October 2007 Archives

The Philippine Daily Inquirer’s Ronnel Domingo has an article today about eight cities that made it to the Institute for Solidarity in Asia’s list of business-friendly cities. ISA is headed by Jess Estanislao, one of the few persons in this country most qualified to make this list. Estanislao is known by most as the chief economic manager of the Aquino administration, first as socioeconomic planning secretary and later as finance secretary. What few people know is that he has a PhD from Harvard University, where he was also a teaching fellow and a research fellow. I included this little snippet because ISA’s public governance system and scorecard is patterned after Harvard’s scorecard for LGUs. Any ranking of the country’s cities will fall down like a pack of cards if there is even a tiny hint that the judging process is arbitrary. Who else but Jess can ensure that the list is bullet-proof? So (drum rolls please), the eight most business-friendly cities are: San Fernando in La Union province San Fernando in Pampanga Marikina in Metro Manila Naga in Camarines Sur Sorsogon in Sorsogon province Calbayog in Samar Iloilo in Iloilo province Tagbilaran in Bohol Here’s an excerpt of the article:

The eight city governments have partnered with ISA on a program called Dream Cities, which requires each of them to map out a charter that states their visions for the next few years. Examples are Marikina’s goal of becoming Southeast Asia’s model city in competitiveness; San Fernando’s positioning to become a tourist destination, and Tagbilaran’s desire to become a premier eco-cultural tourism hub in Asia. Twelve other cities nationwide have joined the ISA program: Tuguegarao, Dagupan, Tagaytay, Iriga, Cebu, Dumaguete, Ligao, Panabo, Tacurong, Tangub, Toledo and Samal. The ISA’s support includes help in strategic planning for spurring business, infrastructure development, and zoning. The LGUs are required to involve the community in government affairs. “They have resources to do these projects,” Fulgencio said. “They also need to create an Office of Strategy Management, which is responsible for the core plan within the city.” Formed last year to address perceptions that the country’s attractiveness to investors was waning relative to neighboring countries, the NCC has created six groups to formulate action agendas and push initiatives focused on human resources; management expertise in specific public offices; financing to micro, small and medium enterprises; reduction of transaction costs and improved transaction flows; the upgrade of infrastructure, particularly in transportation, and reduction of costs and securing supplies of electricity.

Click here to read the rest of the article:

An INQUIRER.net feature today from MoneySense magazine tells the story of an overseas Filipino worker who has successfully jumped into entrepreneurship back home. Being a woman myself, and someone who is often faced with the temptation of working abroad or migrating, hotelier Annabella Wisniewski wowed me when she terrorized someone claiming to be part of the mafia in New York with, well, her bluff on the Asian mafia. An absolutely tantalizing moment. Here’s an excerpt:

I worked in Hilton, Marriot, and Scotts, did international consulting for Horwath and HOSTS, and developed The Ascott (of then Scotts Holdings), the first successful luxury service apartment concept in Singapore. This made me the first Filipino and first woman on the board of directors of that company. I also helped my mother with her business. I learned that not only are foreigners more competitive, but they’re also more exacting about standards. You have to make it on your own merits, and that makes you more professional. Yes, there’s discrimination but I’m sure I never really felt it. I said then, “I’m not going to let anyone bring me down because I’m a Filipina. I’m going to use my uniqueness to my advantage.” One time in San Francisco, we took over a property that was in bankruptcy. We could have evicted them but they were still running the restaurant. They were behind in payments. One of the partners of that property disliked me. That time, discrimination issues were really hot. “That Annabella, I don’t like her already,” he badmouthed. He followed me to the garage. I stopped short and said, “Okay, you want to go on? Just remember, I’m female. I’m Asian. You want to go on? You want to harass me some more? It’s going to be big. Be my guest.” I outsmarted him. And there’s the glass ceiling. Women in my industry then were mostly relegated to executive housekeepers or director of sales, PR, or marketing. They will never be managers unless they own a substantial chunk of the company. I figured, “I have to prove that I’m better. Gender doesn’t matter. Nationality doesn’t matter.” It was never smooth sailing climbing to the top especially in the US corporate world. It all boils down to dollar and cents. They can be ruthless. When I was the general manager in a hotel, the management company did things that I didn’t think were correct. I quit to protect the mother company. They threatened me. It was an old boys’ club. Another time, when we were going through takeover procedures, the previous owner came to my office and threatened me. He was implying that he was an Italian, so goes the mafia. “So what do you want to do? I hope you also heard of the ‘Asian mafia.’ We can also be ruthless, you know.” Two days before that, there was a shootout with the Vietnamese mafia. Of course I had nothing to do with that. I just used that to bluff him.

Read the rest of the article here: http://business.inquirer.net/money/personalfinance/view_article.php?article_id=97437   FoodParks Discovery Suites. Annabella Wisnieweski in a Cornell University alumni event.

