As a business owner, I struggle with this issue all the time and all I can conclude is that one has to take a broader definition of diversification as not just diversification of the business itself but also a wider and more open mindset, hiring various backgrounds of employees and also taking in lessons from other businesses from sometimes totally unrelated fields. In effect, we have to create the correct environment and mindset for successful diversification.Some observations that I have noted on this basis are ;

1. Diversification into new markets with existing products: This is probably the most natural progression to take existing product lines and expand into new markets thereby increasing growth opportunities in areas of existing competencies. We deal with a leading New Zealand based supplier of premium bakery ingredients that initially was totally focussed on exports to the Korean Market but now has built a highly successful export business into other Asian markets like China, Singapore and Taiwan by being able to transfer the knowledge into other similiar markets. 

2. Diversification into new products in same market : Ideally if one can introduce new but related products into the same supply chain it can be a successful strategy. One successful importer of wines in China I have known for years built his business and reputation on French wines initially but just when new world wines took off, he was quick to expand into becoming a major importer of Australian and Chilean wines thereby keeping himself relevant to his customers like hotels and supermarkets that wanted a wider range of products at different price points. With the recent rise in demand for fine wine in China he is now educating himself in the fine wine business and I am sure he will be a success in this field too. 

3. Diversification into an unrelated business : This is the one to be very careful about as the classic trap of the grass being greener on the other side applies. All businesses more or less have to revert to similiar levels of profitability in their field as competitors catch up and costs increase or prices subsequently collapse. But for a small period of time it seems like the glory days are going to last forever whether the case of the fantastic success of the Iphone today or the Palm Pilot ( does anyone even remember ?) or the great era of the Dotcoms fantasyland in 2000. Hong Kong Stock exchange listed companies offer one of the most reliable indicators of the bubble of the season flavour. In the Dotcom bubble textile companies were becoming technology providers and internet portals, in the recent China investment boom XYZ technology would become China XYZ  investment technology and in the resources bubble the same XYZ China Investment technology company would change its name and supposedly its business into XYZ coal Mining Resources or better yet XYZ China coal Mining resources ( Get 2 bubbles for the price of one special deal )

That said there is something to be said in all seriousness to genuinely look at other emerging business sectors and markets with an objective eye and seriously ask if we have the resources to get into potentially a more profitable or faster growing business. Another friend of mine runs a graphic arts company and in the process of buying and renovating a large warehouse space into a studio discovered a niche in the property business that was overlooked of converting older factory buildings into more ' new economy' type space for artists, smaller tech companies and photo studios and he has now made more money in 4 years than what he made in over 15 years of being in the graphic arts business.

Finally whether we do make the decision to diversify our business  or not should be taken very carefully and conservatively but the key is to keep an open mind and not be afraid to accept that there could be better ways of doing exactly the same things we have done for years or maybe even better things to do than what we have done for years by inertia or compulsion rather than choice. 

Many participants highlighted that this was indeed the biggest challenge namely cross subsidization of businesses by competitors in order to gain market share at cost of profitability and thereby bringing down everyone’s profit margins. So someone in the tires business was using profits from tires and forcing themselves into the steel business often at a loss or without an appropriate risk/reward assessment thereby making life hard for the existing steel producers.

We are all too familiar with the 'Too big to fail' model that large banks have successfully deployed to gain massive subsidies from taxpayers in the US and Europe. As a friend of mine cynically puts it, " Too big to fail and too evil to go to jail." Cynical, maybe but certainly not quite far from reality. We are reading everyday that banks are refusing to lend to small businesses leading to tremendous financial difficulties and consistently high unemployment rates choking off the engine of growth of the economy. This creates a very hard spot for the small businessman on how to fund growth.

Anyway, as a small business how necessary is size and growth and more importantly growth at what cost is the key question small entrepreneurs struggle with daily. Reality is it costs money to feed the growth monster and real cost of money is very expensive for the small businessman unlike the "Too big to fail banks." A close friend of mine  sold his house 2 years ago in Hong Kong to invest his life's savings in  fuelling growth at his start up business only to see it implode as a consequence of the global financial crisis. Sadly, the house he sold is now worth 50 % more than he sold it so he not only lost his savings but additional profit. We often joke that the lesson is that he would have been far better off financially just sitting around in his pajamas in his house doing absolutely nothing rather than try grow his business. Sad joke but harsh reality. So one rule I always tell any entrepreneur is to NEVER pledge your primary residence to fund a business based on potential growth. Always remember that the so called “ Burn rate” is a very recent VC ( Venture capitalists) fuelled phenomenon to produce high octane growth from startups that in any case have an average of 90 % failure rates. Sounds like a good idea when you are blowing up OPM ( Other peoples money) but not when you are burning your own money.

We also know of enough small businesses who have been in constant debt by using really expensive credit card debt to meet business and living expenses. Very expensive habit ! I understand the necessity of this move sometimes but it makes for very bad business strategy if it is a constant debt trap to be paying 30 % in credit card interest in an environment that banks pay close to zero on deposit accounts. Few legitimate businesses can give a sustainable return in excess of 30 % to justify that high cost of money. Plus if the entire point is to earn 30 % annually in best case scenario to just to cover interest expense seems like another reason to sit around in your pajamas and do nothing ! Rule number Two : Calculate the real cost of money. The answer may shock you !

Finally, there are also situations where the entrepreneur after years of work does build a successful and profitable business but then is shown dreams of joining the ‘Big league” by promises of an IPO (Initial public offering) and listing on the stock exchange and/or some ‘Exciting” Merger or Acquisition provided certain “ Growth targets” are exceeded and then he is offered funding to go meet these targets. Sometimes this strategy is successful and we then hear these stories in all the papers but more often than not a lot of these companies end up in excess debt or unable to meet unrealistic targets and the entrepreneur often lose management control to the investors or the banks and there goes his life’s work.

