Eight years ago, in 2017, Brien Chua sold his equity in his previous company and founded Houze. With a few teammates who shared the same vision, he started out of the storeroom of their old office and pounced on the opportunity they saw in the market.
Today, eight years later, Houze has grown to a team of 35 operating both as a highly profitable e-commerce business and a retail store with its main showroom and storefront at i12 Katong along with showrooms at Jelita Mall and City Square Mall.
In their journey of expansion, Houze faced challenges around cash flow and warehousing space, particularly around mega campaigns and events. They overcame these challenges with the financing solutions provided by Choco Up.
SMEhorizon speaks with Brien Chua, founder of Houze, on his company’s journey, and how alternativing financing solutions helped his business effectively manage its expansion. Percy Hung, CEO of Choco Up also weighs in on the challenges that SMEs can face during peak retail seasons, and how financing alternatives can help them best leverage these opportunities.
Peak seasons: potential and challenges
Chua recalls that as his business grew, “the biggest challenges we faced were around cash flow and expansion plans to be able to reach more customers. We also needed warehousing space for our products, and the right logistics solutions to ensure that we get all the products delivered to our customers on time.
“Ramping up on inventory 1-2 months prior to mega campaigns and events was also very tough as it required double our usual cash flow to achieve. All this required significant capital injection.”
Indeed, whole peak retail seasons can be a blessing, they can also be hard for local SMEs to leverage effectively. Hung explains that some of the challenges faced by local SMEs is not having enough stock once the season hits. “That will frustrate customers and result in poor customer retention.
“The second biggest challenge is logistical mess-ups and supply chain issues as freight and labour costs also rise during this time,” he continues.
This environment benefits major retailers over SMEs. “Major retailers often already have their stock ready to go months in advance. They also usually have the vast amounts of capital needed to finance this,” Hung explains.
Sharing some tips for SMEs who are facing these challenges, Hung notes that strategic planning is key. “Deploy resources after having a thorough examination of your business, especially realistic forecasting of demand.
“Logistical challenges will also crop up so make sure this is also already on lock. Always have a 5-10% contingency fund on hand for this period for things like an urgent air freight for a sudden requirement of re-stocking.
Financing alternatives to support SME efforts
Through a mutual friend, Chua got in touch with Hung and there began a strong partnership between the two. “Business relationships are about more than just the mutually beneficial transactions, and the way he ran Choco Up solidified my choice to work with them,” recalls Chua.
One concern with financial partnerships of this nature was over ownership. As Chua explains “The biggest question we had was “do we go the route of working with investors, or do we take full ownership of what we’re building?
“So, in choosing a financing partner to work with, we had to ensure that we always had full ownership.”
Once they had a partner that took the time to understand their business and growth potential, respected their needs and concerns, and structured their support accordingly, success eventually followed. The support came through in more than just funds. “Through this partnership, we’ve received assistance with marketing and logistics, on top of the capital that went to team expansions, building out inventory, and upgrading the tools we used to run Houze,” shares Chua.
Building on these successes, Houze has now gone beyond its early storeroom days, becoming the first e-commerce seller to embrace robotics in their warehouse operations, and also consistently ranking on the top charts amongst other international brands.
Finding the right partner to support growth
When dealing with the exigencies of peak retail seasons, financing alternatives like invoice financing can help. Hung explains that “Invoice financing bridges the 30/60/90-day payment gap that can cripple SMEs’ cash flow, limiting funds for inventory and peak-season prep.
“By unlocking trapped capital in outstanding invoices, SMEs can access funds quickly to meet demand, without waiting for customer payments. Unlike traditional financing, invoice financing offers flexible funding that adapts to their business needs, without the burden of strict repayment plans or equity dilution.
“This means SMEs can stock up for peak seasons, fulfil large orders, and seize growth opportunities without disrupting cash flow.”
Unlocking the potential in retail season needs advance planning. “Three to four months out, make sure you’re already forecasting demand, securing finances, and co-ordinating supplier orders,” advises Hung.
“About two months out, that’s when you need to finalise logistics and staffing to make sure you have the capacity once peak season hits. By about a month to D-Day, you need to be stress-testing your websites, and all your systems to make sure that everything runs smoothly.
“And when peak week hits, monitor daily so you know where to allocate resources for items that are performing well.”
This is a challenge that need not be borne alone. Chua emphasises that “the right partnership can make all the difference so that you can focus on growing your business instead of just surviving.
“Consider planning these out before expected crunch times like peak seasons and weigh your options against your business goals.”