The entrepreneur in this article from the Philippine Daily Inquirer is an elementary graduate and yet was able to build a successful business. Read on:

This city southeast of Manila is known as the best cutlery producer in the Bicol region, making scissors, bolos, knives and even razors, grass cutters and other farm tools. But not known to many, located in the outskirts of the city are furniture makers who make unique and useful home furnishings. Along with other furniture shops, the A. B. Buama Furniture is in San Antonio, one of the villages that motorists pass through on the way to Mayon Resthouse near the foot of Mayon Volcano. Having started as a worker in his father’s rattan business 20 years ago, Honorato Buama, has learned the ropes of running the business. After years of working for and helping his father, he decided to put up his own furniture shop, not considering his elementary education as a hindrance. Although the business has not made him rich, the 46-year-old Buama says he has built a house for his family and sends his five children, ages 14 to 22, to school from his earnings. He finds fulfillment in the thought that he provided his neighbors with a decent livelihood because of his business. Junior Rufo, a third-year student at the San Antonio National High School, is a part-time worker at the Buama Furniture. “When I have no classes, I work here to help my family and so that I will have allowance for school,” Rufo says, adding that he is happy working at the furniture shop.

Read the rest of the article here: http://business.inquirer.net/money/features/view_article.php?article_id=96848 Now, how do you solve the problematic roadblock that is the of lack of capital? Buama says sometimes he cannot deliver furniture because money is short for buying additional raw materials. This has been an age-old problem in the entrepreneurial scene. Bankers are awash with money to lend, but naturally will not lend to businesses who don’t even have good bookkeeping. They know that the money now is in SME lending, but do they go into the business of teaching small-time entrepreneurs how to straighten their books, write a business plan and a three-year roadmap? Something has got to give. Some organizations are doing this service. BPI Foundation, for example, goes to towns and municipalities to teach small entrepreneurs as part of their corporate social responsibility program. But this has to happen on a wider scale, or else our small businessmen will have no chance against their Chinese, Indian or even Vietnamese counterparts.

Big business is upbeat on the economy. Are small business owners feeling the same way? MANILA, Philippines--The business community remains upbeat about the Philippines’ prospects amid the challenges posed by globalization and the controversies in the political arena, the Philippine Chamber of Commerce and Industry (PCCI) said Wednesday. The optimism is being fueled to a significant degree by the partnership between the public and private sectors that is essential to sustaining the country’s rapid economic growth, the PCCI said. “Our emphasis is really on this public-private partnership which we need for us to be competitive,” PCCI president Samie Lim said. He made his comments on the sidelines of the organization’s 33rd Philippine Business Conference and Expo in Manila, which runs until Friday. Lim said the PCCI had been laying the groundwork for stronger public-private partnerships for the past five years and the organization’s thrust was beginning to pay off. “We now have success stories which we could hold up as examples for other businesses to emulate,” he said. Read the rest of the article here: http://business.inquirer.net/money/breakingnews/view_article.php?article_id=96598

Your best friend has great work ethic, unquestionable integrity, skilled in managing a company and appears to have all the qualifications of a business partner. You know best, after all, she is your best friend. But it’s a common dilemma: do best friends turn out to be the worst business partners? Reality shows different stories. Some of the best companies in this country were born out of friendships (or at least were nourished by friends and business partners.) There’s SGV & Co., of course, with the legendary business partnership between Wash Sycip and Fred Velayo, who were classmates at the Burgos Elementary School from Grade 1. Some other friends and business partners featured in the Philippine Daily Inquirer through the years are those of Precy Florentino and Kuh Ledesma (Music Museum Group, Inc.), Global Wireless Connections by Jeremy Obial and Arthur Policarpio, and Marvin Agustin and Raymund Magdaluyo’s Sumo-Sam restaurant. Yet the apprehension abounds. I asked three successful businesspersons to guest post on this, and also a professional business consultant. Here are their opinions: Pacita U. Juan Figaro Coffee Company Small Business Entrepreneur Awardee, Ernst & Young

Save the friendship! Hehe. Seriously, it does NOT work in most cases. Friends are better kept as friends. Friends may go into business together but ground rules must be set. Who will handle what? Who is the active partner? Who will be passive? What set of skills does each one have which is needed by the business? Have a skills assessment session.

