Monday, December 02, 2013

Throwing money at the situation don't really work (Part 2)

Singapore’s first social enterprise hawker centres opened for 1 year and closed down, probably wasting more than $1 Million.

Sadly, Kampung @ Simpang Bedok is another victim of a waste of funds just to show that the Government is "doing something"

A question I often ask, "Is there any social impact when this project fails and the hawkers which consists of people from low income group or ex-offenders?"

I'm sure these people are hardworking, and there are a lot of people wanting to "help" however, how much engagement is there and real mentoring?

I've seen many food business fail in Singapore, and many succeed. And it is indeed a very tough business as rents are generally the major cost. Construction and Renovation costs are not cheap and in the end, there is a lot of competition.

Many projects are started by the government by sponsoring a student from a Polytechnic full rental for a year to start their hawker business. Sounds good for the first year, but when rent bills come the second year, most of these projects fail. (So the funds put in are wasted, and lessons are not learned)

There is always a question in my mind, how did the hawker centers in the past run? Why is the running cost so much lower in the past? Is it just rent?

Running a hawker store or F&B business, there are a lot more to it than just cooking good food. Finding the right employees, reliable cleaners and other important staff if key. The entrepreneur will also need to negotiate rental and in this case, the group that run the facility will also need to know the different codes and costs involved in running the facility.

Doing business is not charity, Social enterprise is not charity. Businesses need to make profits, and having the subsidized model does not work unless it is subsidized permanently. (where the businesses rely on subsidies forever). I'm sure Far East Organization that owns the location will be more interested to charge a full price after 1 year of operations and the "social enterprise model" cannot support that.

The lean model in Dominican Republic where the food truck in the day drives to an empty parking lot in the business district, drops a tent, tables and chairs and start a pop-up restaurant seems much lower cost and allows the business to pivot, change location, etc.

Sadly, in an efficient country like Singapore, this will not pass the codes as carparks are not zones for "restaurants" etc.

I guess Singapore will just throw more money to show that it is doing more to help people.

-- Ironbowl.

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