SMEs need to have an 'MNC mindset': PestBusters CEO

SMEs need to have an 'MNC mindset': PestBusters CEO

"Do you think that when people graduate they want to work for SMEs? No. They would rather go for MNCs because they feel that the future is better," says Mr Thomas Fernandez, who went On The Record with 938LIVE on entrepreneurship, hiring locals and seeing recession as an opportunity.

SINGAPORE: As the head of local pest control company PestBusters, Thomas Fernandez has turned a once small SME into one with a growing international footprint. Locally, he counts the majority of hotels and hospitals as his clients.

He has also been an agent of change within his own company – starting first when he suffered from chemical poisoning due to the excessive use of chemicals in outmoded methods. Instead of leaving the industry, he travelled to the United States to learn more about safer and more scientific methods of pest management.

Today, he continues to invest in IT, looking into satellite technology and drones to streamline his company’s operations. He went On The Record with 938LIVE’s Bharati Jagdish about Singapore’s pest problems, what more the Government can do to address SMEs’ concerns, and what smaller companies need to do to help themselves.

Thomas Fernandez: I didn't even know the word “entrepreneur” at the time. The fact that what I was taught about pest management in my job was all wrong, made me say "I want to change things". That was my focus.

If you look at why I chose the 5-star hotels as my niche market, it's because at a 5-star hotel, one fly is too many. I was able to get buy-in for new and better pest management methods from the hotels’ General Managers. I was able to educate every department head to make sure they took preventive measures.

Bharati Jagdish: We’re seeing so many cases of rat infestations in Singapore. While you focus on the hotel market, what’s going on elsewhere? Why is it that in spite of interventions by pest control companies, the problems have not gone away?

Fernandez: You’ve got to look at the root of the problem. Anybody can buy the chemicals and use them, but it’s the science behind it and the application that’s important. There's a skill behind it.

For example, what’s the latest that you have discovered in terms of the pests’ resistance to certain chemicals? I remember I did a white paper about resistance to Deltamethrin, a particular chemical. Others said they had not found cockroaches to be resistant. But when we did our R&D, our doctors found that they are. That’s why you can’t use that chemical anymore. It’ll be ineffective.

We did another paper about why German cockroaches – the Blattella Germanica – infest Chinese kitchens much more than they do Western kitchens.

Bharati: And what was the reason? They like Chinese food?

Fernandez: That's the conclusion everybody came to, but no. It is the way they cook. Because of the oil they use, because of the way they fry things, the oil just goes into the air, and settles down and covers up the chemical that we lay down to get the cockroaches. So you have to know these things in order to modify your methods to get the best results.

Bharati: When you talk about getting buy-in from your clients, I’m sure one crucial element is to get buy-in from them on improving overall sanitation, isn’t it? You could go in there, kill all the rats, but if people continue to dirty the place, they’ll come back.

Fernandez: Absolutely, so the cultural practice has to be there. Lack of sanitation destroys everything. Clients have to be willing to put in place sanitation measures, and everybody has to be involved. For example, in the case of a restaurant - their vendors, deliverymen, etc.

NOT AFRAID TO CHARGE A PREMIUM

Bharati: You charge much more than other pest control companies and you’re proud of it. But you got quite a bit of resistance from clients for charging so much. You gave your first client a money-back guarantee and that worked out. Was that what convinced the others?

Fernandez: Exactly. The first thing I did is get testimonials. That's how the news actually spread.

Bharati: But how challenging is it still to convince people to pay more for such services? How much of a problem is cheap-sourcing?

Fernandez: It always comes down to the price factor. But if the pest control company cannot value-add and get paid more, they cannot pay their technicians a higher salary and it'll be just like the cleaning industry. They want to pay them more, but if your margins are low, you can't do that. You can’t reinvest part of your profit into R&D, into IT, or into upgrading your organisation. You can't even put money into branding. So you are restricted because your margins are so thin.

For me, it's not about profit into my pocket, that's not what I'm looking at. What I'm looking at is managing this better. I put a certain percentage into human capital training and R&D. Both are important if customers want better service. I invest in these even if it means having lower profits for a few years. People have to remember that in pest management, cheap is expensive.