Wilson Ng Blog: http://www.ngkhai.net/bizdrivenlife Ng Khai Development Corporation Winner of Ernst & Young’s Entrepreneur of the Year Award (2004)

Other than the caveat on going to business with a friend as partner, there is also the caveat in going to business with your spouse. My wife and I have been together managing the family business for 15 years, and we are still doing okay.   Of course, the main benefit of working with your friend or spouse is that you know each other very well, and therefore responsibilities and expectations are very clear.  Going into business is also a matter of trust, and doing it with somebody you feel can trust more is a time saver!   When I work with my spouse, I don't have to explicitly say everything. We generally understand already each other halfway down the statement. In short, if you need something done from one to 10, you just say from one to five, and she generally knows where to connect and continue! I can work on a project, and she can take over from it, and vice versa without much explanation, since we already know each other's style and expectations.   Many businesses with friends are done on a handshake, and no need for formal contracts.  Friends are also more willing to be flexible, and considerate.   The main downside is that of course issues on business or money, especially when things are not smooth going, or sometimes when things are too smooth going, can also be damaging to the friendship or marriage. When you have arguments over business, or of things taken, that adds another strain to the relationship.

Henry Ong President, RFP Phils.

People want to partner with friends because of the trust and familiarity in the relationship. But very often, they forget that the business needs skills and sometimes their partners don’t have those skills resulting in unequal allocation of responsibility. This causes money issues and distrust later on. Sometimes two friends may have a successful business but over the long term, when family members of each partner are involved like the wife and children, that’s normally where the problems start. So, it’s important to weigh the costs of breaking friendships over its benefits before entering into partnership. Doing business with friends is better than having friend as partner in business.

Art Ilano Strategy Professor UP College of Business Former editor-in-chief of SME Insight

I've seen quite a lot of businesses that are being run by friends. I think it can work out pretty well. :) Here's the prerequisite though: early on, it should be very clear that "business is business," and that they don't take business with them when they're doing friend stuff, because you are BOUND to disagree on certain matters sooner or later. So what's important is that it will be very clear early on that any disagreements should not carry over to buddy moments. :) They'll have to learn to compartmentalize. :) The next problem will be who takes which position in the business. This should also be very clear from the start, so nobody feels bad if one gets ordered around or whatever. In one successful example I've interviewed for instance (Wizard of Ads, run by school mates), they do have official titles and of course one has to be the President and all that, but when they do decision-making, it's committee-like. Once decisions are made, tasks are then farmed out according to their roles. Works great and they have strong bonds even after the business has grown. :)

Hope these help everyone in this situation. Keep on dreaming, Pinoy entrepreneurs!

Whether you and I like it or not, the world has become one big, chaotic barangay. For capitalists there may be value in targeting markets in other lands. This article in the Philippine Daily Inquirer written by Willy Arcilla says Vietnam is a good place to start. An excerpt follows:

MANILA, Philippines--FILIPINO BUSINESSMEN are finding green pastures in Vietnam, and those that are already there are encouraging their colleagues to follow suit. Here are some tips to guide those considering putting their money in the growing economy of Vietnam. Ernst & Young Partner and Head of Advisory Services Jun Torres exhorts Filipino businessmen to be bold and brave. Otherwise, the windows of opportunity will vanish rapidly as thousands of more aggressive businessmen from Korea, Singapore, India, and even the Middle East, rush in and seize the opportunities. Torres also allayed fears of businessmen about dealing with the Vietnamese, who used to have a reputation of being shrewd, by saying, if the Vietnamese are not trustworthy, then the country would not have attracted $10 billion in foreign direct investments in 2006, and another $20 billion in FDI projected for 2007.

Read the entire article here: http://business.inquirer.net/money/features/view_article.php?article_id=95863 Other points in the article: 1. Treat the customer as king (or queen). 2. A critical ingredient for success in Vietnam's FMCG (fast moving consumer goods) industry is innovation, consisting of new products, flavors and line extensions that constantly delight consumers and strengthen brand loyalty. 3. Go for simple yet effective marketing programs that build strong brand awareness and saliency, products that offer consumers a meaningful reason to buy, advertising campaigns that communicate rational and emotional benefits in an informative and entertaining manner, value-for-money pricing strategies, non-traditional media, such as proprietary TV soap operas, and aggressive expansion of distribution infrastructure. 4. Capitalize on the Vietnamese’ favorable cachet to establish an image of premium quality and appeal to the upper income bracket, because even the lower income segment will aspire to own and buy these brands. 5. Due to growing affluence and a positive disposition to foreign brands, consumer demand is not price sensitive. (Meaning, Vietnamese buy expensive products.) (The author, Willy Arcilla, is regional director of ZMG Signium Ward Howell Inc. and co-organizer of the first Philippine-Vietnam Business Mission. He is also president of Business Mentors, a newly established management consultancy firm.) I met Willy Arcilla during a recent Good News Kapihan briefing in Glorietta. If you are interested in the how-tos of targeting the Vietnamese market, let me know.