Sometimes it is OK though not fashionable to accept that no growth or steady ( read boring) growth is better than growth at any cost. It is better to have a small and profitable business rather than invest your hard earned savings in achieving growth that firstly may never materialize or when it does may be too little and too late to sustain the high cost of funding. Profitability after a period of time adds up and creates solid opportunities for organic growth and guess what….. that’s when the banks and investors come knocking and offer you cheaper cash and/or credit lines too ! That’s when you understand the 3 rules of business life

1.      The rich get richer

2.      The big get bigger

3.      Life is not fair

But by now you are enjoying being in slot number 1, so hopefully you can move on to number 2 but it does take time and unfortunately I have not come across any “ secret” to “get rich quick”. But that’s why rule 3 -life is not fair can also pleasantly surprise on the upside too by that unexpectedly large order or that deal that should not have come your way but did and then you can grow on your terms !

Fact is, we are constantly bombarded with massive advertising from financial services firms about wealth management strategies and serious financial types on TV talking up ' long term' wealth creation strategies and how to invest like.... you guessed it Warren Buffett ( I always wondered how all the financial experts are disciples of Warren Buffet and yet the massive financial collapse happened in 2008)!!  What is even more striking is how the same financial firms that brought about the financial crisis are now back to telling us to let the ' professionals(them) manage your wealth and pretending nothing ever happened.

Upon some thought, I realised that if one were to look at the past decade, the reality has been more about massive wealth destruction rather than wealth creation. The giant honey trap has been laid out to entice common people to actively engage in one form of gambling to another whether the internet stocks bubble or the USA housing bubble, Dubai, Greece and the financial advisers favourite child-stocks for the so called long run. Fact is the Dow Jones a decade ago was about 14000 points and is now struggling at barely 10,000 while the Japanese Nikkei index was at about 40,000 over 20 years ago and is now struggling at 10, 000 which is down 75 %.  So yes by any measures 10 years for the Dow and 20 years for the Nikkei is a long term frame. While the common folks have seen their 401K's decimated, the financial firms have still picked up their asset management fees for the past 10 -20 years. Great job if you can get it for sure !

Another point that is not highlighted enough is how seriously once mightly corporations have been totally discredited and bankrupted. AIG made ENRON look 'well 'mis'managed' and countries like Greece cooking their books over years make Iceland's banks look like the role model of fiscal conservatism. Not a day passes without another new fraud or insider trading scam with some hedge fund or financier or corporate big wig. No wonder such massive wealth destruction has happened right in front of our eyes. No amount of painstaking research or financial knowledge can help when the game being played is advanced financial book cooking ! When the game is unfair, there is no fair game to be played.

I think today the most important skill we should try teach ourselves is financial literacy from a real world perspective. I do not mean just what conventional finance 101 teaches us like studying balance sheets and P/E (price to earnings) ratios (too much financial crookery is mainstream as we have all seen) but more from a pragmatic and sometimes even cynical perspective with the key point being after every financial advertisement or sales pitch do ask yourself - who gains ? Its after all your hard earned money and you have to use strict risk management principles to judge whom you give it to or maybe manage it yourself (yes it can be done despite what 'professional' managers tell you.If you are smart enough to earn it, you sure can teach yourself how to keep it) One rule that has almost always worked for me is that hot investment themes are inversely proportional to subsequent asset performance. Easier said than done but who ever coined the term' easy money' probably never made any money themselves as  that concept just doesn't exist.

As an entrepreneur, the most valuable lesson one learns is to deal with reality and learn from the school of hard knocks and the big lesson of todays world is we are totally on our own. Despite what the experts say, putting your money in the bank yielding negligible interest over the past decade would have been one of the best investments and would have outperformed some of the most highly paid stock pickers that we have to put up with everyday on TV especially adjusted for volatility and risk.  After all return of capital is what matters rather than negative return on capital that has been delivered due to a toxic combination of gross mismanagement, outright fraud and good old fashioned incompetence on behalf of the people we are 'trained to ' trust' with our life's savings.

Sometimes as they say, it is not the deals we do but  rather the ones that we do not do that are the best ones. Buyer beware !

Most of the times my answer is a blatant NO ! This often surprises people as they assume that being an entrepreneur I would be more encouraging and upbeat about prospects for would be entrepreneurs.

If you are one of those looking to start your own venture, the problems I usually highlight are ;

1. People want to start businesses for all the wrong reasons: Some want to work for themselves and not for anyone else (without considering that not getting a steady paycheck starts to hurt sooner than they think) Also, remember, learn to follow before you wish to command. If you have authority issues like lots of entrepreneurs do, make sure to remind yourself you now answer to not one boss but to multiple bosses like investors, customers, logistics guys (yes), cleaning staff in addition to oneself ! Plus now its all on your time and money so no more ' the boss doesn't get it' story. Trust me I miss my ex-boss sometimes and you will too. Life's not much fun when you are out of escuses !

2. Some cant stand the bureaucracy  while others cant stand being forced to do boring mundane work like accounting, bookeeping or putting up with difficult customers. Guess what? Welcome to the real world of Entrepreneurship ! You have to be prepared to do everything and anything to keep the ship afloat and mostly it will be without the help of the large corporate machine that some ex-senior executives are used to. Difficult customers are the norm rather than the exception especially in a new business as you are no longer 'protected' by the benign corporate umbrella. I was speaking to a senior corporate executive who started his business and now has to make sales pitches to his previous company which include setting up appointments for hour long power point presentations and Q @ A sessions from the same junior guys he helped train. Ouch that hurts ! So you need to check in your ego before even considering starting your business.  .

