up with a business idea isn’t the simplest thing to do.
If you don’t have a firm idea of what you will be selling or providing to your customers, ask yourself the following questions:
1. What do you love doing?
2. What do you hate doing?
3. Who is your target audience?
4. How can you make your services or products stand out?
These questions can lead you to a great plan for your business. Once you have an idea of what you would like to do, you’ll want to start measuring it against its profitability and how good you are at it.
Step 2: Understand your competitors and the market
Most entrepreneurs make the mistake of spending more time on their products than they do studying their competitors. When applying for funding, such as loans and grants, potential lenders, business partners, and investors will typically want to know what sets your business apart from the many others.
If your product or service has a saturated market in your area, try to come up with a different approach. For example, if car washing is the service that you’re providing, you might want to consider specializing in door-to-door services to add convenience to your clients’ daily lives.
Furthermore, it’s worth diving deep into finding out what consumers would want from your product or service. This can be done through surveys, questionnaires, and interviews to find out what your target audience is looking for. We don’t recommend asking only your close friends and family, unless they are your target market. This is because family and friends will usually just agree and be nice about whatever it is you’re selling. After all, the last thing you want is to start producing a large amount of products, just for nobody to actually purchase it.
Step 3: Conduct a SWOT analysis
Short for strength, weaknesses, opportunities, and threats, conducting a SWOT analysis helps you to identify how your product might perform if taken to the public. It can also make the direction your idea should go much clearer. This is important because your business idea might come with some weaknesses that you didn’t consider before, which will also allow you to see the opportunities that you can take advantage of.
Step 4: Register your business
After sorting out your business plan, it’s time for you to decide on what type of business suits you best. Here are the three types of business that are most commonly registered for in Malaysia:
|Sole Proprietorship||Partnership||Sendirian Berhad|
|Enterprise or Trading||Wandagal and Partners||Sdn Bhd or Private Limited|
|Only 1 registered owner||2 to 20 registered owners||A minimum of one director who do not have a bankruptcy status as well as a minimum of one shareholder|
The first two options are the most popular types of business among the Small Medium Enterprise (SME) owners in Malaysia - mostly because they are cheaper.
All businesses have to be registered with the Companies Commission of Malaysia (SSM). Once registered with SSM, a Business Registration Certificate will be issued to you within an hour. Depending on which you decide on, your business will then be valid for one to five years and can be renewed on an annual basis.
Step 5: Seek out funding if necessary
There are several ways you can fund your businesses in Malaysia:
- Advanced cash option from banks
We’ve heard that with an annual fee of 7.76%, Maybank EzyCash is the quickest, easiest, and one of the most reasonable banks to work with! However, do make sure to make your repayments on time!
- MaGIC Central
Here you’ll be able to find a list of funding available for 73 types of new businesses. Different options, such as Angel Fund, Crowdfunding, Loan, Grant, and Venture Capital & Equity are available.
- SME Bank Programmes
With very reasonable loan rates, the SME Bank has programmes for businesses started by young entrepreneurs, women, different racial groups, and even online businesses!
- Small business loans from banks
Most banks, such as RHB, Maybank, BSN, and Affin Hwang do offer business loans for different types of businesses. Their loan tenure ranges from 1 to 7 years and their interest rates start from 4.50% p.a. (Maybank). Do survey around to find out what works best for you!
- Equity crowdfunding (ECF) platforms
There are now many different platforms that work to fund different types of businesses. These include PitchIN, FundedByMe Malaysia, Crowdo, CrowdPlus.Asia, and more.
Step 6: Create an exit strategy
Like every other part of your business plan, an exit strategy is crucial for any business that is seeking funding as it outlines how you will handle things if you retire or move on to new projects. An exit strategy also helps you get the most value out of your business when it’s time to sell it.
The most common exit strategies are:
1. Selling the business to another person
2. Passing the business down to family and friends
3. Liquidating the business assets
4. Shutting the doors and walking away
Of course, there are still many more steps to starting a business e.g marketing, hiring a team, selecting suitable business tools, etc. However, the bottom line is that starting a business takes time, effort, and perseverance. If you’re willing to put in the effort, you might just achieve your goals. Before starting a business, be sure to do your research, create a solid business plan, and be patient. After all, Rome wasn’t built in a day!