SMALL SCALE BUSINESSES IN PNG

"What most Papua New Guinean entrepreneurs don't see!"

Papua New Guineans favor business opportunities that promise huge and quick money! Typically, they target hire car, properties,  civil constructions, taxi services, bus services, betel nut wholesale/retail, illicit drug deals, gambling and other such opportunities that promise huge and quick returns. 

They don’t like seemingly unproductive businesses such as those in the FMCG retail sector or agriculture. FMCG means, Fast Moving Consumable Goods. Tucker-shops, grocery shops, and supermarkets are selling FMCGs. These businesses aren't fit for PNGeans as generally perceived hence left to the “kongkongs” or Asians to run. 

Other little known Small to Medium Enterprise (SME) opportunities in the service sector are either seen good for foreigners or for the know-hows. These include tourism & hospitality, travel agents, financial services, beauty and fashion services, entertainments services, communications technology services, and other similar.  

They always look around for opportunities, whether legal or illegal, that promise them huge returns and gamble their hard-earned monies. Even if it means to support a political candidate, they do because this is an easy way to becoming rich overnight! Some turn to gambling for huge returns such as in pokies and horse race!

In business/economics, opportunities that promise huge returns intrinsically have high risk.

Those business opportunities that PNGeans typically want and continue to engage in are highly risky! 

Supporting a political candidate has high probability of loss, and not proper. This is insanity at its best and force that drives politicians to practise corruption. 

Illicit drug trading is a crazy investment! Far risky.

Gambling has 50-50 chances of winning, either you win or the vendor wins. There’s no guarantee!

Buai dealing has huge exposure to theft, rot, and loss during shipment. 

Hire car opportunity has irregular revenue stream. You only make money when your car is hired. Otherwise it sits there doing nothing and demanding more maintenance and running costs. You need good business acumen to grow and sustain it.

Property business also has irregular revenue stream. When you don’t have customers consistently, maintenance, land rates, electricity, insurance costs and mortgage payments add up. However, buying a property and selling again a little higher than market price could be a win. Still you need a very good set of business management skills to be successful. 

Taxi and bus services have maintenance, insurance and running costs whilst the assets depreciate in value over time. Risk of accidents and theft are inherent – huge exposure! Good business acumen is also required to grow and sustain them.

Small scale civil construction opportunity is good but without strong affiliations with politicians or government ministers, you risk big time as this is the name of the game these days (I do not condone but it appears a sad reality nowadays). Also, proper and smart business planning has to be in place with relevant skills set.

Others in the service sector enjoy regular revenue streams. Margins depend on overheads and pricing.

Farming/agriculture has promising returns but again, diversification techniques must be applied in terms of planting different food crops and raising different farm  animals, as well as proper market research to avoid over supply and wastage.

In economics, different portfolios (business opportunities) possess varying levels of risk. Some are highly risky  while others are less risky. It is commonsensical to invest in more than one business opportunity simply to spread the risk. The danger of investing in one opportunity is, if you lose, you lose it all! 

One of the reasons why many PNGeans run a lot of businesses down and go broke is simply because they don’t diversify (among other factors). Do not put all your eggs in one basket!

Do you often find a “Kongkong” sits near a till operator like a statue with his eyes fixed on the cash register in a grocery shop or tucker shop? Do you know why Asians like wholesaling & retailing Fast Moving Consumable Goods (FMCG)? They know this simple truth – diversification. 

In their shops, they sell so many FMCGs. They don’t wait and look for customers. Customers come in numbers every minute.  There is always money coming in from 10t coin to K100 note every minute. You can guess how much they collect at the end of each day! Even though margin on each item is small, revenue flow is consistent throughout. If they don’t sell one particular item, they always sell another item. The turnover in this business is quick and margins are doubled or tripled!

In a nutshell, do not gamble your money on investments that promise high returns without prior planning, because when you lose, you lose it all! Hire car and property services have irregular revenue streams while taxi and bus services have high maintenance and running costs and risk of accident is inherent. 

FMCG sector is a growth and sustainable business. It is a well-diversified business in itself as so many ranges of fast moving items are sold in one shop. If you cannot manage to sell an Ox & Palm, you can sell a Dolly Tuna (tinned). If you cannot sell an Ice Beer, you can sell an SP can or bottle. If you cannot sell a can of Cola-Cola, you can sell a can of Solo! 

This is not to say FMCG is the only best option.  Every investment has its inherent risk elements and encounter business cycle. But rather it is an easy and profitable sector that has been overlooked by PNGeans and is now taken over by Asians! 

This is a new dimension in SME businesses in PNG.

For more information, drop a comment here or contact the blogger on: williemell41@gmail.com 

Author: Willie Mell (freelance blogger)