Malay Entrepreneurs’ Cash Management ‘Weak’, Says Ex-PM

Poor cash management skills are one of the major weaknesses of entrepreneurs in Malaysia, according to the country’s former prime minister Dr Mahathir Mohamad.

He said Malay entrepreneurs often regarded money as an item for purchasing things they desired while it should instead be regarded as capital which, if wisely invested, could generate lucrative returns.

“Management of cash is very important but the problem is when they have money, they want to spend,” said Mohamad. “For instance, [they] take a bank loan of one million Malaysian ringgit (RM) but half of it is spent on buying a Mercedes and other things, and only RM500,000 is used for business. This means the interest is now doubled because that RM500,000 must pay the interest on RM1m and your profit margin must be very much higher to repay the loan.”

Dr Mahathir said there were also cases where Malay entrepreneurs participated in renowned and successful franchise business, yet they failed because they were not good in managing cash as they used the money on other items, instead of purchasing stock. They needed to be taught good cash management by retaining part of the profits in order to maintain or expand the business.

Later, at a press conference, Dr Mahathir said managing cash could be introduced in school so that the future generations would learn to value money from a young age and be able to manage their finances well. He added that to be successful in business, an entrepreneur should work hard, work smart, use market research to determine what they want to do and diversify their product range.

“A small starting capital is not a problem, as most businesses tend to start small while now there are so loan facilities available to start a business,” he added.

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