When you’re in business, you can’t afford to do an ostrich reaction to crises. No matter how much you long to stick your head in the sand and hope all that bad news will go away, the honorable and ultimately more business-friendly decision you can make is to show a grieving face and a generous hand. Ayala Land this afternoon suffered tremendously from a bomb blast in its popular Glorietta mall. Around six hours after, a sincere spokesperson went on television saying the company will take care of all hospitalization expenses. He says that Ayala’s insurance broker will make sure there is no paperwork needed. Huge expenses, yes. Timely and responsible, yes. If you look closely at business crises in the past ten years, these matter, especially in the long run. Petron’s Guimaras debacle has hurt the company mostly because it took the company quite a long time before issuing an official statement. In contrast, Lance Gokongwei’s prompt assurances during the Cebu Pacific Air plane crash a few years ago allowed the public to forgive the company much faster. It’s all about how your name and brand is your best asset. You need to protect it, especially during a crisis. A maze exhibit in Glorietta mall in better days. (Photo: AFP).

Getting a business permit should be a simple and straightforward transaction. It’s most likely the fledgling business owner’s first interaction with local government and could easily be a tipping point on whether he will or will not go through with his plans. Unfortunately, what is simple can turn out to be complex. What is straightforward can become a traumatic experience for many small business owners. One overseas Filipino worker I interviewed, who asked not to be identified, told of his plan a few years ago to come home for good and set up a small business. He ended up going back to the US, sickened by how government officials in his town and police tried every little trick to make him pay more than necessary. Several city halls, though, have seen the light. From my research a few years back, I learned that you wouldn’t break into sweat in getting business permits in the cities of Marikina and Naga in the Bicol region. When I walked inside Marikina’s city hall for the first time, my friend observed that it was like an airport. The ambiance was brisk, and businesslike, and I noted the tempered glass walls that allow you to see inside the offices. “That’s by design. The former mayor, Bayani Fernando, wanted employees to be alert and productive all the time. You can see them if they are slouching or sleeping. You cannot bribe someone because no one is hidden from view,” the official who gave me a tour said. Naga City’s Jesse Robredo has a different, but simple strategy. Naga’s city hall still looked like a rinky dink building when I went there last, but the business-friendly efficiency and transparency made it feel like Marikina’s. Robredo made every department head personally sign a manifesto of sorts that guarantees that getting a business license, for example, would take only 30 minutes. If it takes more than that, the department head in that office is accountable and he can take his complaints to Robredo himself. Those manifestos are in every corner of the city hall. The city of Manila, in this article, seems to be embracing a similar concept.

MANILA -- A "one-stop shop" that will help fast-track the processing of permits and other services will soon be opened at the Manila City Hall to assist businessmen who intend to invest in the capital city. Mayor Alfredo Lim ordered the creation of the "one-stop shop" to simplify the usually tedious procedures involved in transactions being made in the five-story City Hall. Among the permits businessmen need to secure are business permits, health permits, license taxes, compliance certificates. The one-stop shop will also serve as an information center to prevent unnecessary trips to the wrong offices.

Read the article here: http://business.inquirer.net/money/breakingnews/view_article.php?article_id=95292 Now, having a plan is one thing, getting things done is another. Mayor Lim has his work cut out for him. But even if Lim succeeds, three local governments is a drop in a big bucket. I hope there are other city halls out there with the will, the vision and the decency to be transparent and efficient for the sake of our small business owners.

Big businesses like Ayala Corp., Cinderella, PLDT, and Jollibee consume huge kilowatt-hours of electricity per year. Just imagine how a 10 percent drop in their electricity bills can make their bottomline look prettier. I discovered one of the well-kept secrets of big businesses in reducing electricity costs during a conference session on being kind to the environment organized by the League of Corporate Foundations. A rogue businessman who looked more comfortable in jeans watching a rock concert was preaching about bulbs made in Europe that could reduce electricity consumption by as much as 80 percent. I was skeptical, of course. Megaman is a relatively new company; it started operations only in 1994. It claims to use technology that’s superior to other companies that produce halogen and incandescent bulbs. It's bulbs are not warm to the touch even after minutes of emitting light and they are completely made of plastic, so they can be easily disposed. Then Russ Alfonso, president of Megaman Philippines, allowed himself to be interviewed. He explained how Megaman bulbs hammered down the business costs of the likes of The Enterprise Center, Shangri-la Plaza Malls, Rockwell Power Plant, Kenny Rogers Roasters, Penshoppe and Figaro. Ayala Tower 1 (where the Makati Stock Exchange is housed) used to consume P1.244 million worth of electricity in a year for 300 bulbs in a couple of floors. After it replaced these bulbs with those bought from Megaman, the electricity bill on these floors went down to P207,360. Certain Cinderella outlets used to pay P388,800 to Meralco in a year, but this bill has gone down to P77,760. The same with some Figaro Coffee Shops. After replacing 50 bulbs, consumption went down to P12,096 from P86,400. Even Meralco has replaced bulbs on some floors, reducing its consumption by P913,939. That’s almost P1 million in savings. The City of Marikina has changed 280 pieces of its sodium light bulbs (for street lights) and saved P270,950 on the first year. Now, don’t rush to Ace Hardware just yet in the hope of paring down your own electricity consumption. Megaman has decided not to do mass marketing because -- here’s the catch – the bulbs are much more expensive than your usual lightbulb. “No one will buy them off the shelf, so we decided not to go through with that distribution scheme,” Alfonso says. “The initial investment is really high, but the long-term savings will compensate for that. In the long-term, you will see that every little bit of savings in electricity counts,” Alfonso added. That’s why Megaman is like a well-kept secret. While the company also outfits homes and small businesses, you would have to give them a call to be serviced by a sales agent. You won’t find their bulbs just browsing through stores, but big businesses with their volume purchases get first crack. Megaman Philippines website: http://www.megamanphil.com/index.php Megaman UK website (looks much better) http://www.megamanuk.com/

