Local retail chain for high-end children's wear survived economic crises thanks to the owner's astute leadership skill After working in the corporate world for more than 10 years, Herbert Chow Siu-lung decided it was time to be his own boss. So it seemed fortuitous that a local retail chain for children's wear, Chickeeduck, became available for sale in 1998. Chickeeduck was established in 1990 and was a profitable business, specialising in quality, high-end children's clothing. However, just a year after purchasing the business the Asian economic crisis caught up with the retail sector and in 1999 the business took a big hit. That's when Mr Chow, the company chief executive, had to get creative. 'Because there was no growth possibility at the time, we had to [tighten] costs. We not only had to reduce our head count, but we had to cut salaries as well. However, for the sales staff, we increased their commission percentage, which encouraged people to continue to work hard,' he said. One way that Mr Chow was able to keep his business afloat was by taking away departments such as administration and human resources. By doing so, he not only saved money but he gave more entitlements to the store managers, as they were solely responsible for hiring their own staff. This system proved so successful that it is still in place today. 'We ran the company as several mini companies, with the department heads responsible for everything. I thought, if there's trust, let's decentralise things,' Mr Chow explained. This approach meant that Chickeeduck did not have to close any shops even during economic downturns. In fact, to encourage customers to come back and spend, the firm has a system of upgrading stores every three years to keep things fresh and appealing. Another process kept in place since the tough days is the commission scheme. Compared with some big chains, Chickeeduck's commission didn't seem like much, but a quality working environment was important, Mr Chow said. 'Staff don't have to stay in the store for 14 hours a day like many other retailers.' Once the economic crisis was over, business started recovering, only to be hit again in 2003 by Sars. But because the company had already trimmed everything down, there was nothing to do but wait it out. This was when Mr Chow realised the necessity of digging deep. 'If you're the owner, you can't have the attitude of 'I've put in enough money'. You have to be willing to spend your own money, no matter how much it takes to keep the business going.' Another lesson he had learned was to delegate. 'By giving the store managers autonomy, they feel ownership in the business and work hard,' Mr Chow said.He also learned the importance of being transparent with staff. 'Staff expect the boss to be clear about what he wants before they take any action. So, if I am upfront with my staff and let them know exactly what I want, there is less chance of surprises.' Now that the business is thriving again, Chickeeduck has seen a lot of growth in the past few years. 'We are good with our margins, which helps us to stay competitive. Also, we are consistent in what we say to our customers. For example, we have a 'no questions asked' return policy. People can bring back an item and get store credit for it without having to go through a lot of hassle. This is true at all of our 22 shops, and consistency in business practices is key to remaining a market leader.' Mr Chow also sees shop location as vital to success. 'As a boss of a retail shop you must be willing to go out of your way to keep your location. This has proven to be an expensive undertaking for us, but we have only lost one shop because of its location,' he said. 'One property agent on Hong Kong Island kicked us out because they didn't want any children's clothing shops in the mall, even though we were willing to pay more than the new tenant. We also said that we would upgrade our shop yearly rather than every three years like our other shops, but this was to no avail. We just couldn't win.' With 22 shops throughout Hong Kong, Mr Chow feels the local market is saturated and he has started to look to other areas, such as partnering with someone in the mainland to break into the market there. Also, with a large database of customers who are mostly mothers, Mr Chow has recently opened a new women's fashion brand, People's Republic. There are three shops in Hong Kong with more planned. Looking back, Mr Chow said he had no regrets about giving up his big corporate salary to go into business. 'I'd be a happier man running a hot dog stand than being a corporate man. I don't have to massage any egos in my own business like I had to when I worked for someone else. Being a business owner has been a big lesson in character building.' Ten things I know 1 Understand your finances Start your new business at a scale that you can afford without being at the expense of your livelihood and that of your dependents. 2 Transparency Be open with your employees. Don't create an inner group. You need to instil a sense of trust within the organisation. 3 Location is king For a retail business, nothing is more important than location. Be prepared to fight tooth and nail to keep yours if it is good. 4 Avoid the unnecessary Think about what you don't need for your business. For example, you can ask yourself, 'Do I need to supply distilled water to my staff?' When things are tight, it's okay to try to save money. For my company, I decided to not spend money on distilled water and the dispenser, and instead we have our tea lady boil water and keep it refrigerated for staff. 5 Understand the connectivity You need to believe everything is related, so don't separate things such as product from marketing. Your product is marketing and vice versa. Knowing your product well is half of successful marketing. 6 Be a generalist You need the hunger to learn everything about your business. So don't go for specialisation. 7 Be open minded You need to be flexible to deal with market changes. You have to be willing to learn and go with the flow. 8 Don't penalise people for making mistakes. You need to learn from your mistakes and move on, and don't dwell on who did what wrong. As the boss, you need to understand how intimidating you can be and try to be forgiving. However, that doesn't mean that people can keep making the same mistakes over and over with impunity. 9 Accountability for mistakes Take responsibility for your mistakes and don't try to pass the buck. Don't fall back on expressions such as, 'But it's always been done that way' or 'The boss says to do it this way' to shun responsibility. 10 Learn to delegate I had a difficult lesson to learn before I came to realise its importance. It is a management philosophy important both for yourself as a boss and for your employees. If you try to do everything yourself, you will get burned out fast. However, if you delegate to others, that helps instil the sense of trust you have with your staff.