3. Learn to respect the little guys : Remember the accountant or shipping clerk you never knew existed? Well he'll have to be your new best friend if you wish to get any real work done in a timely and professional manner and actually get paid. 'Team' now doesnt mean top guys going out for all night drinks but rather you sitting with the back office guys sorting out the accounts and the logistics and the brand campaign that doesnt sound quite right despite the hours clicking away. You ready for that ? 

4. Risk vs Rewards : This is particularly relevant for senior corporate executives considering a jump to entrepreneurship. Sometimes it is easy to lose perspecitve on how HARD life on the outside track really is. No more business class travel, no housing or kids education allowance, no company car and driver, no expensing posh meals and above all no more guaranteed bonuses and stock options. Are you ready for this ? And more importantly is this a rational decision to give all this up. Reality is that in the past  decade corporate salaries, bonuses and stock options have balooned to such an extent especially in developing countries like India and China that it is very difficult in the best of circumstances to ever make that same amount in a start up business. Make sure you account correctly for the REAL costs of chasing the dream and not end in the nightmare of harsh reality if it doesnt quite work out.

5. Its very lonely out there : One of the best advise I got when starting my business was to be prepared for a long winding path of loneliness. No more corporate team building sessions or office gossip by the coffee machine or even the hourly 'strategy' sessions. Its amazing how the phone slowly stops ringing once you step out of the corporate world. Make sure you have an adequate support group of fellow entrepreneurs, friends and family just to bounce ideas off and keep your sanity. There will be moments of self doubt and then there will be even more moments of even greater self doubt. Do you have the inner confidence to stay the course ? And more importantly is it worthwhile to stay the course? What is the end game ? When do you call it  cutting losses as a smart strategy and when is it called being a LOSER ?

6. They myth of going back or ' Plan B : A lot of would be entrepreneurs from a corporate background rationalize that if all else fails they can always slot back into their previous roles. Trust me it is'nt quite that simple. There are only few limited senior roles and they arent being kept warm just so that you can be welcomed back once you've done ' your own thing' while your collegues have been slogging away in the corporate grind.  Also the problem with ' Plan B' is that you think you have a safety net so you do not give it your best shot in Plan A i.e making the business work and going all out to make it happen. Business is a highly competitive sport and you cant win if you are fighting the guys who are hungrier than you and more motivated and more passionate that you as they do not have Plan B in their gameplan !

If you still want to go out on your own, wish you all the best ! May the best man (or woman ) win !

As last weeks debt based implosion in Dubai proved, we are clearly not out of the woods yet. In fact if anything, we have managed to put several rounds of band aid in what is essentially a large wound. The credit binge of the past decade will take a while to work off and we will see more Ireland, Iceland and Dubai style blowups.

Hidden in all the hoopla of the huge' recovery' in  financial markets worldwide is the story of the massive damage to the middle class. In the USA, the ' American dream' of howm ownership has turned to the curse of negative equity with households owing much more than their homes are worth. In Dubai, not paying off debts in time is punishable by a jail sentence, Icelanders cant even have Mcdonalds burgers now that the burger chain is withdrawing form Iceland in the aftermath of the crisis, Hong Kong youth unemployment is in high double digits and in India the middle class home buyers face delays of over 2-5 years on property they have paid for as developers are cash strapped and hence delayed projects across the board.

With USA  middle class households stuck with their unpaid mortgages, they cannot afford to move out even if they found jobs in another state leading to reduced labour mobility which was always a big strength for the US economy. No wonder the jobless rate remains stubbornly in double digits at over 10 % but in reality some economists estimate that the real rate of unemployment and underemployment is over 17.5 %. It is not uncommon to hear of stories of  highly qualified ex- managers now working on hourly wages in retail and convenience stores to eke out a living or just put food on the table. Just the other day, a friend of mine was asked for a loan of USD500 from a seemingly well off acquaintance who lives in a flash house in a upscale neighbourhood but has been without a job for 18 months ! In fact we put an advertisement last week for a junior administration assistant and within half an hour of the advert going on line, we had 155 resumes ! What was more eye opening was the demographic range of the  group from 22 years fresh graduates from good universities and good academic backgrounds to candidates in the late fourties with over 25 years work experience behind them ! If ever we think getting a job is hard, lets face it giving a job in this market is a very hard task too with such good candidates and such stories that the resumes do not tell of the personal and professional upheaval some of the candidates have gone through is the past 18 months.

The bad news in all this is that it will not get much better either on the job front for three reasons

1. As the economic downturn lasts longer, more candidates join the job market and hence the backlog increases.

2. Some of the jobs created in the bubble economy of the past decade should never have existed and will probably not be back in a long time.

3. Since household wealth has taken such a massive hit, spending and hence growth will be muted for a long time and hence fewer jobs at least for the educated middle class.

So what can one do ? Having discussed with quite a few people, one theme emerged as a likely answer, however cliched it sounds. Keep an open mind and force yourself to accept the new reality as this time maybe it really is different and not in quite the way you would ideally wish for. I am personally not a huge fan of what is called ' Eduscam' or 'lifelong learning' which is where the majority of middle class feel they have been cheated.Having spoken to and hired quite a few brilliant young graduates of top universities, I see the ' social contract' shattered all too often that study hard, work diligently and be honest and one will move up in life just doesnt work in this environment. But keeping an open mind is essential as one needs to acquire a new mindset and maybe new revelant skills to come back in the game. It is not uncommon  to observe that some older  and long term employed staff who have now been laid off may not have polished the job search or networking skills to be able to launch and effective ' back to job market' campaign. This will have to change.