Reader Lily Ann wrote a very interesting comment on my post last Monday on “Why many OFW families’ businesses don’t thrive.”

I'm a full-time entrepreneur myself having just quit my full-time job in a corporate world (though still working part-time in the same company upon their request) recently. I could say that for any business to thrive, the owner should be hands-on. Otherwise, everything will turn into dust. Simply because of "kawalan ng malasakit". Why should people even (own relatives) sacrifice on something he/she did not spent a single sweat? Hindi naman nila pinaghirapan iyong perang ipinuhunan, so why do they care kung malugi? It's only the owner of the capital who will really care and get hurt when business suffer. I employ my own relatives in my own small business just for the good intention of helping them earn a living and stay away from idle lives - sort of give a man a fish and you just feed for a day, but teach a man how to fish, you feed him for his entire life, but nothing happened. I ended up the bad guy and the whole clan talks about me when I dismissed my cousin from my employ due to wrongdoings and abuse. They have even become the thorn in my flesh. So, I realized, good intentions is not enough. You ned to protect your hard-earned money invested in the business. So, my suggestions to OFWs who wants to have a business as additional source of income (which should be) in preparation of their retirement from working abroad, do a business which you can do by yourself wherever you are. When you are finally ready to jump and take the risk to the unpredictable journey of being an entrepreneur, that's the time you plunge into a full-time business. At least, when you failed, you can still say head on, that you tried. Then, try another one. That's business. As I told my friends, "if you are not ready to die", don't go into business, coz there's a lot of nightmares - from the staff, to the clients, suppliers, the government red tapes, especially, etc.

Read the entire comment here. Hire someone – relative or not – based on his attitude and integrity. Perhaps he doesn’t have the experience or the qualifications, but if he can be taught and if he is honest and has the drive, then you have a gem on your hands. Otherwise, fire him: relative or not. At the end of the day, coddling someone just because he or she is a relative can do more damage to that person, not just to the business. It may turn out to be the kindest thing you can do.

It’s not hard to imagine that from the OFW perspective, financial dreams are not made of candy clouds and somnambulant wanderings between bright business ideas. They are built by wide-eyed hard work and sacrifice. Unfortunately, financial security at home – the dream of almost every OFW I know – gets trumped by many things, not least of all the inability to start a small business. Nielsen Media Research simply described this inability as a tendency to depend on monthly remittances for daily expenses. Jay Mendoza, NMR says most families of OFWs prefer to have no other sources of income. I’m not an expert on the OFW community, but I think there’s more to the story than that, just as there is more to a business than capital. There must be more to the figures than just languid dependence and zero creativity. To thrive, OFW families cannot just rush into any “business opportunity.” Too much money from overseas workers have disappeared inside Internet café businesses, parlors, miracle virgin coconut oil and network marketing schemes. So, the question often asked is: what is a good business to get into? Now, here’s the irony of the moment: it is the OFW that gains the global perspective and skill to build and nurture an enduring business, but he or she has to depend on the family member, who may or may not have what it takes to make good and quick business decisions. Assuming the tough part is over. The niche has been created, the product designed finished and the business has survived its first month. The OFW-financed business still has to contend with supply chain problems, pilferage, fraud, marketing – issues that even a sari-sari store should adequately address if it is to grow beyond a sari-sari store. Now, What Cat has an interesting series all on how OFW businesses fail. If it’s hard to begin, it’s even harder to know when to end a fledgling business. When things don’t go exactly as planned, how do you know when to cut losses or when to persevere? Capital is no longer the issue here. The things that make a real entrepreneur – pure gut feel – come into play. Most OFW families just say ‘I don’t want to get burned any more. This is a lotta work.” So, what happens? Back to just waiting for remittances. Wala pang lugi. This is one of the stories behind the figures, another way of looking at the survey results that may give us reason to poke at possibilities for change. OFW families, heck Filipinos in general, need help to set up their businesses successfully. Who will give assistance? Should it be the government? Should it be private companies wishing to do good in their communities? I have found many government entities and corporate foundations with “entrepreneurship” as their gilded missions. If you belong to these groups, don’t just do good in your little corner. Broadcast your message and reach out to more OFWs, to more communities, to more Filipinos who have the dreams and the tenacity to hold on to them. This country needs more than just slogans and missions. Our entrepreneurs are waiting to blossom and they need your help.