Don't wait till your brand is affected by a pest infestation. Don’t wait till it’s that expensive. When it comes to a specialist trade, such as civil engineering, or structural engineering, you should look at two envelopes. The first envelope is the proposal of your design. Experts should assess that based on merit. Only after that, you should open up the second envelope for the price.

LEARNING LESSONS AND IMPARTING KNOWLEDGE

Bharati: I understand that at one point, one of your mentors actually offered you the opportunity to live and work in the US, but you rejected this. Why?

Fernandez: I thought it was a great opportunity. He offered me a company to run and a green card. What more could I ask for? But I woke up one day and I thought: “What was the purpose of coming to America to learn the American way?" It was because I nearly died of chemical poisoning from bad pest management methods, so I had to go back to my purpose, which was to come back to Singapore and change the way pest management is done here.

Bharati: You talk a lot about the time when you got sick, while working in pest management in the early years. How did this illness manifest itself?

Fernandez: I was extremely lethargic, not active, couldn’t walk, so on and so forth. I knew there was something wrong. I’m not one to “baby” my sickness. I tried to fight it. But this time, I couldn’t. It just felt too wrong.

When the doctor checked me and asked: “What do you do for work?" And when I told him, it became obvious why. He did a test and there was a high level of pesticides in my blood. People in those days wanted to see the pests die immediately, so we used large doses of chemicals. That was the problem. The chemicals were also very potent. Now, some are banned because they were found to cause cancer.

Bharati: So I'm sure there are many pest management personnel who suffered the same way you did over the years.

Fernandez: The only way to avoid this is to be aware, see a doctor and take a break from the chemicals, and your body will recover. If you carry on, you could die.

Bharati: Your father was a businessman too.

Fernandez: My dad was a businessman, yes.

Bharati: But he failed.

Fernandez: His partner played him out. So he took a step back and said: "Okay, let him take the business." He didn't want to do anything about it. His partner was one of his staff members. He trusted him enough to make him partner, but eventually, my father found that he was doing a lot of things behind his back. That dampened his trust and he told the guy: “If you’re so greedy, just take it.” And he left the business.

Bharati: Didn't your dad's experience make you more wary when you started out?

Fernandez: No. When I started PestBusters, I just gave shares to my people to retain them. I had no business partners. When it comes to new business partners, I do get worried.

But when I go into a partnership or I invest in a company, I think about it this way: "If I'm going to part with half-a-million dollars, I have to be willing to write off the money." I’ll only do it if I have excess money. So I will not bother about it. I will not be depressed like my dad. That's the lesson I learnt.

My main aim was never the money anyway. It was to improve things. And that is what my mentor, Ken Doty, who owned Doty's Pest Control in the US told me as well. He used to say: “Thomas, you are hungry. You do work well. You're not lazy.” I was just really hungry to learn.

Bharati: Where do you get this attitude from?

Fernandez: I think from my mentor. He was also very generous in sharing knowledge. It’s the culture in America, it seems. They have university extension services. Any member of the public can go there and ask them anything even when it comes to pest management. They have stacks and stacks of information that the public can take. I've been to so many big companies, and I met the CEOs. I notice they're willing to share. They even share knowledge with their competitors. Here, we guard everything.

It’s a totally different culture. I actually learnt the American mentality. Asians tend to keep their secrets. For example, if you look at Asian family businesses, they want to just contain everything within the family instead of bringing in outsiders. They are afraid that the outsiders will overpower them.

Bharati: But wouldn't the same thing apply to you to some extent? You’re not about to share your expertise and your techniques and methods with other competitor companies, right?

Fernandez: Actually, if anybody wants that information, I'm happy to share.

Bharati: Even with your competitors?

Fernandez: Even with my competitors. I believe that if they raise their level, I’ll be able to raise mine too. Competition is very, very healthy. Keeps you on your toes. It ensures you never become complacent. I’ve been in situations where my competitors poach my staff so that they can get the expertise, but they only manage to do this short term, because they don't have the stamina to continue building that relationship with staff, or bring in new technology, new methods. So I see that as my edge over them.

We can all have the same knowledge, but what we do with it can be very different. So I have no objections to sharing with my competitors. The ultimate aim is to improve the industry overall and offer better services to clients.

Bharati: So, if that is truly your aim, considering we have pest infestations making headlines in Singapore, why aren’t you sharing voluntarily with your competitors?

