Tale of Two Cycles

TWENTY fifteen is here! Happy New Year! (Sorry for the late post.)

Let me begin by sharing the worst phone call of 2015, so far. I was calling a few businesses whose numbers were listed in a directory which the business must subscribe to. My aim was simple: invite the person in charge of sales and business development to a business meeting where they can do that. Simple and straightforward. No hidden agenda.

Of course there are those who said yes. And those who said no.

But this one unfortunate lady, the proprietor of a business in Kuching. Her niche is to sell accounting software to businesses. Upon asking “who is this?”, decided it is best to show who is boss. Thus, started to talk rudely and bitterly. Thanking her for her time, I later decided the following:

Converging Spheres Sdn. Bhd. and its subsidiaries, future and present, will not engage the services of “Business Account Management Solution” in Kuching – whether directly or indirectly.

We strongly discourage our clients, associates and partners from engaging, subscribing to or working with this rude and hot tempered sole proprietor.

Yes, I am the Managing Director of Converging Spheres Sdn. Bhd. Using her principle, as the Managing Director of this Private Limited Company, I am deciding to prohibit any form of cooperation with, collaboration with or subscription to this person and this business. And I advise anyone who is keen to engaging this business to take their money elsewhere. I posted this on my Facebook and LinkedIn. Now I share it on my blog.

A Problem with Accounting Software Distributors?

But this is not the first time a business distributing accounting software has been rude to prospective clients and businesses. Sadly I know another which scolded another businessman for introducing his business and software to a quarry owner in Kuching.

Economic cycles see the usual trend: influx of demand, a high plateau of demand, a drop in demand and a dry spell.

In 2014, accounting softwares are in high demand. Suddenly all the businesses whose revenue is RM500,000 or more are looking around for GST-compliant systems. Come April 1st, 2015, Malaysia will implement the Goods & Services Tax – a form of added value tax.

No doubt 2014 and early 2015 will be a boom market for accounting software distributors.

Here’s the thing, the boom is coming to an end. Soon almost all businesses with at least RM500,000 in revenue will have a GST compliant software. And then what next?

The market for accounting software will be “saturated”. It will turn into a recession. What guarantees are there that the new businesses in 2015 and beyond will actually hit RM500,000 in that year or the year after? Remember: thanks to the demand surge in 2014, there are more distributors popping up like mushrooms after a rainy day! If there were only 50 distributors in the market before the boom, it is not impossible to see the number increase to 75 (50% more competitors) or 100 (100% more competitors). It is just like the computer supply business in the early 2000s.

From 512MB to 1TB…

At the time, computer and its hardwares costed a bomb! Notebook computers costed at least RM4,000 and desktops RM3,000. It was so expensive that Malaysian workers could withdraw from their EPF to buy a computer! Fast forward to today. You get better hardware and systems for RM1,500!

In 2006, a 512MB thumbdrive costs at least RM60. I remember buying mine at Central Square in Sungai Petani, Kedah. Today, 512MB thumbdrives are a rare thing. If you can find it, no guarantee it can hold enough files. Today you can get 8GB thumb drives for RM30 in a bookstore!

Now coming back to accounting software. More players are coming in. It’s technology. It may even cost only RM50~RM100 on Google Store or the App Store. And like technological movements, it will become more user-friendly and easier.

So what happens to you, the distributor? Where will you be amidst the competition in two, three or five years down the road?

Change is the Only Constant

In a marketplace which demands more service oriented businesses, can you afford to be rude to people? In Business Network International (BNI), of which I am a member of Signature Chapter, we are taught to a simple, but dangerous idea:

Do not look at those present. See the network behind them.

I am just one business owner. But I, too, know business owners in Kuching and beyond. I deal with manufacturers and suppliers alike. I meet politicians and bureaucrats and others as well. But you were rude and unbecoming of a business owner. Yes, I am sharing my bad experience with you with people I know. Now remember I am not the only person you were rude to before. Are you sure you can survive in this coming market?

The rules of the game in business has changed. And it is changing very very fast. Yes, I named one “Business Account Management Solution” in Kuching. I did not name the second, but know that many are already complaining about you.

April 1st, 2015 is less than 90 days away. Are you sure you are prepared for the market post-boom?

About Aldric 109 Articles
Copywriter. Emersed in conversations about politics, economics, business, personal finance, theology, and entrepreneurship. Starting golf. Enjoy travelling and experiencing the many things in life.

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