Every entrepreneur knows about the futility of moving with herds. You see a herd, get worked up by how profitable they look as they come down the highway stampeding all the way and you move quickly to join only to realize that you jumped in too late at too high a cost. There’s not a hotter business idea these days that will compare with call centers. But can 10-seaters slug it out with the big boys? If you’re a Johnny-come-lately, do you still stand a chance? Joji Ilagan Bian, a businesswoman from Davao says “Smites” or small and medium-scale IT enterprises are sprouting up and they are banding together to compete with big companies.

"With less resources, it is hard for us to launch campaigns and promote ourselves to clients because most SMCCs rely on brokers who may turn out to be unreliable." For this reason, Bian's firm joined forces with similarly situated SMCCs and formed the Philippine Call Center Alliance Inc. or PhilCall in October 2006. So far, PhilCall has 25 members--with an average of 40 seats each--including 999 Inc., Synergia Cybercare Inc., VirCommServe Inc., Right Technicomm Inc., Sysgen Outsource Inc., Tech1 Internet and Farmout Central Intouch Inc. Bian, who is PhilCall interim president, explains that the association was meant to advance SMCCs interest mainly by curbing the problem of dealing with brokers. "At this early, PhilCall has been able to undertake initial efforts in representing members when making campaigns," she says. "This move saves our members from the prospect of not getting paid by clients because of unreliable brokers." To strengthen PhilCall and make it more effective, the group has also embarked on a campaign to enlist more members with the goal of being able to represent a total of 10,000 seats. "Our aim is also to professionalize SMCC operation so that we can establish a good reputation that is based on high standards of services as well as of ethics," Bian says. "We want to flesh out SMCCs from the underground, so to speak."

That’s an effort that’s much needed in an industry where players are mainly motivated by getting as much return while the going is still good. Why do I say that? A few years ago, I interviewed many big, medium-sized and small players in the industry and have seen many fail and close shop because they came into the business just to get a slice of the action. Result? Expectations of easy money fizzled as soon as the nitty gritty of doing the business reared its head. The difficulty of marketing their services to clients overseas, managing quality of contact agents, backend operations, IT requirements, rental and office space – it’s not really a walk in the woods. An owner of a 15-seater told me he hasn’t even seen some of his clients personally. “So, how do you know you will get paid?” I ask incredulously. “We don’t -- until the billing date arrives.” What a way of doing business.  Entrepreneurs who join a herd fail because they are just after the gravy. Entrepreneurs who build a business because it’s their passion and it’s where they can contribute to society stand a better chance. They think through it, create strategies, and they are prepared for the tough moments. As another successful contact-center owner told me, it’s still a hot industry but it takes a lot of hard work now that the first phase is over and somebody who comes in without a good strategy can kiss his investment goodbye in more or less a year.  This call center agent will probably get a lot of irate callers :-) . Photo credit: AFP

The student with a clever idea for a business, the office worker who has been dreaming of starting a unique pastry shop, the OFW  who has been living poor so he can save enough money to start a business -- all labor under the assumption that it takes money to make money. I, too, believe that money begets money because capital is where the energy of an enterprise comes from. It’s not the only source, of course. An inspired business model, determination to succeed and all that are all folded into the business enterprise. But when it comes to money and capital, either you have it or you don’t have it. Cynthia Baello, in “From P200 to riches”, an article from the Philippine Daily Inquirer, made me think again. She started her business with P200, and grew it from there. This story has several business lessons for everyone. First, a mother’s protective instinct is probably one of the strongest power on earth.

“Baello, 58, said she used to go to the bank to check if she had money from her husband who was then working in Bahrain -- only to find out there was none. This would send her to fits of nervous anxiety, thinking of where to get the money to pay for water and electric bills. She told herself she did not want that kind of a life. “Naawa ako sa sarili ko” [“I felt sorry for myself”], she said.”

From a desire to be self-reliant was born a business built up not by capital but pure, dogged determination and frugality. As has often been discussed in this forum, the ability to survive at all cost is another business lesson in Baello’s story.