Fernandez: If anybody comes to me, I'm happy to share.

Bharati: Why aren’t you willing to make the first move?

Fernandez: To be honest, I tried. Some years ago, we started the Pest Control Association. I was in the educational team. I brought the first international pest management conference to Singapore. I brought it in a second time too, but the problem with the association is that there was too much politicking. They went power-crazy. So I stepped out.

Bharati: So you’re saying they aren’t willing to listen?

Fernandez: You’re right to say that. So the only thing I do now is educate the public. So I have groups of people managing shopping centres coming to my office and I educate them on how to purchase pest management services.

Bharati: Even if they don't ultimately buy from you?

Fernandez: Even if they don't buy from me.

Bharati: But don't they eventually buy from you, considering you're the one talking to them?

Fernandez: Most of them try others and come to me when those options fail. It’s like if you’re sick, you may go to several General Practitioners, but eventually if that doesn’t work, you may have to go to a specialist and pay more.

NOT ALL SMOOTH-SAILING

Bharati: While it may seem like all is well now for your company, at times, it hasn’t been. In the first year at least, you were making losses. In 2008, your company was accused of bid-rigging and you were actually fined for it.

Fernandez: Just like anybody else, we meant well. The chemical company told us that in order not to dilute the chemicals for termites, we should all charge similar prices.

Bharati: People were diluting it because the chemical was expensive?

Fernandez: Yes. It was for termites. Some companies wanted to compete on price and they would dilute the chemical so that they could charge less to get the contract. But because of the dilution, customers’ problems were unsolved.

Some companies would give you a five-year warranty in spite of this. But three years later they wind up the company, and they start a new company, and they go on this way. So we decided to apply to become Authorized Applicators of this chemical. And if you are one, you must stick to a reasonable price and not undercut others and you must give the best value to your customer.

Bharati: But there was collusion.

Fernandez: There was an agreement by the chemical companies.

Bharati: Wasn’t that anti-competition?

Fernandez: I personally feel it wasn’t. For example, if you buy a Rolex watch, you go to any shop, you'll find that the prices are almost the same. They won’t bring the prices down, because it would cheapen the brand.

RECESSION PERFECT OPPORTUNITY TO IMPROVE

Bharati: There’s been a big focus on getting SMEs on track during this period of economic restructuring. What would you say SMEs need to do better?

Thomas Fernandez on opportunities in recession

Fernandez: The first issue is many of them have become very complacent. They need to be less complacent. They don't innovate. They don't look at the future. They tend to look at their business as home-based – Singapore and that’s it. When competition comes in, they cry about it. They don’t do anything about it.

The other mistake that entrepreneurs make is that they do not get outsiders to come in. They don't bring in professionals. In a recession or times like these, you can get good people at a cheap price.

Bharati: Because a lot of people have been retrenched.

Fernandez: Yes, and you can use them. And you can take them to the next phase when the market is right.

Bharati: But you shouldn't take advantage of retrenched individuals even during a recession.

Fernandez: Well they have no job, and you are now giving them a job. At least they can put food on the table.

Bharati: But you can't continue exploiting them.

Fernandez: But if your company picks up, the deal is their salary picks up too. If you keep his salary stagnant, then you're exploiting him. You need to reward and say: “Okay, as long as you're able to bring my company to the next level, I will reward you. I'll give you more than what you earned before." And that should be a win-win situation.

Bharati: Aside from looking into manpower issues, what’s your strategy in times like these?

Fernandez: SMEs shouldn't sit down and cry. A recession is actually the perfect time to improve your business. You have the opportunity to do a reality check. In good times, because of the high volume of production and orders, you may have no time for training for instance.

But during a recession when orders are low, you can look at the fat in your organisation, or retraining, or remodeling and innovation. Take advantage of government grants. If you find that the process of getting funding is difficult, go and be an intern to a company that's done it. Learn from them. Get guidance.

Bharati: At this point, how much would you say SMEs are still grappling with the mindset change that’s needed when it comes to adopting these strategies?

Fernandez: Yeah. They have some way to go. There are solutions out there. The Association of Small and Medium Enterprises has consultants that offer free services. The problem is many bosses just don't want to go the extra mile. They just brood about it and they just say: “Oh, I can’t.”

