Webinar on The Road to Becoming a Hawker by Hawkers Collective and NTUC LearningHub, 17 Sep 2021 Fri at 15.00

This webinar is organized by NTUC LearningHub and Hawkers Collective to share insights from ‘hawker mentors’ that 0, HeyMe Prawn Noodles, Hong Seng Curry Rice, Li Xin fishball noodles, Old Amoy Chendol, Reimondo Seafood Congee, Soon Heng Pork Noodles, Tian Kee Carrot Cake & Hokkien Mee, Warong Pak Sapari and Western Barbeque.

To register, go to the following Zoom link.

Items non exchangeable and non refundable are superseded by Singapore Lemon Law

Customers will be given ‘warning’ during checkouts at the cashier that their items are non exchangeable and non refundable. The cashiers say it according to their management’s instruction: ‘please note that these items are not exchangeable and non refundable’. Some are ‘stamped’ on the receipt (Fig. 1).

I would usually say, ‘yeah, ok’. Why would I even need to bother telling the cashier who is not in a management position about Lemon Law? But I know what Lemon Law is and my rights to replace/exchange a DEFECTIVE GOOD.

So, for all customers, your rights are protected under Consumer Protection (Fair Trading) Act Chapter 52A (https://sso.agc.gov.sg/Act/CPFTA2003), under Part III Additional Consumer Rights in Respect to Non-conforming Goods (i.e., defective goods).

If you got a defective goods, you can get it replaced with the same design, size, or model of the product. In the event that there is no suitable replacement, you can get an exchange (provided that you are agreeable), i.e., to switch the defective item with something of equivalent trait or value. If there is no suitable equivalent value to exchange, you can get a refund!

Some company are more open about their return policy, e.g., Art Friend (Fig. 2).

So, if you encounter an outlet or staff that says your goods are non-exchangeable and non-refundable, THE RULE IS NOT BINDING BECAUSE IT IS SUPERCEDED BY LEMON LAW.

Fig. 1 items sold are non-exchangeable and non-refundable by Sketchers Singapore
Fig. 2 Art Friend receipt conform to the Lemon Law requirement (somewhat, because Lemon law protects consumers longer, especially when the defect may take time to reveal itself).

Reference

  1. Consumer Protection (Fair Trading) Act Chapter 52A (https://sso.agc.gov.sg/Act/CPFTA2003)
  2. What is Lemon Law?, 29 May 2021 (https://irblaw.com.sg/learning-centre/lemon-law/)

Business owners with lousy website security self-block businesses

Lackadaisical attitude by business owner irks customers

You can call it sabotage, rivalry action, or callousness (or lackadaisical).

Business owners who don’t put thoughts into maintaining its web presence can only display its lack of professionalism. The trait is a letdown to potential customers.

Get professional help or web development platforms

A business should hire only professionals to maintain its website. If not, at least get an IT-competent staff to subscribe to web development platforms such as WordPress, Wix or GoDaddy to maintain their website!

Unsecured website is a threat to customers

Alas, their inaptitude can cause harm to customers/visitors who visit their website (Fig. 1-2).

Those with anti-virus will pick up the threat and render their website useless (Fig. 3).

Site can’t be reached. Conversion funnel is nil.

If businesses such as UTOC (Singapore) Pte Ltd can’t be bothered with its web security, it can only expect zero customer from CONVERSION FUNNEL attributed to website presence.

Fig. 1 AVG detected and aborted threat from a website
Fig. 2 AVG history displayed the threat blocked from a website
Fig. 3 Website with threats will not be available in the user’s broswer

Phillip Capital Poems GTD, Cash, and fees

It is easy to open an account to invest in securities in Singapore. Register for an account in any stock broker, e.g., Phillip Capital. You will receive a CDP account (from SGX) and an online trading platform POEMS account.

Next, open a bank account for Electronic Payment System (EPS) and link it to POEMS. Install the apps on your phone and you can trade any time any where.