“In the 1980s she already had a stuffed toy business, but the entry of products from China into the local market forced her to abandon her business. Chinese products were priced so low, she said, that she, along with hundreds of other stuffed toy makers in Tarlac province, could not compete and had to find other means of income. Baello’s eagerness to join her first trade fair in 2003, to be held at the SM Megamall in Metro Manila, prompted her to revive her small business formally. But just as she was about ready to showcase her wares, disaster struck. She needed money not only for the raw materials for her items but also for the rental of the stall to be used in the business fair. But the loan application on which she pinned her hope was rejected. She was near tears as she walked home. She was praying, “Lord, i-lead Ninyo ako sa mga taong tutulong sa akin.” [“Lord, please lead me to the people who can help me.”] Along the way she noticed people milling about in front of an office building on F. Tañedo Street. It was the Tarlac branch of a microfinancing organization called Alalay sa Kaunlaran sa Gitnang Luzon (ASKI). Established in 1987 to “serve and empower the poor through micro-enterprise development,” ASKI is a Philippine partner of Australia-based Opportunity International, one of the world’s largest microfinance organizations. The group uses the slogan, “Giving the poor a working chance.” At the time, however, Baello didn’t know these things, and so she asked around until she was told to see the manager. During her interview with the manager -- which she opened by asking, “Ano ho ba ang business ninyo? Puwede ho bang umutang dito?” [“Sir, what kind of business do you have here? Do you make loans?”] She told him of her situation. The manager was immediately sympathetic and, when she asked how much she could borrow, he said she could start with P10,000.”

Another business lesson is to join trade fairs. Baello’s business began seriously growing after she joined trade shows. More people found out about her products, her market grew and she paid her debts. She also shares that it is important to “listen to customers” and give good customer service. You could say, she grew wings from a 200-peso capital. So which is more important: capital or a good business model?

  Serendipitous moments are crystalline in their beauty. Just as Open For Business readers figure out how to handle the continuous strengthening of the peso against the dollar (see previous post), here come your friendly central bankers explaining how YOU -- exporters, small business owners and even private investors -- can prepare. Doris Dumlao wrote after the central bank forum on the exchange rate that disadvantaged sectors could tap a wide array of hedging tools to reduce their foreign exchange risks. (Click here to read the entire article).

“The peso is expected to remain firm for the rest of the year on the back of sustained dollar inflows from overseas Filipino remittances, portfolio and foreign direct investments and export receipts,” BSP Deputy Governor Diwa Guinigundo said at a forum with exporters. Guinigundo said the uptrend would continue for the rest of the year despite jitters from rising oil prices and the credit crunch in the United States or despite the BSP’s occasional intervention at the spot foreign exchange market. The peso closed at 45.14 to the dollar Wednesday from Tuesday’s 44.915. Traders suspected that BSP intervention prevented the local currency’s further appreciation in the last few days. “A strong peso is not the BSP’s policy. Our policy has always been and will continue to be for a market-determined exchange rate, with occasional scope for official action on our part to smoothen excessive volatility in the exchange rate, and this we do whether the rate is going up or going down,” BSP Governor Amando Tetangco Jr. said at the forum. Tetangco said the volatility in asset prices, especially in the form of foreign exchange movements, could adversely affect the operations and render the investment plans of both public and private sectors highly challenging. “Hedging could, therefore, serve as a form of insurance to help businesses reduce this type of risks so businesses could plan better and reduce volatility in their cash flow,” he said. Wednesday’s forum focused on hedging against exchange rate fluctuations through the use of derivatives, or financial products whose worth are based on the values of underlying commodities or indices. “An exporter, for instance, by entering into a forward contract, could reduce the volatility of his cash flow by locking in at an agreed exchange rate the conversion of pesos of his future export earnings,” Tetangco said.

Jhunie asked if these hedging instruments are provided by the government. Gone are the days where we always have to wait for the government to solve the country’s problems for us. The free market itself should form the solution. These hedging instruments are possible through your relationship with your banks. I understand how awful this is for anyone earning in dollars and other currencies. Remember, however, that in free markets, especially currency markets, anything can happen. The peso moved from 26 to 40 in just a few days in 1997. From 54 a few years ago, it’s now at 45. If there’s anything we should all try to do is not to live in the moment, but find solutions because the financial world can change in a blink.

Are you ready to get 40 pesos for every dollar by next year? What about 30 pesos per dollar by 2009? Whether it’s a sign from the heavens, what the tarot cards say or a forecasting model, the signs show the peso will continue to strengthen. At least, for now. Businesses, big and small, cannot escape foreign exchange risks. Doris Dumlao wrote in the Philippine Daily Inquirer early last month that 75 firms, mostly small and medium scale enterprises, have closed shop as the invisible hands of the peso’s sharp appreciation caused owners to surrender to the trend. Sergio Ortiz-Luiz Jr., president of the Philippine Exporters’ Confederation, has challenged the central bank’s bias for a stronger peso – something that the central bank immediately refuted. Finger-pointing, however, cannot solve the issue. Almost all currencies are strengthening against the US dollar. Entrepreneurs need to face the problem. No one can afford to ignore it in the hope that it will go away, or rant and rave at the government asking the State to fix the exchange rate. The hard questions still need to be answered: what is the smart way to handle foreign exchange risks? Should exporters move to other ‘safer’ businesses? Are there hedging instruments available that can help? Is your banker helping you? Entrepreneurship is leadership taken to the extreme. That means having the tenacity to find the door that should open after the one you just got into slammed in your face. Ultimately, it’s the ability to find opportunities in every crisis. Trite, yes, but still so true.

