MasterClass #165: 3 Massive Mistakes Entrepreneurs Make That Kill Their Revenue and Put Them Out of Business

Mr Johari Low

Mr. Johari Low, Chairman of Rockwills International Group

After webinar #165 on Tuesday 17 Nov, I received this email from Mr. Johari.

Mr. Johari wrote:

“Reflecting on yesterday’s webinar, I thought my answer to the question on loan or capital was not clear enough so I have done a written answer below.

Question at the webinar: Is it better to raise cash for the business through capital or through borrowing?

To answer this question, one has to look at two main factors.

The first is comparing the cost of financing with the cost of capital. Yes, capital does have a cost and is not free. Although there may not be any contractual obligation to pay a fixed reward to the shareholder, unlike the obligation to pay interest to the lender, when an investor puts in capital, he expects a certain rate of return over time. This is invariably higher than borrowing cost because he is taking a bigger risk than a lender. And if you do not deliver that, you will have difficulty to get further funds from him in future. That’s the cost of capital.

So the lower the cost of financing, the better it is to borrow without raising new cash from capital issues. Obviously, when borrowing cost is cheaper than the cost of capital, one may think of borrowing as much as possible.

However, borrowing has a limitation and this is the second factor called gearing.

Gearing is how much the business borrows compared to capital. The higher the gearing, the more difficult it is to raise future borrowings. If you go to a lender and ask for a loan of RM 1 for every RM 1 capital invested, he may perhaps consider but if you have a capital of RM 1 and you ask for a loan of RM 10, then it is unlikely he will ever agree to lend. This is because he will perceive that the gearing ratio is too high (10 to 1), meaning he will be worried that there is not enough safety margin (if your capital is RM 1 and he lends RM 10, then the safety margin is only 10%). So the business may not borrow beyond what is called its gearing limit.

There are other factors to consider such as period of borrowing available and whether interest rate is fixed throughout or floating (going up and down depending on money market conditions).

The other thing I said in error – 70% of businesses do not survive the first ten years (not the first year).

Perhaps you could circulate to all the participants who attended. Thanks”

All of us love to plan ahead …
if you plan towards the right direction, hey, planning is awesome !
if you plan towards the wrong direction, oh dear, you’ll fail faster than you’ll ever imagine …

This online master class, we’ll talk about mistakes, failures, blunders of most entrepreneurs make in their business … it’s scary but you have to make sure you are away of these before you do any planning for Year 2016 …
what are the biggest mistakes most businesses make that kill their revenue & put them out of business ?
how to avoid making business mistakes ?
how to fix your mistakes before you run out of business ?
I’ve invited Mr. Johari Low (Chairman of Rockwills International Group) to train you & engage directly with you … Do attend this online master class before you plan for year 2016 …


Master Class #165: Massive Mistakes Entrepreneurs Make That Kill Their Revenue and Put Them Out of Business


1.Entrepreneurship Journey & Challenges Faced When Building Rockwills Business from Scratch
2.Top 3 Mistakes Entrepreneurs Make in Business That Kill Their Revenue & Put Them Out of Business
3.How to Avoid Making These Mistakes & How To Amend If The Mistakes Had Already Been Made

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Master Trainer: Mr Johari Low

Mr. Johari Low is a Fellow CPA, Chartered Accountant double awards winner and Mensa member. Johari Low has been involved in the corporate world for over 40 years, as auditor, as receiver and liquidator, a banker, as director of a conglomerate and an insurance and stockbroking group, as founder of a leading unit trust company, as CEO of a large fast food chain, and as Deputy Chairman of a listed plantation group.

He started his first successful business venture at the tender age of 23 and became one of the youngest to be appointed to the board of a bank at age of 33. He has served in the past on the board of listed companies in Australia, HongKong and London, as council member of MICPA, MIA, Lions Club (KL Host) and La Salle Petaling Jaya and as an advisor to several major groups and the Federation of Public Listed Companies as well as the Malaysian Institute of Corporate Governance.

He is currently an independent director of several public companies and serves as adviser to several business tycoons. He is the Chairman of Rockwills International Group, the leading estate planning group in Malaysia and Singapore

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