If you want to use your CPF to invest in securities, you can apply for CPF Investment Scheme (CPFIS), where you can invest securities using your ordinary account (OA) and special account (SA). Please note the cost-and-benefit of using CPF to invest, e.g., CPF provides yearly interest of at least 2.5% p.a.

POEMS allow you to add securities to watch list, add price alerts, and trade by limit order, and good to day (GTD). The commission fee is $25 per transaction per day (excludes other fees).

For successful purchase of securities with Cash, you have to pay within T+2. Payment is by bank transfer to Phillips Securities via EPS. It takes T+1 to effect the bank transfer.

It is convenient to buy via GTD, but the risk is that if you have multiple ‘partial completions’ to complete an order, especially in ‘sluggish’ counters, you will have to pay for multiple commission fees at $25 for each transaction per day. E.g., I had to pay $25 + $25 for two partial orders of 1000 units and 2000 units of securities (for a GTD limit order of 3000 units). What happens if I have 3 partial transactions? I will have to pay commission fee of $75.

I am still learning how to trade and currently only looking at SGX securities. There are other exchanges that I haven’t ventured.

Start investing when you start to work. Know your assets, liabilities, and equity.

siekitchen@gmail.com
3 Jul 2021

As a working person, it is important to understand your assets, liabilities, and equity (i.e., A=LE). Let us look at the following examples.

Assets

Intangible assets

We start of with this asset.

Your qualification/skill is your intangible asset. It allows you to earn revenue via service contract with your boss, i.e., through job or freelancing. To be relevant, it is important to continue your education (aka lifelong learning). That way, you don’t make your intangible asset ‘obsolete’.

However, invest in education should be decided based on the cost-benefit analysis (CBA). Benefit should outweigh the cost. Select relevant and value-added courses that will help you to improve your intangible assets. It MUST NOT be a ‘trophy qualification’.

Real property

Real property is a good asset in Singapore. It is subjected to capital appreciation (i.e., value increase/decrease by market demand).

If the asset is bought by a home loan (i.e., mortgage or debt), then the asset is a mix of liabilities + equity (L+E). The bank co-owns the property. As you repay the loan, you reclaim more equity over your property.

The expenses that you pay for your property are the property tax, bank interest on loan, conservancy charges or monthly maintenance fees.

In comparison to rent, paying a housing loan is an ‘investment’ (plus expense/interest). You pay for the ‘equity’ over time. In contrast, if you pay rent, it is entirely your expenses (without return). In countries where the property market is constantly in over-supply, property is considered a risky investment.

The challenges to buy a property are the significant down-payment, one-time transaction costs, renovation/furnishing costs, and securing loan.

Car

Car is not an asset, unless it brings revenue, e.g., when you are ‘moonlighting’ as a Grab driver. There is no capital appreciation (increase in value), except depreciation. The depreciation value can be above $10k per year. Other expenses involved in owning a car are interest, petrol, maintenance, parts replacement, etc.

Liabilities

Loans

Loans are derived from Education, Property, and Car purchases.

Property loan can help to grow your asset (dependent on its capital appreciation). It can be a loss if there is a glut (i.e., over-supply) that caused depreciated value.

Education loan helps improve your intangible asset and allow you to generate revenue (i.e., salary/service fees).

Car loan can be used to generate revenue (or ‘cost recovery’) if you use it in gig economy of ‘shared rides’. Else, it depreciates rapidly.

Equity

Property

As you repay your mortgage, you start to increase your equity over that property. The final asset value depends on market demand. If there is uptrend, you earn profit from its capital appreciation.

Summary

The above is an example of your assets, liabilities and equity. Everyone starts off with intangible assets and sometimes liabilities such as education loan. But over time, you should be able to reduce your liabilities and improve your equity. The more asset you accumulate, the higher their values appreciate, the more you keep your equity.