Most, if not all of us shop in supermarkets. How come we can easily find “fresh,” huge strawberries from the US and not those from nearby Baguio? Even bags of mixed vegetables from other countries are easily found on supermarket shelves, but none from Benguet. Marketing and branding go well together. If some geniuses in branding are out there, get those creative juices flowing to save the Benguet region from branding ignominy! This article from the Philippine Daily Inquirer’s Luzon bureau is begging for assistance. How can you create a strong brand for Benguet vegetables so that they are easily sold and found? A provincial seal and tagline, of course, sound simple. But there should be more brilliant ideas out there. LA TRINIDAD, Benguet, Philippines -- Home to the country's best potatoes, carrots and cabbages, Benguet nevertheless lags behind in the business of product labeling that could gain more commercial value for its vegetables. Entrepreneurs are pushing for the improved packaging of the province's processed vegetables. But the competitive edge in production has yet to impact on the local industry of fries, chips, juices and ready mix vegetables. The reason, according to the Institute of Social Research and Development (IBRD) at the Benguet State University (BSU) here, is that there exists a void in the marketing strategy of the province's vegetables -- the lack of a provincial brand. Read more here: Some photos below courtesy of the Benguet provincial government's website. Igorot farmers harvest cabbages in La Trinidad, Benguet. Filipino bakers celebrate the 52nd founding anniversary of Benguet province with a giant strawberry cake in La Trinidad, 18 March 2002. Visitors enjoyed the huge cake prepared with 520 kilos of strawberries, the chief agricultural produce of this northern mountain province. AFP PHOTO/ ANDY ZAPATA

More than business strategies and good products, small businesses need leadership to grow – leadership that should not only come from the top but ideally should be echoed all over the enterprise. Unfortunately, leaders aren’t infallible. In John C. Maxwell’s column today in INQUIRER.net, he talked about some blind spots that can wreck a leader’s journey. An excerpt from the article follows. Check the entire article here:

The Blind Spot—An area in the lives of people in which they continually do not see themselves or their situation realistically. This unawareness often causes great damage to the people and those around them.

Most every leader has a blind spot, in fact, all probably do. We are trapped in our own perspectives, unable to see the world completely from another person’s point of view. We are absorbed in our world, caught in our present circumstances, consumed by selfish thoughts, and confined by our narrow experiences. To illustrate, consider King George III of England’s journal entry on July 4, 1776: “Nothing happened today.” Of course, unbeknownst to King George, the American Declaration of Independence had been issued that day, and it would change the course of history. One reason for our singular perspective can be attributed to our self-perception, or attitude toward self. As I wrote in the Lens Principle: Who we are determines how we see others. A naïve optimist may be blind to the less-than-ideal intentions of those around them. Oppositely, an eternal pessimist may be blind to the kindness of a co-worker, instead suspecting ulterior motives. A second cause of singular perspective comes from our tendency to judge ourselves based on intentions, while judging others by their actions. Such a bias allows us to cut ourselves slack and to justify our actions, because, after all, we meant well. However, since we aren’t able to see the motives of others, we evaluate them solely by their actions. We attribute shortcomings in their behavior to shortfalls in character without regard for their present circumstances, mood, or emotional frame of mind. We are fully aware of our history, but ignorant of the background of others. For this reason, context is the third and final cause of a blinding singular perspective. Decisions we take make perfect sense to us given our beliefs and experiences, but they may surprise others who are not as familiar with us. On the other hand, since we don’t know the particulars of another person’s childhood, past relationships, or prior involvements, we often have trouble conceiving why the person acts the way he or she does. As trite as it may sound, putting yourself in another person’s shoes does open you to their perspective. To broaden your limited perspective, try to envision their opinions and feelings. Attempt to be aware of their motives and the values they hold dear. Leaders avoid the blind spot of singular perspective when they seek to understand before seeking to be understood.

As always, Maxwell’s thoughts resonate deeply with what I have observed in small businesses. Often, there’s so much potential that are destroyed by leaders’ failure to respond or even acknowledge blind spots. It takes discipline, and certainly it takes humility. Sometimes, it takes a good, trusted friend to point it out at the risk of being fired. :-) Are you ready to face your blind spot? (Photo courtesy of Michelle Morelos.)