Young entrepreneurs are struggling in the inflation-hit economy by motivating their staff with small pay rises, extra training, regular parties and helping staff take care of their family members, as they find motivated staff enhance the quality of services which is crucial to business success.

Tina Yeung Ting-ting, the 26-year-old owner of Minnage Cafˆm in Mongkok, has faced a huge food price hike. ¡§A carton of milk, for example, has increased from HK$80 since September of 2007 to the present HK$120. Moreover, a drum of oil has increased from HK$90 to HK$220 over the past six months,¡¨ said Miss Yeung.

Even though the cost of ingredients have increased, Miss Yeung only charged HK$1 or HK$2 more for each set meal she sells. She said: ¡§Revenue has not fluctuated much with inflation, yet it is more difficult for us to earn a profit.¡¨

To ease the burden of increased food cost, Miss Yeung has made extra effort to compare the prices of food suppliers regularly and order food in bulk which is cheaper than food bought in supermarkets.

Yet, she has also made an effort to increase the salaries for her staff according to the market level in order to maintain quality of services for her cafe.

¡§When staff members are given a higher income, they are willing to provide customers with better services,¡¨ said Miss Yeung. ¡§Prices are not the only concern for customers, but also the quality of services.¡¨

Gigi Ng Hoi-mei, the client services and marketing manager of a design company with 300 project-based designers, also finds that quality of services provided by the staff is crucial to the business.

¡§The staff is our boss. We cannot survive without designers as our business is based on design,¡¨ Miss Ng said.

In order to nurture mutual understanding with employees, Miss Ng's company organises regular training workshops and parties. ¡§Once we know what they need from our company, we can provide more resources and assistance to them,¡¨ she said.

She said that the company can combat inflation if the designers produce high-quality products. ¡§The customers are willing to pay a premium. It's a win-win situation during times of inflation,¡¨ she said.

Wesker Lam Cheuk-fai, the owner of Dragon Burg Restaurant in Western District, said that communication with employees is important in dealing with rising costs.

The 28-year-old restaurant owner said the price of rice has doubled for the past two years. ¡§The price has increased from about HK$100 a pack (25kg) in 2006 to over HK$200 a pack earlier this year,¡¨ Mr Lam said.

He said it is hard to find cheap substitutes. ¡§When broccoli is expensive, I would use cabbage instead. However, it does not help much,¡¨ he said.

Instead, Mr Lam is putting more effort in bonding with his staff. ¡§Eight to nine of us eat together every day like the big family in Moon Light Resonance (a famous TV drama on TVB Jade),¡¨ he said.

He said this makes the working environment warm and happy. He even helps taking care of the grandson of one of his workers.

¡§I chat with them (his staff) and try to understand their difficulties,¡¨ said Mr Lam. ¡§I think our relationship goes beyond that of employer and employee. Instead, we are close friends.¡¨

Mr Lam also said customers are considerate and thoughtful about the difficulties in keeping a business going in the current economic climate.

¡§In the past, if we increased the price by only HK$1, we would lose 10 per cent of our customers,¡¨ he said. However, increasing the price today will not affect the number of customers a lot because they understand the situation, he added.

¡§Those customers, especially housewives, have purchased goods in the markets. They know the prices of food have greatly increased,¡¨ he said. ¡§The increase in prices in the markets is even more severe than that in our restaurant. Thus, customers understand our situation.¡¨

Other young entrepreneurs have seized inflation as a business opportunity.

Sam Wong Yiu-sum, 27, managing director of a printing and design company also said inflation is favourable to his business as the spending on marketing and public relations of other business sector has increased due to their drop in revenue.

¡§These business sectors need to promote more for more business,¡¨ he said.

Wong Siu-ho, 24, another business development manager of a design company said his company earns approximately HK$80,000 a month.

¡§Our sales are still increasing, even now,¡¨ he said.