Other assets that I did not mention are in share-holding (i.e., equity market), starting your own business, other investments, and insurance that protects your asset/health. Insurance is a liability if it is short-term, but some are structured to have lower expenses/premium over longer-term commitment. It is important to start your insurance policy early, especially if you want to start a family and have several liabilities under your belt.

Advice from other gurus

  • Grow your asset
    • intangible asset (i.e., your qualification/skill)
    • invest part of your salary
      • knowledge acquisition, e.g., books, courses
      • share-holding or investments that has at least 1% p.a. return (e.g., saving bonds, insurance savings plan)
      • once you have sum for down-payment, invest in property
    • assets to consider
      • shares
      • property
      • intangible assets (yourself)
  • Reduce your liabilities
    • get into loans that have better benefits/returns, e.g., property or continuous education
    • avoid loans that don’t add value. If you must own a car, wait until your asset grow and you can afford to draw out from your growing equity.
  • Manage your expenses
    • it is good to spend money to improve your well-being. This is considered as maintaining your ‘intangible asset’ (or mental health), but don’t overspend and accrue credit card debts.
    • understand your recurring expenses. If there are ways/alternatives to reduce these expenses, do it.
    • consider implementing ‘cost-recovery’ if your expenses are too high, e.g., car debt repayment can be offset by moonlighting as grab driver to earn revenue. If this is property repayment, consider renting out a room to a colleague to offset the monthly home loan repayment.

How to waive UOB credit card membership fee

My membership fee was charged on Oct. The fee is around $200. I spent quote regularly using the card.

I have applied for waiver previously and it was approved.

To apply for a waiver, call the UOB personal banking number at 18002222121. This is an automated call management system. From the selections, you will be directed to credit card waiver. It will ask for your credit card number followed by hash key. It will ask for your phone number followed by hash key. The automated voice will inform you that your application will be reviewed.

Costs incurred to hawkers

Study on the above topic will help most hawkers. For example, cost components for average hawker stall and other information conducted by Ministry of Trade and Industry (MTI) is important (ref. 1).

It suggested that raw material played the most cost for average hawkers, whereas rental contributed about 12% and utility at 9.3% (both at 21.3%).

Fig. 1 Cost component of average hawker centre (dated 2015; ref. 1)

As mentioned previously, the average cost of rental is $1500 with a range of $5 to $5000 (as offered bids; ref. 2). If a business operates daily without rest, then this translates to $1500/30=$50 per day from rental. Assume 12% rental cost is true, then total cost is $50/0.12 = $416. If daily total cost is true, then the cost of utility and rental would be $416 * 0.21 = $87.36. If raw material is approximately 60%, the cost is $416 * 0.6 = $250. Daily, a hawker would be spending $337.36. The rest is manpower and other service fees at approximately 20% (which is variable, because manpower could be business owner’s fixed salary and other service fees are variable).

To break-even, a business needs to achieve $337.36. If a bowl of product is $3, then the business owner needs 113 bowls per day. Subsequent bowls would be operating profit.

If I am to start a business in a location selling a dish, I will first determine the following:

  • Average footfall in the location per day (and especially compared during weekends)
  • Average peak time per day in hour.
  • Number of competitors
  • Average price of similar product around the location
  • Seats available
  • Parking area
  • Type of customers, e.g. workers, students, or other market segment.
  • Other marketing strategies.
  • Operations consideration, e.g. storage, freezers, footprint (sqm), process area (or kitchen), payment method (cash or cashless), and stall service provider (their efficiency), stall hygiene level (study the NEA awarded hygiene level, should be above Silver level; ref. 3)

Reference

  1. Examining the cost drivers of hawker food prices by MTI (https://www.mti.gov.sg/-/media/MTI/Legislation/Public-Consultations/2015/Examining-The-Cost-Drivers-of-Hawker-Food-Prices/fa_1q15.pdf)
  2. Hawker stall rental using bidding system is flawed (https://siekitchen.com/2020/05/16/hawker-stall-rental-using-bidding-system-is-flawed/)
  3. New food hygiene recognition scheme to replace existing grading system (https://www.channelnewsasia.com/news/singapore/new-food-hygiene-recognition-scheme-to-replace-existing-grading-10446030, 19 Jun 2018)

Hawker stall rental using bidding system is flawed

Bidding is a competitive process where contenders (i.e., bidders) express the price they are willing to pay for the item presented (with ask price). Anyone who expressed the highest bid price wins the item.

