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SCMP Reporter

FOR many entrepreneurs, starting up a one-man business is not difficult, but growing it by yourself is.

 Michael Lawes, founder and publisher of weekly money market magazine Basis Point, said that if he had the chance to start his business over again, he would have chosen to do so with a partner.

 'The difficult thing is that all the business decisions are made by myself now. It's very hard for me to make strategic decisions when I'm tied up with the editorial side of the business most of the time,' he said.

 A one-way air ticket from Britain opened the door to a career change for Mr Lawes, who came to Hong Kong 10 years ago after a one-year stint in Singapore teaching English.

 It also gave him the opportunity to do what he had never dreamed of before - starting his own publishing business.

 'I have always been interested in journalism, economics and business, but financial journalism was a difficult field to get into in the UK,' he said.

 Mr Lawes quickly landed a job with a global financial magazine as a journalist when he first arrived in Hong Kong in the late 1980s, at which time there was a shortage of native English writers.

 He worked with the magazine for 2.5 years and became the editor for the Asia section.

 'Journalism is an ideal profession for me because I like to find things out from other people. I was never bored by my work here. With all my jobs previous to this I was always looking at my watch to see when it's time to leave.'  However, Mr Lawes said he had not thought of starting his own business until he came to Hong Kong, where the laissez-faire business environment was ideal for establishing a small business.

 While working at the global financial magazine, Mr Lawes observed the market was lacking a publication that focused on debt market news and specifically tailored for the Asia region, which prompted him to quit his job and establish Basis Point.

 The market at that time was dominated by two main global financial magazines that covered a broad range of markets and financial topics, including equities, derivatives, money markets and general economic issues.

 Mr Lawes said he wanted to create a business tool, providing only information that money market professionals needed on a factual, newsletter format, rather than the 'coffee table glossy magazine' approach taken by its competitors.

  After quitting his job, Mr Lawes rented a small office in Wan Chai and started producing his own magazine with a Macintosh computer and a few desktop publishing software packages in 1992.

 He ran the entire operation on his own for one year, from news gathering to layout and sales.

 'The switch [from being a journalist and editor to a business owner] was not a big leap for me, as I was basically doing the same job,' he said.

  Although he had limited time and resources to spend on selling Basis Point, he said the product almost sold itself, as his subscribers, mostly financial institutions, were 'advertising the product' for him by faxing the eight-page magazine to their overseas offices and friends in the same industry.

 His magazine penetrated the market through word-of-mouth and his subscriber base has grown from 25 a week after its first publication to more than a thousand in the region.

 'The good thing about the publishing industry is that you have very good cash flow, because your customers pay you a year in advance,' he said.

 'Of course, there were people who were worried that we wouldn't survive for more than three to six months and asked for shorter subscription, but I took pleasure in proving them wrong.'  Mr Lawes' continued his one-man operation until a year after Basis Point was launched when he hired a sales manager, so that he could concentrate on the editorial side of the business.

 Hiring three other journalists to cover more markets in Asia, he expanded basis point to a publication of 32-36 pages at its peak in 1996-1997.

 Mr Lawes estimated half of about 2,000 potential subscribing institutions in the region were subscribers, although there was no audited industry figures.

 He attributed the success of his newsletter to its focused content and lower price than its competitors.

 The annual subscription cost of Basis Point is $7,450 a year, compared with about $18,700 for its closest competitor, IFR Asia, which covers general economic and equities issues, in addition to money markets.

 'They [the big publishing companies] were very slow to react. They basically ignored us in the beginning,' he said.

  'It took four years for one of them to come up with a product for the Asian market. We had a free run for several years.'  Although business growth was strong, Basis Point was inevitably hit by the regional financial turmoil that forced many financial institutions to cut costs.

 New subscriptions of Basis Point fell by almost half last year, while some customers cancelled their subscriptions, which had never occurred before the crisis. Closures and mergers of some financial institutions contributed to some of the cancellations.

 Some subscribers cut costs by copying and faxing the publication to their overseas offices.

 'The copying and faxing that had helped our sales before had become one of the biggest problems for us now,' Mr Lawes said.

 He estimated sales could have been 50 per cent higher if there were no illegal copying and faxing by subscribers.

 'What they [his subscribers] don't realise, is that the cost of faxing to their overseas offices could be higher than the cost of subscription on a yearly basis.

  The subsribers were merely shifting the cost burden of the overseas offices in the form of subscription costs to long distance telecommunications costs borne by the Hong Kong office, he said. However, sharp reductions in long-distance dialling charges as the telecommunications market opened up to competition had made illegal faxing tempting.

 'We tried every way to make copying and faxing difficult - printing in pink ink on white paper, black ink on blood red paper - but they don't really work,' Mr Lawes said.

 Fortunately, a year before the onset of the regional financial crisis, Mr Lawes had started diversifying the source of revenues of his company.

 In October 1996, he launched Basisfield, a computer database for the Asian debt markets through a joint venture with Springfield Financial Advisory.

 The product allows subscribers to search and compile reports based on the entire historical information reported by Basis Point.

 Mr Lawes said because his operating costs are more or less fixed, to boost profits, he would have to sell his information in as many ways as possible.

 He said if money market activities picked up this year, he might consider extending the distribution of Basis Point news to wire services.

  Working 60 hours a week, including a 16-hour day on Friday to meet the editorial deadline, Mr Lawes said he had little time to reflect on the strategic side of his business. For example, with little sales outside Asia, he estimated the company could gain another 10 per cent sales in each of the European and North American markets.

 'I just don't have the time to reflect [on my business], when every week I'm under pressure to put out a quality magazine. I can't take it easy in any week.

 'But I thoroughly enjoy my work and the control I have over the final product, from content to layout.'  His company recently won a contract to build an Internet-based syndication loan-arranging system for the Asia Pacific Loan Market Association, which was formed by about 100 big banks in Asia.

 The system will allow member banks to conduct syndication deals on-line.



Lone venture makes for hectic life