SUBHOME SUCCESS: A Drastic Shift In Leadership Strategy

SUBHOME SUCCESS: A Drastic Shift In Leadership Strategy

Entrepreneurship is never easy with its risk involved. However, the effort is always worthwhile. This is shown in the fascinating real life experience of Sandeep Grewal, the founder of Subhome and a property manager. From gaining painful yet critical experiences in his first business attempt, he had grown and elevated eventually.

First Attempt

Lesson Learnt: Throat Cutting Competition Leads to a No-Win Situation

Became an entrepreneur at the age of 24, he held onto his beginner’s mind and ventured into the vending machine business.

At the time, Sandeep believed in the potential market prospects of the vending machine business. With friends, they gathered up an amount of capital and started the business.

He claimed that the vending machine business was initially quite simple which leads them to a handful of fortune. However, things got worse when the competitors began to surface. Soon, what seemed to be a promising business had become a fierce competitive red ocean market. The hardship also revealed the true nature of his partners, and two of the four founders decided to retreat, and eventually ended their business.

Second Attempt

Evolution: Shifting from Renting to Property Consulting

He invested in real estate by utilizing the money he earned from the previous business, claiming that the real estate market was an easy field to understand. Utilizing the knowledge gained as a landlord, he co-organized a property investment talk with his partners. The feedback was surprisingly good and they explored in the property consulting field.

The audience was always passionate after the talks, but their passion ceased over time and no action was taken. This prompted Sandeep and his partners to select a few people in the audience and organize a one-to-one investment training. As the time passed, more and more developers and agents engaged in their services, naturally expanding their network and making them more popular in the field.

The consultation company, Freeman is still operating but Sandeep has quit and involved himself in full-fledged hotel management.

Third Attempt

Upgrading: Getting Involved in Hotel Managing

 

Introducing Airbnb’s Concept

Sandeep referred to Airbnb’s concept and built a full-fledged hotel which included home renovation, housekeeping, booking, receptions, et cetera.

After introducing Airbnb’s concept, all the units he bought with a low price got rented out. However, the business was proven to be a challenge due to several customers’ requests awaited him during the process. Hence, he was forced to learn about hotel managements and minor repairing skills through the Internet and personal experiences. Besides, he strictly fulfilled all requirements for hotel management license, to ensure his business operated legally.

Setting a Hotel Management Plan

Sandeep hired a few experienced hoteliers to assist him in coming up with the managing plan, hoping that their experience would enhance the customer service of the hotel. After brainstorming the managing plan came the execution process. The first succeeded hotel, Summer Suites was born. It had an over 90% of renting percentage. After the success of Summer Suites, he expanded and changed the hotel’s target market to tourists. He had always examined the suitability of a location to invest the suites first before requesting the agreement from the nearby business owners. Due to the benefits of raise in local real estate’s value, the business owners usually accept his operation.

Equity Crowdfunding Brought Recognition

Although the operating system was bringing profit, a larger amount of capital was still required for future growth. Believing that fund raising activity was not limited solely to businesses under financial difficulties, he started to raise fund by utilizing Equity Crowdfunding which assisted in indirectly marketing the business, which further led to increased company’s fame.

The collaborating system between Subhome and the owners is the owners offered 80% of the cost while the company is only responsible for the other 20%. However, the company bears the full responsibility of operating after renovation. Among all the income, the owners get 60% while Subhome will only get the profit after deducting all the managing and manpower costs of the remaining 40%.

Target Customer: Solo Travellers or Backpackers from China

Sandeep figured that with the increasing number of tourists from China, the need for accommodation in the main tourist areas would also increase. The tourists from China prefer free travel and are afraid of hustlers and con artists, so a one-stop online traveling service will be an attraction to them.

Interestingly enough, Sandeep signed up for a Chinese language course, hoping one day he could communicate directly with the Chinese customers.

Opening Franchises

Sandeep thought that the market was very large so instead of raising funds and expanding the hotels alone, he would rather find some interested and passionate business partners.

Expansion of Business to Penang and Johor

Subhome currently has 3 hotels in Kuala Lumpur and will be expanding the business to Penang and Johor in the future.

Sandeep claimed that Subhome had recently proposed the first hotel project in Johor Bahru due to having Lego Land within the state, and its strategic location next by Singapore; hence will be an ideal location to attract tourists.

For the Penang market, Sandeep decided to use the tried and tested system in Kuala Lumpur. What’s worth our attention is that the hotels under the name of Subhome are all located in busy areas of the city, having designs and renovations that rivals the 5-star level hotels with an extra addition of kitchen appliances; but cost roughly 20 to 30% cheaper than relative hotels.

Summer Suite even got a high recommendation prize on Booking.com, where they managed to achieve a high satisfactory mark of 8.1 points.

Age when first starting a business 24 years old
Entrepreneur experience 20 years
Involved field Hotel management
Involved field experience 3 different working field
Capital when first starting a business RM300,000
Failure in entrepreneurship 1
Number of hotels under management 8

Conclusion:

In recent years, the discussion on “how to avoid the red ocean market (fierce competition) and get involved in blue ocean market (innovation based markets)” and “how business should collaborate but not compete” are overwhelming. However, it is not as easy as it sounds.

Nevertheless, the founder of Subhome had gained experiences from failure in exploring the red ocean market and learned to collaborate with partners. Hence, a brand new operation system was born.

The sweetness of success is only for the ones who dare to step out of their comfort zone.

If you are interested in starting your own business, it is recommended that you understand and refer to these successful examples.

Translated from http://bit.ly/2h4cCVm

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Malcam Prasad About the author

Learning to play with words like cats play with food. Self expression has never been a problem. The words I live by: "Charisma and Talent are poor substitutes for skill"