Similiarly and even more challenging is a career change may be called for or even absolutely essential. Are the skills one acquired over the years transferrable or can one add value and present them in a more marketable or growing area of employment? A laid off investment analyst friend of mine launched an Investor relations (IR) firm with some other collegues and is doing well since he can still use  his skill set and contacts in an area that is growing and has strong demand. Another friend who lost her job in finance has become a senior financial journalist. Another has become a teacher while a laid off property sales professional has started his business offering professional property and security management services demand for which is growing in light of the great number of foreclosures and security issues associated with empty homes. A businessman friend of mine whose venture collapsed in the downturn has even managed to take up a consultancy role with a former competitor and seems to be managing well.

Also sometimes its OK to question the conventional wisdom. Don't go insane sending thousands of resumes and taking rejections personally. Some resumes are now auto screened by software and can produce pretty random results. So dont be too hard on yourself if nothing shows up and maybe give it a rest for few days or weeks to get yourself together. Beware of too many' paid networking' events too where people peddle ' false hope' or network marketing type schemes of dubious commercial value. But do consider taking up some part time job or hobby or volunteer work to keep productively occupied so you have other things on your mind than the dreaded job search. Sometimes escape from reality is OK too to escape a constant negative loop. Do search for smaller companies in your neighbourhood and try contact them as sometimes smaller companies are more in need of skill sets that professionals might have like graphic design capabilities, advertising support, on line marketing, website design and even industrywide contacts that they could be able to budget a little for that extra assistance.

Finally, stay in touch with people and do not become a recluse ! It is hard keeping a cheerful front and it need not be superficially upbeat as people understand the hardships others are facing. So keep an open mind in meeting people you know  (and new ones too) and share truthfully your experiences and show empathy for their circumstances and  be open to offer and also receive advise when suitable and appropriate. Sometimes just listening or being heard is all it takes to spark that idea that allows you to think outside the box and plan the big comeback. All the best ! 

As an Entrepreneur, one has to be constantly on the vigil for fraud. If anything that we can learn from the recent financial scams, it is basically that 'buyer beware' still is the best way forward. All the false sense of security that the authorities and control systems are there to safeguard the little guys interests have been proven to be delusional at best and an even bigger scam at worst with rating agencies, accounting firms, employees and senior management all knowingly or unknowingly fuelling the rise and rise of 'SCAMATHONS' or the never ending Olympics of Fraud.

Unfortunately, we will probably all see a lot more of these for years to come as the financial bubble of the past 15 years works off its excesses. It makes one wonder how much of the ' growth' in the ' Goldilocks' economy was real growth and how much purely driven by fictitious ' ponzi ' scheme type financial system that we will pay for in the years ahead.

Some of the scams that I have observed over the years are;

1. Publically listed companies : Some of the worst offenders as they come with a so called shroud of false complacency that they are subject to more regulation which we have seen is an illusion on more occasions than once begining with ENRON, WORLDCOM etc. Last week a listed company in Hong Kong applied for liquidation afer burning through USD400Million in bonds in past 3 years without any real assets to show for it and after delaying their audited reports for over an year. The amazing part is the total lack of due diligence on part of the institutional investors who bought these bonds with no regard to cash flow analysis.

If any small businessperson ever applies for a loan, we are made to jump hoops to secure a small token amunt but publically traded companies seem ' exempt' from such matters. Too bad for the shareholders too including suppliers who will probably not receive anything back.

Another company is going in for an IPO and over 55 % of its sales are in 'receivables' that are over  130 days so seems the banks will not lend but these guys have no problem acting as ' bankers to their ' customers'. I wish I had some such open ended credit giving suppliers with ' payable when able' terms!

2. Financial investments : I will not delve into hedge funds and other such types as ' sophisticated' investors should know better than to dole out money without asking any questions. But lots of ''opportunities' are  regularly promoted such as ' land banking' in far flung lands without any value. My favourite was a few weeks ago there was a group promoting ' investments in private ATM machines that required a minimum investment of USD20, 000 per machine and a minimum of 5 machinese need to be purchased. At the end of the ' wealth seminar' the  self appointed ' serial entrepreneur' suggested that we could ' book our slot' for USD 100 !! There are enough articles in the news about ATM machines that simply dont exist but investors paid in full for them ! Always ask for actual referals of other investors and check if the scheme is registered with any financial authority and make sure to call them as well as the compnies own offices and ask questions. Sometimes a simple Google search on fraud will give out a wealth of information.

3. Wealth seminars : Another growing industry especially in the current slowdown where many unfortunate people who have lost their jobs are prime targets where they are made to invest in ' businesses of dubious distinction. It sometimes takes the shape of MLM( multilevel marketing schemes) where the 'partner' is made to buy large amounts of goods upfront at usually inflated prices. Usually the warning sign to watch for is the excess emphasis on ' easy money' and ' high returns' and ' control your destiny pitch.' Frankly in my business experience those three slogans easy money, high returns and control of destiny have never co-existed together !

4. Job Scams : Again same principle where the job applicant is asked to pay upfront for' high potential leads' and special job databases and ' counselling' sessions with ' job coaches and a' suite of interview skills. Some surely add value but quite a few are just vultures preying on the weak ! Most reputed headhunters will never ask for payment from any potential employees. Some ' scam companies' also pretend to be ' hiring' and there in an upfront ' security deposit' or charge to fill in application forms.

