Welcome to Money Bootcamp, where we help our readers reach their personal goals by putting them through a rigorous financial transformation.
Our third intrepid spender/saver is Seah Pei Song, a 21-year-old university student who managed to save up enough money to start his own business last year. Inspired by his years as a member of his school’s debate team, Pei Song started Dialogic Learning Services, a company that provides instructors and workshops to schools for activities like debate, public speaking, and journalism.
For this instalment, we’re switching things up a little since Pei Song has already achieved his goals. Pei Song shares the 5 things he learnt about time and financial management that allowed him to be a business owner at such a young age once he was done with NS.
My Life, A Year Ago, At A Glance
Age: 20
Industry: Education
NSF allowance: $630
Goal: Save $3200 for my startup capital.
Fixed monthly (recurring) expenses:
Spotify ($10)
Public Transport ($85)
Total: $95/month, or $22/week.
Savings: At least $200/month.
What’s left (Food, leisure, etc): $335
The Challenge:
Save up enough money so that I can start my own business the moment I ORD.
1. Spend your money as if you only had NSF allowance
When I was in the army, I had to put in a conscious effort to grow my savings because no one gets much money in NS! My allowance as an NSF was $630 per month; I aimed to save at least $200 monthly, over the course of my whole NS, for my startup capital.
Thankfully, I was—and still am—pretty frugal. My only monthly recurring cost was Spotify Premium, which was $10 a month.
Other than that, my biggest costs were just food and transportation. You’d be quite surprised how much transport costs will add up. From Pasir Ris to Joo Koon, each journey costs about $2, one-way. That’s literally the most you can charge on the MRT. So 2-ways it’ll be $5.
But eventually I discovered the wonders of the concession pass. The concession pass back then was $85. I did some calculations and found out that concession was worth it. Just taking into account my weekday trips to camp, I would save $30 per month already.
With the fixed expenses of Spotify and my concession pass, I would only have $500 left to spend a month, so I tried to have most meals in camp.
Except when the cookhouse food is rubbish. On those days, I would spend $4.50 on Pasir Laba’s infamous ‘full battle order’: sambal cao fan with chicken cutlet, egg, cheese fries. I have it twice a month, maximum.
Koi is also a great vice of mine. When I alight from the train to go home, I see Koi right outside the MRT station. It’s just there. So it’s a perpetual struggle whether I should buy Koi.
I like the peach green tea with aloe vera. It’s $4.80 for the medium, $6.50 for large. After a while, I realised it’s too expensive. So I started looking for alternatives, and I became a convert to this place called iTea. It’s a neighbourhood chain that you can’t find at shopping malls. You’ll definitely see it at heartland areas, below HDB blocks.
And it’s super cheap. $2 a cup. Better than SweetTalk. Compared to Koi, I save up to $4 a cup, which is a lot in the long run.
Another thing I do to save money is when I’m at Birds of Paradise and eat the white chrysanthemum ice cream—it’s the best thing they have there—I buy it in a cup. Then I buy the packets of sui sui (crushed, fragmented) cones— the cones that are spoiled, which they then break into pieces and put into a packet.
It’s just $1. A lot cheaper than the $1.50 cone, because they give a lot more. I’ll dip the pieces into the ice cream. It gives me a lot more joy eating the $1 packet, though admittedly, it’s not that much of a saving.
Maybe it’s just the feeling of saving money that makes me happy. But when you add all these savings together, they make $630 a month go a long way.
2. Make full use of ‘downtime’
When I was in the army, I had a travel time of 4 hours—2 hours from Pasir Ris to Pasir Laba Camp every day, to and fro. At the start I was just using the time unproductively, like watching Netflix.
When I was trying to piece together the idea for my company, I decided to bring my laptop along during my train ride (even though it’s very inconvenient because they’ll keep it in the lockers at camp).
While stuck in the train, I started to do research on what gaps I could plug in the market. By observing which schools engage which instructors, and monitoring the public procurement website, I realised that the people who coach school debating teams are people who don’t have much experience: they’re gym instructors, insurance agents, property agents, meditation instructors—if you can believe that! So I could fill this gap with my prior debate experience.
