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SMEpinoy MBAlite

To help businesses succeed in the New Normal, we are dedicating this webpage through tips on how MSMEs can manage using MBA principles.

CH 1 : How my sanity survived the New Normal? – 2021

I am revitalizing my 2020 article into a video.

Below is my article in 2020:

CH 1 : How my sanity survived the New Normal? – 2020

Before the ECQ I have some routine breaks that revitalized me, like early morning walks in the beautiful campus of the Ateneo (felt like Baguio even in summer), weekend beer with friends and office mates, church community activities and a sideline business that quenches my thirst to share. My routine breaks are nature and community, then came the Covid-19 pandemic where I was forced to stay home for months and close my sideline business. I was privileged that even during the ECQ I was still able to work from home and have a family to take care of as a routine. I could not imagine the otherwise of being alone and doing nothing. Having got used with routine breaks, I tried new activities such as gardening, delivery disinfection, home repairs and insect extermination. I also kept myself updated with news and pretended to be a back-seat IATF, but my sanity was still breaking while trying to be normal in the New Normal. The intensity increased when it became clear that the New Normal will last for around two years. I felt like the boy in the video, I was becoming grey.

After a few weeks, I shifted my mindset from being inward to outward focused, my thirst to share was awoken once more. It started with a free webinar on how to manage your business on the Post-ECQ using the knowledge I have gained as a back-seat IATF and hours of reading on the internet. The message was simple, to survive in the Post-ECQ MSMEs needs to go digital and Reset-Realign-Restart(a). To Reset, I re-assessed my SWOT(b), Strengths and Weaknesses during the ECQ and looked at the Opportunities and Threats then started strategizing for the New Normal. I saw that my Strengths matches with the Threat the MSMEs will face on how to operate in the New Normal and made this as an Opportunity to help MSMEs succeed in the New Normal. This will be my re-mission, a rehashed mission to re-focus to support MSMEs. I took the SMEpinoy.com brand out of the “baul”, and planned to use this as a vehicle for my re-mission. I created a BHAG and created an initial plan using the Business Model Canvass(c) framework. To Realign, I fired up again my sleeping partners in Servus and asked for a re-commitment, to continue working with those who are still willing. To get new blood, instead of finding partners or start a new company, which is unwise knowing how hard it is to close a corporation, I instead looked for new alliances with existing businesses. People who like me are just waiting for the starting gun of the lifting of the ECQ and start sprinting to do business in the new Normal.

But this was not the case, we were just brought down from ECQ to GCQ and still finding it hard to Restart. More businesses are forced to close or slow down which cause a lot of people to lose their job. Digital Commerce was booming even though the government said they will tax them. DTI said the online sellers should register their business so the online buyers can run after suppliers of defective product. I see the value of DTI’s reminder to protect the online buyers, but I also see the risks of registering your business. A business is not simply finding a product or service, branding it and selling it. The department you see at large corporations, HR, Operations, Finance, etc. must be present in any business big or micro. Although for big businesses it can be a division for a micro enterprise it will just be a function done by the sole owner of the business. Not doing this other functions is one of the major reasons why less than 0.7% of businesses in the Philippines survive more than 5 years, it is even much less during the Covid-19 pandemic. As it is hard to register a new business, it is much harder to close a business. During the GCQ, I am receiving at least five FB page group invites a day for new online businesses. Based on the statistics, from the 25 new FB page invites I receive per week only 1 or 2 will still be there 5 years from now.

Thus, I saw a new segment of society that needs the support of my MBA and more than 23 years of experience as an Entrepreneur, people who lost their old source of income and trying a new one. I took out again my trustee Business Model Canvass Template to create SMEpinoy Business Sanctuary whose mission is to guide startups from the dream stage to the expansion stage. The GCQ, as a blessing in disguise has given me time to Realign before Restarting a better planned and equipped SMEpinoy.com.

To answer the question, SMEpinoy.com and the weekly “e-numan” is how my sanity is surviving in the New Normal.

References:

  1. Reset-realign-restart : https://www2.deloitte.com/us/en/insights/economy/covid-19/guide-to-organizational-recovery-for-senior-executives-heart-of-resilient-leadership.html
  2. SWOT Analysis : https://en.wikipedia.org/wiki/SWOT_analysis
  3. Business Model Canvass : https://en.wikipedia.org/wiki/Business_Model_Canvas

CH 2a : The struggles of an Entrepreneur – 2021

I am revitalizing my 2020 article into a video.

Below is my article in 2020:

CH 2a : The struggles of an Entrepreneur – 2020

I have learned to make it a habit to do an external analysis of the macro-environment to anticipate the different forces that might affect my business. The Macro-Environment Analysis, or some call it the PESTLE Analysis(a), is one of the MBA frameworks in Strategic Management. One method to do external analysis is by keeping up to date with the news, much more in the New Normal. Recently one news that came out will have a big impact on businesses in the Philippines. There is a sharp drop in the Philippine economy, much worse than the 1984-85 economic crisis during the Marcos-era.