5. Employee scams : In a bad economy, lots of people are hurting and when people are hurting, it sometimes clouds their moral judgement. Watch your check books and your bank accounts and have another staff or trusted friend if you are a Small business cross check the numbers. I had a situation once where my assistant was forging my signature and taking smaller amounts over a period of time so as to not be noticed till a newly hired young accountant suspected foul play and alerted me. To this day, I do not know whether she was just a petty thief or was getting warmed up for the BIG ONE ! Thankfully I survived to not find out the answer the hard way.

6. Small business scams : If everyone is on the scam, then why not the entrepreneur....

 Sure enough lots of propositions of  great prospect businesses where you can get in on the 'ground floor' ( just before the floor caves in !)

Everything is game from oil exploration in Africa to Mining concessions in Mongolia to Land deals in Dubai and my old time favourite revolving around mad scientist breakthroughs in technology and gaming.

I once invested in a  medical transcription company wherein we had to ' pay up front' to get milion dollar contracts with ' huge margins' except that to get those million dollar contracts we had to buy dedicated proprietary software. Sure enough the software was paid for in cash and the contracts ???? well you are looking at the fool- I, me, myself !

As a favourite quote of mine goes " Do business with strangers as if they were brothers and with brothers as if they were strangers' and ' money scammed is twice as sweet as money earned- make sure you are not the sweetener !'

Entrepreneurship is a very lonely path and often it requires tremendous patience and self confidence to stay the path. Success is often the result of great teamwork and support from collegues, friends, family and business associates. The question to ask is what are the key motivations of bringing in a business partner and what will the key roles clearly be of each partner. Sounds easy enough, except most partnerships do not account for defining these roles and most others fail to adjust to changing circumstances and changing personal or business fortune of the partners. This can lead to a devastating impac on the business itself and create a very negative environment for staff morale.

I think the most important thing is to first and foremost know oneself and our own limitations and strengths and then scout for a partner accordingly. Sounds like a how to find an ideal spouse seminar....guess in lots of ways it is !

Some common partnership forms that I have seen are as follows ;

1. Husband/ Wife teams : Millions of small family businesses have been run successfully over the years by husband/ wife teams.

But on the flip side, things can get messy indeed if there was a falling out like a divorce. There are also issues with impartiality as professionals may not be entirely comfortable in this ' family style' environment. A friend of mine worked for a business which was operated by the husband/wife team and the wife was responsible for the accounts. eventually both of them probably so confused their personal/ business accounts that they ended up being investigated by the tax authorities for lax accounting. What was otherwise a good business ended up being shut down as no one was willing to overrule the 'boss' who also happened to be the owners wife and a partner too.

2. Brothers in arms : A friend of mine was passing through a rough patch and needed some extra help so decided to bring in his brother as a partner in the business on a whim without going through the details of each partners roles and responsibilities and a partnership document specifying the effective management control parameters. The conflicts basically tore the business apart and of course their relationships too. The brother felt he was never allowed enough say in the strategic decision making and that staff never reported' directly' to him despite his being a partner. Meanwhile, the founder felt his brother was ungrateful and incompetent and was basically getting a free ride on his original efforts in setting up the company. Very soon both were busy in reckless spending on company expense and staff were busy scoring' loyalty points' and the business fell off a cliff.

3. Friends Forever (but not in business) : This is probably one of the most common partnerships. You like someone, you share ideas and you think it would be great to get into business together. Things go great and then you run into a rough patch and all hell breaks loose because no one bothered to clarify what were clear roles and who had effective management and equity control.

I have entered into partnerships with friends and noted following drawbacks;

1. Because you are friends, lots of the hard issues are never discussed openly like equity split and management control and exit strategy for either partner if things do not work out. Unfortunately business is about harsh realities and the sooner one faces up the better it is.

2. We often grossly underestimate or overestimate our friends abilities. We need the best man for the job not necessarily our best friend for the job. Conversely, if your best friend is also the best man for the job, we often do not credit them enough for their role in building the enterprise.

3. Personality types : What makes certain people great friends are the exact same qualities you may not want in a business partner or worse you may start to resent as business grows. Someone who is the opposite personality type i.e quiet vs outgoing could feel the outgoing partner is hogging all the limelight and credit for the business while the other partner may actually feel that all succes is due to his 'outgoing' personality.

Often, the same friends we love to party with are probably the worst people to have running a serious business operation. They think business is an extension of last nights activities.

So what works ?

1. Select people based on relative value addition not solely on the basis of personal relationships. Value added is something I define broadly as anything that complements the entrepreneurs skill sets be it technical or human resource skills or capital ( rich partners by the way are not the best partners or the easiest guys to deal with so sorry but no free lunches anywhere)

2. Boring is good. Get the equity ownership issues and the mangement control issues sorted out clearly and early.

Lots of misunderstandings happen because people confuse equity ownership with management control. They are not the same thing. You can even be a significant equity partner without effective management control. Nothing wrong with that If you know if beforehand.

3. Share the credit ( and the cash ) : Easier said than done but not only is it good ethics but it makes better business sense. One of the things less appreciated about Bill Gates is the fairness with which he shared equity with his co-founder Paul Allen and his friend and current CEO Steve Ballmer ( All of whom are billionaires). How many people have heard of the other co-founder of Apple besides Steve Jobs? Yes Steve Wozniak was also there building one of the greatest tech companies in the world.

Question to ask oneself is of all the successful personalities mentioned above, what type do you fit into and work out your partnership deed accordingly.

