7 Money Lessons From 3 Failed Businesses in Singapore

The average Singaporean can pick up many things to learn from the different failed business in Singapore.

Business issues are often considered a separate “world” from personal finance. But while the two are quite different, there are some important money lessons to be learned from businesses and entrepreneurs.

Here are some things you can learn from failed businesses in Singapore:

1. The Tonio Lamborghini Club Closure

On 20th October last year, the Tonio Lamborghini Club closed down after its launch day. About 20 staff were owed three months of salary (it’s not uncommon for operations to start before the official launch), and the Central Provident Fund (CPF) board is taking legal action against the owners.

We don’t know why the club closed down, and it was unexpected - the club was meant to cater to the well-heeled, with an exclusive membership; it usually takes significant capital to even set up such a deal. There were even magazine and newspaper articles citing the club was the first of a chain, and that it would change the entertainment scene in Singapore.

Some Useful Lessons:

• Never assume steady employment
• Know when to walk away
• Wealth isn’t about hype and appearance

Never Assume Steady Employment

The employees of the club couldn’t have known the club would close down so quickly. But if it can happen to a prestige business with proper backing, it could happen to any other company.

Most people fear losing their jobs due to bad work performance, but fewer people think about the health of their employer. It’s important to save up a few months of your income (ideally six months) to deal with situations like this - the money could tide you over while you look for a new job.

Know When to Walk Away

If you haven’t been paid your salary in more than a month, it’s time to call the Ministry of Manpower (MOM) and immediately search for a new job. This doesn’t mean you have to take on a new employer right away. It means you just have to start searching early, in case the worst happens.

Wealth Isn’t About Hype and Appearance

Be wary of “wealth by association”. This is the assumption that, if you work for a place with a lot of rich people, you’ll be rolling in money as well.

There is a limited truth in this, in that hanging around with the rich may see some of their clever methods and mindsets rub off on you (it depends on who you hang out with though; a lottery winner has fewer lessons to teach than a successful entrepreneur).

However, don’t assume that working in a high-end business will bring those benefits, or that they are even financially stable. It’s quite possible for a high-end hotel or restaurant or club to be teetering on the brink of bankruptcy.

2. The Tower Records Shutdown

Tower Records used to be a notable success among Singapore’s consumer brands. They started selling music CDs and related electronics in the mid-1990s. At a time when CD shops were mostly small, disparate shops, Tower Records managed to become a major brand presence that dominated local distribution.

In 2006, they closed down after a long (losing) war against online music and the rise of torrent sites. Tower Records also could not change business models easily, as they had invested in a large inventory of unsold products.

Some Useful Lessons:

• Adapt and change with the times
• Don’t over-invest in one asset

Adapt and Change with the Times

When we had around 15,000 layoffs in 2015, it was noted the ones who had difficulty finding new employment were older workers. It can be difficult to start fresh, if you are retrenched while in your mid 40s. At the same time, with disruptive business models appearing, there is no guarantee that your job will be permanent.

What can you do?

The answer is to stay adaptable. A simple way to do this is to always try and set up some form of side-income: become a web developer on the side, run a small blogshop, make custom shoes, etc. (it’s even better if it’s a hobby). Whatever you do, try to monetise it: it could be a source of side-income that keeps you going in between jobs.

Besides this, always dedicate some time (at least 10 hours per month, or about two to three hours a week) toward learning a new skill. This can be anything from Business English to Accounting. Check if your current employer will offer such courses at a subsidised rate and if not, check if you can use your S$500 SkillsFuture grant.

Don’t Over-Invest in One Asset

Tower Records was burdened with a huge inventory of products, and it would have been a massive loss for them to abandon it all for a new business model (perhaps that contributed to the inertia).

To use an analogy, do not over-invest in a single asset (e.g. pour all your money into the biggest house you can get). If the value of that one asset goes down, your entire wealth may soon follow. Consider how the devaluation of the CD led to Tower Record’s fall, and you might get a sense of how a falling property market could spell your financial doom when all your money is invested in the house.

3. Anything and Whatever (The Soft Drinks)

Back in around 2007, we had two soft drinks called Anything and Whatever. They were a play on a local convention - when you ask Singaporeans what they want to drink, they often tell you “anything” or “whatever”.

That’s clever, but ultimately it made the drink just a gag. Even the advertisements only emphasised the wordplay. What was seldom highlighted was the actual quality of the product, which wasn’t great. Many consumers “got” the joke, but no one particularly enjoyed the taste. In fact, some people joked that they were called “anything” and “whatever” because you couldn’t distinguish them from any other fruity soft drink.

How did it end? We don’t know for sure. All we know is that the drinks were no longer available from 2010, and the company’s website went down in 2012.

Some Useful Lessons:

• Novelties are not a stupid way to make money
• But don’t expect novelty to last

Novelties are Not a Stupid Way to Make Money

Say you have an unusual talent of some sort, like training cats to use the toilet bowl, or a way to make computer cases out of seashells (both have been done). You may think this is just a stupid novelty with no monetary value, but you’d be wrong.

People can and do buy things that have no substantial value other than temporary entertainment. Pet rocks are a silly idea, but their inventor made millions. On Kickstarter, a project to make potato salad once raised over USD $200,000.

If you have something novel but not particularly useful, don’t be afraid to try it as a side-business. Also, be aware of how easy it is to persuade you to buy a novelty item - it’s a norm for us to spend based on interest, not actual “use value”.

But Don’t Expect Novelty to Last

If you make money from a novelty, or work for a novelty company (these are often odd and obvious, like a company that trains clowns or turns living rooms into ice skating rinks or something), then don’t count on the long term.

Save up what you make - and you can make a lot from novelties - and then prepare to move on when the fad ends.

Read This Next:

Instant Gratification is Personal Finance's No 1 Enemy

5 Situations That Make You Spend More Money