Singapore National Environmental Agency (NEA) is entity that offer the tender for bidders to express their highest price for monthly stall rental (ref. 1).

Bidding is susceptible to spikes and outliers, e.g. a lady who bidded $10,028 per month for a hawker stall to sell drink. According to NEA, the average price is $1,500 within a range of $5 to $5,000 (ref. 3). This would mean that the rental is $1,500 +/- 20% or from $1,200 to $1,800. So, the $10k monthly rental is considered very high for a drink stall.

The bidding process is also susceptible to those bidders who are out to win the bid and then sublet or assign the winning at higher price to others (in order to profit). NEA said they ensured that sublet and reassignment are not allowed, but did not elaborate how they will monitor and control this practice. I guess it would require stall operators to report this to the authorities.

For more information refer to ref. 4.

Reference

  1. NEA tender notice (https://www.nea.gov.sg/corporate-functions/resources/tender-notices)
  2. Bidder ends deal on record $10,028 monthly rental bid for Chomp Chomp hawker stall (https://www.straitstimes.com/singapore/10028-monthly-rental-bid-for-chomp-chomp-hawker-stall-highest-in-3-years-bidder-walked, 30 Aug 2018)
  3. NEA adopts transparent tender system for hawker stalls (https://www.nea.gov.sg/media/readers-letters/index/nea-adopts-transparent-tender-system-for-hawker-stallshttps://www.nea.gov.sg/media/readers-letters/index/nea-adopts-transparent-tender-system-for-hawker-stalls)
  4. Information for stallholder (https://www.nea.gov.sg/our-services/hawker-management/information-for-stallholders)

Hawker profit margin analysis, real experience

Introduction

CNA highlighted an article about profit margin of hawker. The piece was written by a Fishball noodle seller, who claimed that a bowl of his Fishball noodle had only 20-30 cents profit margin.

There was no sharing of his cost breakdowns, revenue and other financial data to help readers. For example, operating revenue is revenue – all costs. Costs included cost of goods sold (direct cost) and indirect costs (e.g. rental, utility and others).

If Desmond wanted to know his net profit, he would need to discount any loan interest, and subsequently income tax. That would be his net profit!

Profit is subjective

Desmond Ng does not represent all Fishball noodle sellers. That is because, to be a successful business owner, you have to be resourceful. That said, you need to reduce costs (either by sourcing for suppliers and drafting long-term contractual agreement with them), and operate more efficiently.

Instead of lamenting low profit margin, he should be differentiating his product. If he can differentiate his product to be more than just Fishball Noodle, he will be able to price his value-added plate higher.

Instead, he is attributing customers as the main reason his profit margin is low. His reasoning that customers are reluctant to pay more is flawed. Customers compare and select. If there are other Fishball noodle sellers selling at a particular price, they expect the price to be within that range, else they have avenue to select and abandon those who priced more. That is what supply and demand works.

Real experience

To be able to assess and analyse the claim that hawkers’ profit margin is low, I have to get into the industry myself.

This is part 1 of my research.

Reference

  1. Profit margins for hawker fare? As low as 20 to 30 cents (https://www.channelnewsasia.com/news/cnainsider/profit-margins-for-hawker-centre-fare-as-low-as-20-to-30-cents-10948414, 20 Nov 2018 by Desmond Ng). Note that Desmond is a Fishball noodle seller who shared his personal profit margin.