It was a very unfortunate incident but there is something accurate in what he said reflecting the current economic situation. While we all wish to put our best foot forward and be positive in adversity, the reality is sometimes it is OK to accept that things really are that bad and not to be too hard on oneself. Life does throw the occasional bad egg and just when you wipe it off.. comes raining the whole basket of bad eggs !

There's a whole new industry now flourishing around resume writing skills, interview coaching, outplacement, networking seminars, job seminars, paid career counselling and of course the whole ' positivity' and ' the power within you' industry ! While some are useful and well meaning, reality is positivity must be consumed in doses of reality and sometimes the ' power within you' is great motivational fodder for speeches and the 'uplifting ' Guru types, it often doesnt work in reality by itself as a magic potion.' What can be imagined can be achieved' seems better as a slogan but not when you are trying to climb uphill without a rope or support !

My problem is people are paying top dollar sometimes for these activities and with dubious results as most of these are geared  towards telling the prospect that there is something wrong about the resume or the dress or the shoes.... it was reported that one company in China even sells plastic surgery as a job search solution. If looks could kill......

As we all know, a big part of who we are is determined by our economic status which often means the job we have. There is enough written about the economic consequences of losing ones livelihood i.e unpaid mortgages, schools fees, food etc but less is mentioned about the psychological damage caused. Unfortunately it takes a huge silent toll leading to rising depression, alcoholism, drugs and isolationism and suicides as has been the case in Japan which has the highest suicide rate in the developed world since the economic crash over 2 decades ago. People often do not have time to build a trusting relationship network outside of the corporate/ business world where one always has to put on the ' salesmen smile on how great things are going.' Sometimes it OK to accept that things are indeed not going well and level off with close friends and family or support groups. Denial of problems lays the seeds for further emotional and psychological damage.

Sometimes it is OK to accept ' time out' as all great athletes do get injured, replaced or simply exhausted in the middle of a major game. It's OK to accept that sometimes life does hand you a knockout blow and take the time to recuperate and give it some time to heal so when you are back in the game, you do not carry the 'baggage' of hurt, betrayal or in some cases deep anger at being ' wronged'. It is also OK to accept that just like all injured athletes, you may not have a comeback like in the ' ROCKY' movie series but then there are other options that could be equally gratifying in the longer run like coaching or changing one's career and accepting this change and making the best of it ( Easier said than done, I fully admit but I have enough friends who have managed to do it so I know it can be done )

Meanwhile, those who still are fortunate to have jobs, try best not to be condescending whether intentional or not when some one comes by for help. It could be you tomorrow on the other side of the desk !

Too much attention has been focussed on how we are in the biggest 'depression' since the great depression of 1929. My problem is that was far far away and most of the world's population was not even born then and with advanced technology and economic progress how many of those lessons are valid in today's globalised economy. Sure there are many similiarities and many lessons that policy makers worldwide have learnt that seems to have brought back at least the stock markets back from the brink. The big problem is what if this global crisis has more in common with the long, relentless slowdown of modern day Japan where every economic dawn has been a false promise and almost 20 years after the Japanese bubble burst, stock markets are down 75 % and yet Japan remains the world's largest economy ! The scary part is the uncanny resemblance in policy that Western Goverrnments have taken to 'revive' their ' zombie' financial institutions to what Japan did in what is called the lost decade (more like lost generation one should say). Japan was widely criticised for 'propping up' failed institutions and large corporations in exactly the same way that is being done across the globe today.

The worrisome part is the outcome in Japan where a lot of these institutions still hang around like zombies and ever lower interest rates and larger and larger fiscal stimulas plans still have not gotten the economy out of the slump. Well, thats Japan some would say, its different... exactly what the Japanese said at the top of their economic glory days in the 90's that the rules don't apply to us. The rest as we know is history.

Problem seems that the giant all you can eat and drink credit bufet party has come to an end globally and in its aftermath are lots of dirty dishes (and dirty laundry) left over. It almost seems that a lot of the growth in the ' goldilocks' economy may have been phantom growth after all fed by one bubble ( internet bubble) to another ( housing) to another (emerging markets or rather submerging markets). It seems quite obvious that some of the ' smart money' was actually plain dumb money being fed credit lines on steriods and promising outsized returns on phantom profits and fictitious balance sheets. Problem now is can the world really adjust to ' real' boring growth rates without steriods ? The answer is probably not that easily. All efforts seem on to create another bubble and therefore talk of ' green shoots' whatever that means. Basically bankrupt banks keep' threatening' to 'give back' tax payer money so they can go back to ' risk taking' and paying out ' outsized bonuses' in the well established belief that they can always go back and beg for more funds when it blows up all over again.

Unfortunately, the real economy is not biting this time around. People are nursing wounds from their total wealth destruction in stock portfolios, fall in housing values, loss of jobs ( US unemployment over 9 % and people talking of 'green shoots').

We all hope that maybe the 'green shoot' types are right and sure at some stage things will stop getting any worse but that does not make for sustained growth. Fortunes will be lost in trying to bet on ' recovery' same way as fortunes were lost in trying to time the Japanese stock markets' inevitable' recovery that never happened in the past 20 years- so much for long term investing !

Reality is whether we like it or not, we are in uncharted waters and we are pretty much on our own. We will need to ask a lot of hard questions on career choices, business decisions and personal lifestyle choices based on the fact maybe the old rules may no longer apply. Or sometimes there may be no rules at all whether old or new ! 'Guaranteed' global growth was one such old rule that became the new paradigm in the ' world is flat' era! Lets be careful not to get 'flattened ' by it.

Upon asking, quite a few exhibitors advised that they were rather dissapointed that there wasn't much business to go around and these shows cost a fair bit from USD10,000 to USD30,000 (and more) depending on how large the booth is. 