Bharati: What do you think has led to this mentality?

Fernandez: I think maybe they are just comfortable. They’ve got an HDB flat. They could be living in a 5-room flat, or in an executive flat. They drive a car. They make maybe a profit of $5,000 and that's enough for their salary. And they are satisfied until times go bad and they can’t even sustain what they have.

Some might see a few bubble-tea shops and think: “Oh, bubble-tea can make money.” Then, everybody starts a bubble-tea shop. They have no clue why they are going into the business, or what differentiates them from the businesses that are already out there.

Bharati: Have many perhaps have gone into business for all the wrong reasons?

Fernandez: Absolutely. Many businessmen go into business for all the wrong reasons. They want to be "boss", but they have no vision. They have no clue, no written vision statement to communicate to their people where they're going to take the company. They don't have a mission statement. They don't know the core values of their business.

If you're going to sell bubble-tea and you say you’re going to add vitamins and you're going to take away the sugar, then you make health the core value of your business. You need to know why you’re doing this business.

RENT CONTROL

Bharati: Many businesses have said that there are other issues working against them, rentals being one of them. You have had issues with this in the past too.

Thomas Fernandez on rent in Singapore

Fernandez: I think the Government should step in. Are you really here as the Government to listen to the SMEs who have a problem? In the past, we had a listening ear. There were JTC industrial buildings. Now, it’s all these private developers who charge such high rents. JTC is now slowly coming back and I hope they will.

As a Government, you can control the price. If you want to promote entrepreneurship and want them to survive, you have to think about it as a marathon. Running a business is not about running a fast race. It's about continuity and whether you are able to sustain the business in hard times. If JTC comes back, the private developers will have to rethink their rentals rates too.

The Government should talk to landlords and say: "Hey guys, let's be a little bit more sympathetic. Let's not look at profit. Let's look at the SMEs." Ride with them during the good times and the bad times as well. Sure, the fittest will survive, but what about the rest? If you demoralise them, they’ll pack their bags and go. We’ll lose more Singaporeans.

MINDSETS ABOUT WORK AND BUSINESS NEED TO CHANGE

Bharati: You mentioned earlier how good employees are so important. Do you have problems hiring Singaporeans for your business?

Fernandez: Yes. Pest control is not a sexy business.

Bharati: Do you think perhaps it just has to do with making your employment terms more attractive? Look at the bus companies now. They're raising salaries and making employment terms so much more attractive and managing to get Singaporeans and PRs to work for them.

Fernandez: Salary is one thing. It's not everything. It's the whole ecosystem including giving them a career path, giving them new tools to turn the unsexy business into a sexy one.

So right now we are able to attract Singaporeans. But having Singaporeans is one thing. Having Singaporeans with the right attitude is another challenge. Singaporeans are not that hungry, no matter what. You can give them a great salary, but ask them to work on a Friday or Saturday, they'll say no. They want work-life balance. Nothing wrong with that. They should have sufficient rest and time with the family.

But in some jobs, you sometimes have to work on Saturdays or Sundays. I don’t expect it every week, but if you have to once a month or so, you should be willing to, especially if you work in F&B. That’s the nature of the business.

Bharati: If not for the quotas, if you had a choice, would you hire more foreigners than Singaporeans?

Fernandez: I'll hire anyone that comes in with the right attitude. I think it comes from the top, the parents. If parents spoil them, they look at the parents and say: “Hey, why should I work? My parents provide me a car, my parents give me enough money to go and spend.” And you can see the younger ones spending. It's not their hard-earned money, but they are spending.

Bharati: You’re working on expanding your international footprint – something that other SMEs are being encouraged to do as well. What’s your strategy on this front?

Fernandez: Start training your people to have an MNC (multinational corporation) mindset. If we think small all the time, we will remain small. You need to be inspired, that's how MNCs do it. You must have a vision that you want to grow your company and your brand; not just locally, but internationally.

If you have the right mindset, find people to come into your organisation. Get the right people to start training your people to have the MNC mindset.

Do you think that when people graduate they want to work for SMEs? No. They would rather go for MNCs because they feel that the future is better. They can build a career, they can be posted overseas, so on and so forth. So SMEs need to have an MNC mindset to achieve this as well, and attract better people.

Source: CNA/kk