Asia-Euro Holidays saga: A cautionary tale for SMEs

IN May, the media reported on the abrupt closure of family-run travel agent Asia-Euro Holidays. It is a case of business failure that I believe holds several lessons for companies, especially SMEs. Staff at Asia-Euro Holidays were simply told to go home early and some 500 customers, several of whom had left their passports with the company, were left high and dry. The company's downfall, it seems, was S$2 million in losses on property dealings.

Why had a travel company ventured into the property sector and exposed itself to such losses? Did diversifying from its core business lead to its downfall? Going by news reports, this seems to be the case.

One lesson from this saga is that companies should tread carefully when venturing beyond their competencies.