I have been a big supporter of trade show participation as an effective means to reaching 'real' business clients vs working the  informal (and formal) 'networking' tree which yields erratic results , if any at all. As the saying goes' Do business with strangers as friends and with friends as strangers'. The trade show business worldwide is certainly one that is booming given that everyone is trying to find new markets given their traditional markets are suffering or simply fallen off a cliff. Another huge factor is that most Governments are now subsidizing trade show participations to help SME's ( Small and medium enterprises)expand trade. For example, Australia has an EMDG ( Export market development grant) that pays back upto 50 % of all marketing related expenses. Even Hong Kong has a similiar grants that we have been beneficiaries of over the years and I would strongly encourage all entrepreneurs to fully take advantage of such opportunities.

China is the center of the trade show universe at this time as everyone is thinking this is where the money is. So if you are a trade show organiser in China, good on you ! In fact anything that is a 'platform' to help increase business is doing well whether networking sites like linked in or facebook , trade shows, trade assocations, business clubs (and even dating agencies) and of course alumni associations ( There is always more love at the bottom of the pyramid than at the top of the economic cycle). So if you are associated with any of the above, life should be OK and if you are looking for a job, I would look into these categories.

Now who is winning business in this economy ? The same guys who are getting the jobs. Basically, anyone who can answer clearly to his client or his employer 2 questions, A. How can you make them money or B how can you save them some money. Now that may be putting it too crudely but thats what it boils down to in this environment in which a lot of those  warm, fuzzy and lofty corporate titles are gone or non existent in SME's that are still hiring given the relentless bloodbath the large corporations are taking. Same with business. One has to offer clear cut value whether running a bar ( happy hours are getting happier and longer) or a restaurant (Set lunches with drinks and soups and appetisers included for less than the original cost of just starters) or movie theatres ( popcorn or hot dog free). Basically its a back to basics economy with no frills and no complications as customers are exhausted and' marketed out.' No wonder Wal-mart, Mc Donalds, Cafe De Coral ( Worlds largest chinese fast food chain based in HK), Sa Sa ( Discount cosmetics in HK) are all drawing in the customers. Even coffee shops like Starbucks and Pacific coffee ( Hong Kong based coffee chain ) seem to be doing well as ' Coffee becomes the new lunch' ( Remember its cheaper to meet for networking coffee that try pass that lunch bill through expense accounts)

Small is in and boring is in.  I believe, in this economy ' Dime is the new dollar'.There's just the marginal dollar left and you have to show respect to the client with the hard earned dollar. The upside in a tough economy is that suppliers, service providers, airlines, temp workers, shipping companies are all willing to do smaller deals to keep the busness moving. So in a sense it in a great time for innovation or introducing new products as smaller lots are also viable both in real costs and opportunity cost basis ( fewer opportunities means grab what you can when you can). Friends of mine who are in the teaching/ tutoring businesses are having a great year. Dont tell them about depression economics and finally if you are in Government, things look very good too. For all the criticism that was levelled against being a ' public sector' employee, our masters of the universe in the global corporations and the damage they have collectively caused makes me look at the public sector guys with a lot more respect since 'post bailouts', the 'masters of the universe' have to go back to them to beg for a ' few pennies more.' And the Governments are hiring..... so go get that job !

Funny how time flies and one hears the same comments being echoed all over again by business associates and collegues about fresh graduates. How are the generation Y (never liked the terms Gen Y X whatever in first place) going to manage in the economic crisis.

While the facts are indeed grim in the sense that a lot of life is just about timing and unfortunately some of the students graduating this year will face the worst job market in generations, reality is in lots of ways, no one is better equipped to deal with these adverse circumstances that the youth of today with their grasp of technology, creativity and despite what the naysayers say-their can do attitude !

I have been amazed with the sharp refreshing insights I have received over the years from some of the younger people I have had the opportunity to deal with whether my 23 year old property agent who gives me the most honest guidance and exceptional after sales service or another 20 something interns we hired to help look at some new initiatives in fresh fruits imports which involved getting up at 3 AM to head for the fresh fruit markets and dealing with the 'tough fruit guys' and even  in simple tasks like using the web to expand our customer base being a small company. Nothing fancy at all but just enough to make us look like a dynamic company that is on the move.

We have been lucky to have some highest grade interns from Hong Kong University (HKU) which is Asia's premier university and I have always wondered what I missed out on by not working with the ones that we did not select in the interview. I always ask why they choose to work in a small company for a nominal stipend and their reaction always is ' opportunity and a fun, flexible and relaxed workplace where they get to take on real responsibilities vs. being consigned to photocopying for the rest of their young working life and then being lectured on 'youngsters lacking ambition and drive'.So all the talk of the new graduates being all 'softies' and not ready to take on the world is all based on a general condescending tone that a lot of ' manager types' apply all the time.

Fact is a lot of the young people today are free of any baggage and sense of entitlements which is a very solid base to build success in the world of business. Corporations are undergoing such severe turmoil and their 'business models'(or rather lack of them) seem thoroughly discredited. Corporate CEO's  too stand heavily discredited and never have their reputations been more soiled by the excess greed and blatant mismanagement that has been the norm rather than the exception over the last decade. It may be an opportunity and time when younger people may decide that the odds of going through multiple levels of interviews and getting hundreds of rejections to basically work for companies that anyway no longer reflect their ideals and maybe starting a small business may be almost even despite all the difficulties of going out on ones own.

