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Friday June 28th 2019

NZ entrepreneur enquiring about EP approval by opening IT company

Hi All,

Kindly help with my employment pass application. i am from NZ and planning to open IT company with 40000 S$ paid up capital and shall be drawing 9000 S$ salary per month for my self.

What are the chances that my EP application will get approved? i am already in talks with some local people who will be acting as local director initially in my firm.

Regards
Andrews

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Permit me to do some simple arithmetic here. You’ve got $40,000 in paid up capital. You are planning to pay yourself $9,000 per month. Let’s assume you’re going to set aside a very modest $4,000 for all of the odds and ends you will need to open up a company… government fees, professional fees, printing, website… I haven’t even mentioned something like rent, or employee salaries.

Anyway, that leaves you with $36,000 in paid up capital. Divide that by your monthly salary and you get FOUR… you will be completely out of cash in four months.

So, am I to assume that your pro forma financials and business plan shows startup break even at four months? That is, at the end of four months, your company will be earning at least $9,000 per month to continue to pay your salary? More realistically, will it be earning more than that to cover your company expenses as well?

Because, if you’re not planning on break even in four months, then your numbers don’t make any sense and your application will get shit canned. Where are you getting the money to pay yourself $9,000 per month with no revenues to cover?

Is it the local idiots who told you that $9,000 is a great number because “big” numbers are better than small numbers? They are full of crap. Have you asked them where the $9,000 is supposed to come from? What are they going to tell MoM when MoM asks where the money is coming from? You’re going to get a big fat, “rejected because revenues do not cover salaries”.

Really, unless you’ve got a decent business plan and three years of semi-realistic pro forma financial statements, unless you can convince yourself that you have enough money to survive until you are profitable, you ought to save your own money.

Unless you’ve already got contracts in hand, it is very rare for a new company to break even in less than six months. What are you going to do when you run out of money? Seriously, if you can’t self fund until you’re making enough money to pay the expenses of your business and yourself, you’re doomed before you begin.

Here’s an outline for a business plan. It may not be the plan you use but it’s something to think about and something that the authorities here will want to see to make sure that you’re not some yahoo trying to use a startup company as a backdoor way to sneak into Singapore.

http://www.herberts.org/miscdocs/Sample … ntents.pdf

In closing, and by way of example: I paid myself $8,000. I also had $200,000 in paid up capital, and I had several hundred thousand dollars worth of contracts waiting to be executed. Can you see the difference in sustainability in the startup phase?

Edited to add: You want to start an IT business in Singapore? IT startups are the shits in Singapore. You think you’re going to approach local businesses with your IT services, whatever they are? You won’t. You will be shut out in the cold. Guaranteed… unless maybe you’re Chinese and speak the language… even then… no network.

You think you’re going to sell into multi-nationals? Good luck. That was my model… regional sales. That’s been replaced with global PMO’s and global service providers… think Infosys and Tata and Getronics.

Unless you’ve got a great Rolodex, and unless you’ve thoroughly researched your market segment and competition, I’d save my $40,000 for something else.

Strong Eagle

Editor’s note: This article is retrieved by a comment posted in Singapore Expats forum.

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