My 4-hour daily train journey turned out to be an extremely productive time that allowed me to focus on laying the foundations of my company.
3. Think in terms of opportunity costs
My startup capital was not that much, honestly. First was the cost of starting the company. Admin costs, that’s one thing. Other than that it’ll be cost of printing for the workshops I conduct. In total, that’s about $3500.
The biggest cost to me was opportunity cost. At the end of the day, businesses are inherently unstable. You never know what you might be getting into.
Truth be told, this is not my only company. I tried to start another before, but that failed rather miserably. I mean, the cost involved is really the cost of what could I have better used my time for. And whether this investment was something that is worthwhile.
But I told myself, even if I failed on this venture, this was my ‘business degree’. This one year trying something out, running a business, is my business degree.
Even if everything fails, this is something I would learn. The benefits outweigh the costs, even opportunity costs, so it’s worth pursuing.
4. Be aware of the difference between money and value
At the start I thought that a business must be one that always focuses on the profits. I only applied for jobs that I thought I could make a big margin on. I would quote very high prices—which, unsurprisingly, resulted in me getting much more rejections than acceptance.
I started to feel like my business became a game of numbers. I was focusing too much on the money, how much I could make, how price-competitive I could be.
It was a time of introspection as I reflected on what I really wanted to achieve with my business.
My dad is a businessman. Seeing me in this state, he told me that the most important thing for any business is to always focus on what value you can add to your client, and the money will come naturally. He told me that I needed to offer a service that is worth more than what they are paying me for.
I thought about the values I wanted to bring to my students and was reminded of my own passion when I was in my junior college debate team. It led me to perceive that my comparative advantage lay not in price, but in innovation in teaching practices, or the fact that my team is made up of generally young people—they can relate to students better than older instructors.
Thus, I started to care less about the money and shift my focus to whatever good I could bring to the students. True enough, more contracts came along.
5. When you are new, don’t be afraid to volunteer your services
In the same way, just because I am not charging a price for some of my services, it does not mean I am making a loss.
At the start of my business, when I was keen to enter the market, I looked for underprivileged schools that didn’t have a background in debating and needed a free coach—or what they call schools in the Division 3 circuit.
The French School of Singapore was keen on me because they didn’t have a debating coach so I offered my services pro bono last year. And this sacrifice paid off: they decided to contract me this year.
Under my guidance, their students even emerged champions of Division 3 this year. It was really a win-win scenario for both of us. I got to see my students grow confident and bask in their achievements, while I received financial and emotional validation for my work.
A big part of it is willing to do things for free—maybe not so much free, but with my eye less on the profit than on what I can bring to the table.
My philosophy is really that you miss 100% of the shots you don’t take. For every job opening, I’ll apply—if there’s a workshop that needs me, I’ll apply. Even though there might be a better company out there, I might be able to outdo them in other aspects.
But that applies not just to running a business, but also when you are managing your time and finances. You have to do it actively.
DBS Money Bootcamp trainer says,
“Pei Song is thrifty and is prudent with his spending. These are great qualities to have when you’re saving money to start your business, and you will naturally apply these practices to your business operations as well. He’s off to a good start!
Here are some nifty and affordable tips we recommend to new business owners.
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Dream big, start small – There are advantages to starting small. You have the opportunity to learn at your own pace, the freedom to adapt to changes quickly and chart your business growth.
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Go digital – A physical shopfront is no longer necessary today. Do your research and suss out the best tools and services online to build a digital presence. Accounting tools and business administrative services are readily available online at affordable rates as well. Check out DBS’ Start Digital portal to get the best bang for your buck!
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Tap on the power of social media to find and engage with your target audience – Gen Z and millennials are born into the digital era, and they have social media at their fingertips. Make use of your digital and social media knowledge to grow your fan base cheaply and effectively. Be part of relevant online communities such as DBS BusinessClass to expand your network and meet like-minded entrepreneurs.”