If this ripple turns into a wave, we could have the next big surge in entrepreneural activity lead by the younger people similiar to the computer revolution that was pioneered by young visionaries like Bill Gates, Steve Jobs and Khosla/Andy and Scott at Sun Microsystems.

So whenever I hear someone whine about' no good talent' or difficulties in finding' good people' I always remember one of my favourite sayings' Beware of the young turks and the old turkeys as young turks eventually become old turkeys !' Here's a toast to the Young turks !!

While I have often been critical of the ' role' the Venture capitalists(VC's) and 'Angel investors play in the real world by being both the perpetuators and the victims of ' fad based investing' and jumping on the ' hottest ideas of the time' in a wave of mass hysteria as we saw in the DOTCOM ( DOTBOMB era really ! ) , even entrepreneurs need a dose of reality when asking for outside funding.

Sadly, quite a few entrepreneurs I have known do not really deserve the funding that they are seeking others to provide them. I often ask myself if I would indeed fund some of my own business ideas if I were an objective investor and the answer is often times a brutal NO ! Some plans and business ideas are poorly laid out and sometimes in areas where the margins are extremely slim or non existent to begin with or gestation period so long that even funeral homes wouldn't take bookings so far in advance. Sometimes the business is proposed in an area where the entrepreneurs has limited expertise which is at best 'distorted positivism' or at worst case ' 'entrepreneural self delusion and escapism.' Fact is we live in an extremely competitive business environment and one needs an EDGE to make it (besides loads of luck and the cash that come with being lucky of course)

The businesses that I have seen become successful from start- up level shared the following characteristics;

1. Ideally if your best customer provides you the start up funding as well as the business to make your company cash flow positive from the word go. This will only happen if you have a lot of experience in that particular field and the relationships cultivated over the years for some establised corporate to take that punt on you. This is extremely rare and difficult to pull off but this is the ultimate gold plated AAA standard ( Not issued by the highly discredited rating agencies of course)

2. One has an investor who can act as an objective advisor as well as provide funding and genuine business guidance and contacts to help open doors. This investor can be an established entrepreneur looking to diversify or invest in a new idea that your business has an edge in.

Biggest advantage in both these options is the entrepreneurs gets paid (usually a nominal salary)while the business gets off the ground (or even if it crashes) so no starving entrepreneurs syndrome here !

3. Self funding with a little help from friends and family : This is probably the most realistic scenario for majority of small start ups. I can say that while this is not as glamourous as option 1 or as solid and secure as option 2, one should never underestimate the power of ' less is more' or as my close friend said the ' blind leading the blind'

When I started my business, conserving cash was the top priority so a close friend of mine who also had a start up and I decided to share an office in a serviced office and also share the cost of an accountant and secretary. Over 3 years of such an arrangement helped saved serious $$$ and also equally importantly helped provide a partnership and a sounding board for new ideas and a shoulder to cry on when things did not seem to go right. The mental and emotional support and the confidence of being with like minded people is as important in my opinion as is cash infusion since entrepreneurship is a long lonely path and one needs a good solid team to provide the support for one to go all the way.

Here's a special cheers to all the little guys supporting each other !

Angel investors.......Dream on ! By the time you would go on making and remaking your business plan you will be drained of any energy, confidence  and resources to actually conduct any business.

So in short and sweet terms, you are on your own.

I would suggest between begging, borrowing and stealing.. stealing looks like the best option ( As the masters of the investment universe have proven to us. But I guess we will have to let the Madoffs' and the Stanfords of the world stick to their expertise)

Watch your cash very very carefully as it will be a very long, lonely and ardous journey. Mirages will be many but genuine oasis's few and far inbetween so be prepared not to burn out while the ' big one' might be just around the corner.

Keep offices in  the cheapest place you can afford and  do not go on staffing binge in ' hopes' of business. You can always staff up when the business shows up. Keep expectation of staff low and do not promise them the sky. People, especially staff and customers are smart enough to accept reality and they CAN SEE reality ! So focus on building a good business and all will share the rewards. Pretend to build a farce of a business in a flash office with half a dozen secretaries and daily fresh flowers and soon you will be another footnote in the statistics of business failure that runs as high as 90 %

Sometimes entrepreneurship is celebrated and romanticised to such an extent that we lose all sense of the harsh realities that lay in the path of the entrepreneur. Why are the success stories oft repeated while the many who perished by the wayside not even mentioned in the footnote of the history of capitalism?

All the more pertinent is this issue in todays economic crisis context. Is it a good time be an entrepreneur I get asked all the time by eager students and friends in the corporate world who do not feel secure any more in their once cushy jobs. Maybe it is also cyclical the highs and lows of entrepreneurship.

As one One learns in high school economics about the factors of production namely Land , Labour, Capital and Entrepreneur, these have their bull and bear markets too in my opinion.

During the internet bubble, Entrepreneurs were celebrated including may who pretended to be entrepreneurs and yet raised million in equity capital. It was also the bubble phase of capital as one could not ' invest fast enough !! This also created a bull market in labour i.e ' knowledge economy' wherein there was a shortage of ' good people' whatever that meant !!!

With the internet bubble bursting, we saw the property and financial bubble take its place where capital and land became the new highs and again labour entered a bull market with all talk of ' the world is flat' economics !! Entrepreneurs were 'out' as corporate high fliers and corporate fat cats dominated by the financial firms became the new 'masters of the universe' or as the Economist magazine put it ' the sultans of global capitalism'

Well all great parties do come to an end eventually and now we are faced with a huge slump in Land(property) capital ( none left) Labour ( everyone can be laid off especially ' good people). Last man standing ? The entrepreneurs....Will this be the golden age of entrepreneurship ???