When his father's apparel retail business abruptly closed down during the Sars crisis in 2003, rag trader Kelvyn Chee was inundated with phone calls demanding the $1.4 million of debts he suddenly owed as the firm's guarantor.
The elder Mr Chee's business had lost up to 50 per cent of sales during the crisis but he hid the extent of the problem and stopped paying his bills for four to five months.
The burden fell on the younger Mr Chee, then 28, as his mother and sister were not significantly involved in the business. His father went into a slight depression shortly after the business closed down.
Mr Chee, now 41, called the creditors one by one, meeting them in coffee shops and offices to work out a solution.
"There's no tomorrow at this time," he recalls. "You're sitting down there and (thinking) how you can convince yourself to move further... You cannot run. How can you face people in the future if you run and don't answer anything?"
He started two apparel businesses - in Liang Court and Bugis Junction - in 2003 with about $120,000, as well as loans of up to $300,000 from creditors who trusted him based on previous dealings.
Things were difficult at first. The businesses lost about $300,000 within the first six months as the brands it sold did not fare as well as expected. Store traffic was also low due to the Sars crisis.
"I cried - one business was losing $260,000," Mr Chee recalls.
But his luck turned when store traffic started to improve after the first six months as the Sars crisis subsided. Profits grew quickly because he had secured especially favourable rental terms during the Sars downturn.
His firm also learnt that Surfers Paradise products from Australia were popular - the company sold 1,000 items in four days at a fair. It introduced more products from the brand and as sales grew, the business began to flourish.
Mr Chee's experience in the apparel business proved especially helpful.
Worst and best bets
Q What has been your best investment?
A I bought a warehouse in 2010 and sold it within two weeks of collecting the keys for a profit of $330,000. The warehouse cost about $650,0000.
The agent normally recommends me very good deals - this was one of them - as I pay him very well (I learnt that from the book, Rich Dad, Poor Dad). He kept this unit for me for about two months.
I had wanted my close friend to buy the unit but he delayed viewing it. In the end, I bought it as I was embarrassed to keep the agent waiting.
I knew it was a good deal, but didn't expect the property's value to pick up in the three months I was waiting for the keys. There was much interest then in commercial property because prices of residential units had gone up so much.
Q What has been your biggest investing mistake?
A I followed the crowd and invested $500,000 in unit trusts, Permal funds and US bank stocks around 2007.
Within six months, I lost $50,000 due to the US sub-prime crisis. I was lucky I did not lose more.
I was made to buy Merrill Lynch at US$28 a share after I bought an option from the bank when the stock was worth US$35.
If the stock did not go below US$28, I would get a 12 per cent per annum interest. If it fell below US$28, I would have to buy it and not get any interest.
The stock dropped to US$8 or US$9 and as I had invested over $200,000, I was so worried. In the end, I managed to sell it at about US$23.
I learnt not to just blindly follow the crowd.
"In my father's time, we were helping out at the factory, doing buttons, doing the collar, et cetera.
"Looking at what you wear now, I can estimate the cost of your shirt, the workmanship needed to sew this part, how much the fabric costs, et cetera."
This knowledge helped the company in choosing suppliers and negotiating costs.
Eventually, Mr Chee, who is married with three children, aged five, three and nine months, settled the company's debts in 18 months.
His businesses made $700,000 in net profit in two years.
Today, the two retail businesses have merged under Decks, one of the businesses Mr Chee founded in 2003. It now sells three brands: Island Shop, Surfers Paradise and Beverly Hills Polo Club. Annual turnover is about $13 million a year with net profit approaching $2 million.
Decks is a majority shareholder in two other apparel retail businesses. Mr Chee also owns an Indonesian textile operation and a property holding company.
Q Moneywise, what were your growing-up years like?
A My father was a tailor and my mother a seamstress. They started their business in 1980s as a shirt factory and went into selling apparel in 1983.
At its peak, the business had about 15 retail shops in Singapore.
My father was considered quite well-to-do at that time, and drove me to the school in a Mercedes-Benz car every day.
When I was in primary school, I got $10 pocket money a day just for my meals and I could afford a lot of toys. I was buying a lot of stuff and was quite spendthrift.
