Jenny Lao-Phillips
Months ago, a quite successful small restaurant closed down, to the disappointment of customers in the neighbourhood. That place was one of the favorites of many living in the area due to their delicious low-cost savory food. The restaurant maintained its low costs by offering a simple menu and a smooth service process which required only four staff (presumably relatives). The restaurant never lacked customers, in fact at times needing to refuse orders because they were too busy. For a restaurant like this, one would assume they were at least successful enough to survive, so it was quite a shock when one day they suddenly closed down.
After inquiring around the neighborhood, I found that the reason for its closure was none other than a significant increase in rent which forced the small restaurant to either close down or increase their prices by a large percentage. So, if even a business that managed to keep costs extremely low and enjoy an impressive revenue cannot survive, what do entrepreneurs have to do to run a small business in Macao?
Year after year, research about local SMEs conducted by my students reported the same major difficulties faced by small business owners – rent and labor. That is nothing new, of course, with inflation and the high salaries offered by the gaming industry, SMEs have been facing staffing issues for a long time. So, a small business that managed to function efficiently with only four people should be at an advantage. But even then they couldn’t survive the ever increasing rent. The more traditional firms who own their own shops thus do not face the pressure of high rent, still complain about not being able to hire staff. For a small business to survive, perhaps entrepreneurial individuals need to come up with businesses that do not require renting of spaces or hiring of people.
Well, that seems to be the new trend now. Browsing through the mighty Facebook, one might notice more and more shops where orders are placed via social media, and products are delivered to the customers’ homes. These products can vary widely: organic food, natural cosmetics, latest fashion from Japan or Korea, homemade soup and desserts, locally designed accessories, to name a few. Perhaps some of these companies have a physical location, but quite a few of them are run from home. These businesses are often run by young people who may have a full time job, and are doing this on the side for extra income to combat inflation. Those who have managed to acquire steady profit have left their full time employment to run their tiny business. According to one of these “home-made” entrepreneurs, the profit margin from her business is not very high, perhaps a few hundred to a thousand dollars a day. But that is enough for a living, and more importantly, she enjoys her work and the fact that she no longer has to deal with workplace stress. For the new generation of entrepreneurs like her, they do not consider what they are doing a business, it’s a way to turn what they enjoy doing into an income stream.
It is still too soon to know if any of these ‘sources of income’ will be developed into successful businesses that contribute to the economic development of Macao in the future. But these young entrepreneurs surely contribute to the diversification of local SMEs, perhaps not in the form of new products or services, but a different view of running a business. The joy in doing what they like, and the hope and dreams they communicate when talking about how they “make their living”, allow others to see possibilities, and perhaps even opportunity for new business models. Jenny Lao-Phillips
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