Things changed when I went to help out in the business as a sales representative after my army days in 1995.
I realised the company was actually not in good shape financially and that changed my perception about money. The company was issuing post-dated cheques to suppliers and was paying the staff late.
I became very prudent when I realised that making money is not easy at all.
Q How did you get interested in investing?
A I started investing when I was about 20. I bought some shares because everybody was talking about Malaysian shares and shares in general in 1996.
I bought some and the crisis came in 1997. As I bought only a few stocks, the losses were not a lot.
In 2009, I was looking to invest in residential property but started to consider warehouses when my business moved to a new place. It took one month to move everything to the new unit. I realised then it is harder for businesses to move than for households. I checked the prices of commercial property and realised they were good.
Q Describe your investing strategy.
A I invest in property and my business as they are things I can see and manage; I can tell whether a property is good and I can use processes to manage my business.
For property, I ask the agent to print the prices of every property I am considering for the past 10 to 20 years.
For example, in 2009, we realised that commercial property prices had gone up by only 20 per cent in the previous five years. Residential property, on the other hand, had risen more than 50 to 70 per cent.
I would also visit many properties and look for those with unique features and study upcoming market supply.
In 2009, I bought warehouse units that are above the ground floor but which very heavy and wide vehicles can access by driving up a ramp. There are very few units like that in Singapore.
For my business, I invest in workflow systems such that the business can run on its own without my getting involved.
I also try to improve staff efficiency. Recently, I invested in an identification technology which allows staff to take stock just by waving a device across a shelf as opposed to counting items manually. With the system, we take about 15 minutes to take stock of 6,000 pieces. If you do it manually, it takes about 12 hours.
Q What's in your portfolio?
A Only 5 per cent is in stocks, the rest is evenly split into property and the business.
I bought six warehouse units at Enterprise Hub in Toh Guan Road in 2009. I got five of them at about $650,000 each. The other one I bought for about $1 million.
The six are now valued at about $7.2 million collectively. One unit is about 2,800 sq ft.
I'm renting out each of these units at about $5,000 a month.
I initially invested about $120,000 in two apparel businesses in 2003. We broke even 12 months later. The businesses have merged under Decks, which has annual sales of about $13 million and a net profit of about 15 per cent of sales.
Q What does money mean to you?
A It's a tool you need for happiness, but it's not something that can bring you happiness. You will need to derive that from your family.
It's better to spend time with your family than on making money. To do that, you will need to build processes to make sure your "money tree" can grow by itself. If not, you will spend a lot of time on it.
Q What's the most extravagant thing you have done?
A I bought a 2,500 sq ft penthouse in Woodlands two years ago for about $1.6 million. It will be completed in March.
My mother and I value family gatherings and enjoy having guests around. We would like to have more room for that.
There are guests in my house every day - friends, relatives, et cetera. About 40 people were at my house on New Year's Day.
To me, the penthouse is very good value.
It is different from other penthouses because it has just a single storey. My grandmother lives with me and for her to climb stairs would be very inconvenient.
If I want to sell it later, it will have a different value as a lot of penthouses have two floors.
Q What are your immediate investment plans?
A This is not a very good time to buy residential, office or warehousing property as the supply is more than the demand.
We intend to sell our fashion brands internationally, in places with luxury markets, like Paris and London. In the next 12 months, we will invest around $500,000. Our main approach for expansion will be to license other companies to sell our brands abroad.
To make sure the apparel we develop will sell overseas, we subscribe to a fashion trend website that covers things like colour or silhouette trends. The annual subscription to the website costs a five-figure sum.
We put a lot of effort into designing, choosing the right fabric, doing campaign shoots and commercials.
Q How are you planning for retirement?
A I don't intend to take a break from my business and will still be involved in it even in my old age.
I had planned to take a three-month break before I started my first business in 2003, but by the fourth day, I couldn't take not working and registered and started that business that very day.
Q Home is now/I drive...
A My wife, three kids, and mum and grandmother live with me in an HDB five-room flat in Bukit Panjang. I drive a nine-year-old Toyota Picnic. I like the Toyota and this is my fifth one.