This is a Threat in the Economic Factor to all businesses in the Philippines.  During the ECQ I was optimistic, once the Quarantine is lifted people had the SAP to still spend in the New Normal. But the prolonged quarantine is depleting the savings of most Filipinos. OFW’s are going home, people are losing their jobs and businesses are closing. I am wondering how much cash will be left circulating in the Philippines after the quarantine. I am feeling sad, this has also brought back memories of how hard it was in 1984-85, our family had a major setback in our lifestyle during the 1984-85 recession which gave me bad memories that built my character. From this experience, I learned to live a simple lifestyle.

Filipinos and businesses struggled during this period, we had the Smokey Mountain (not the band) and Negros (including the Escalante Massacre(b)) which was our very own Ethiopian Famine (Band AID(c) and USA for Africa).

Before the Pandemic, a Philippine statistic was less than 0.7% of businesses survive more than 5 years. I could imagine that in this pandemic it will be much less. To show it in a different lens, I receive around 5 new Facebook Page invites for new businesses per day, that is around 35 per week or 140 new businesses per month. If we follow the pre-pandemic statistics, only 1 of this 140 new businesses will survive more than 5 years. During the Pandemic where businesses are closing, the Philippines would be lucky if 1 of around 200 business would survive more than 5 years.

If you are a neophyte entrepreneur during the pandemic or even have an existing business, you need to ask yourself, how can I be the lucky 1 to survive more than 5 years. Follow this up with the following questions:

  • What is the difference of my product or service with the others existing in the market?
  • Aside from a product/service and an FB page, how can this difference make me capture a chunk of the pie (market share) to make it feasible to maintain this business?
  • If I were lucky enough to capture a significant pie of the market, how can I protect this competitive advantage to make me survive more than five years.

The struggle of an entrepreneur is on how to develop a product or service that can capture a significant market share that will make it financially feasible to survive in the now and after I captured this market share, how do I protect my competitive advantage to expand in the tomorrow. This struggle is greater during the New Normal where the pie being shared has decreased and the number of new players increased.     

A lot of people dream to be an Entrepreneur by necessity, having lost their jobs, or were enticed by the thousands of rag to riches stories. There are exceptional entrepreneurs who started their business during the recession. One of the business cases we analyzed when I was earning my MBA was Chowking Food Corporation, its founder Robert Kuan started his business in 1985 and even expanded during the recession. His strategy was to build his company when it was cheap to setup a business and be in position as the economy grows.

The silver lining, if the forecast below will be accurate, we have the same scenario as 25 years ago.

The economy is expected to recover after two years, there is hope. There are also people like Robert Kuan who believes that now is a good time to start your business. Actually it is not the business you need to start, its your product or service. Capital is cheap and the best time to test your product/service.

But still we have to beat another statistic and be The 1 of the around 200 new businesses to survive more than 5 years. People do not just enter into something to fail and maintaining a business with only a product and an FB page is a sure way to fail. We enter a battle prepared, just like a general you need to spy on your enemy, know the terrain, assess your soldiers and then create a battle plan based on all this factors. I will discuss in the future chapters of SMEpinoy MBAlite how to prepare yourself for battle so years after you can call a little part of your life Happyness…

References:

  1. Pestle Analysis :  https://pestleanalysis.com/what-is-macro-environment-analysis/
  2. Escalante Massacre : https://en.wikipedia.org/wiki/Escalante_massacre
  3. Band Aid : https://en.wikipedia.org/wiki/Band_Aid_(band)

CH 2b: Funding Your Business – 2021

I am revitalizing my 2020 article into a video.

Below is my article in 2020:

CH 2b : Funding Your Business – 2020

In the spirit of reading the signs of the times, I would change my article this week into Funding Your Business. I received a private message (PM) this morning from one of the attendees of my “How To Start Your Own Business” Seminar. He asked advice on how to fund a business he WANTS to put up. His savings run out and needs to get funding so he can generate income. Which is our mission for Business Sanctuary (http://sanctuary.smepinoy.com/) having foreseen this issue being encountered by a lot of people in the New Normal.

My first feedback, is the business you WANT to put up feasible? Is there a market for your product or are you just asking for funding to build your clubhouse? Are you trying to get a loan from the bank, or funding from anyone, without a business plan? Good luck! Having a business plan gives assurance to whomever you approach that you are legitimate. It also show that you have a plan and not just starting something on a whim.

Having a business plan also gives you the opportunity to analyse if the business you WANT to put up has a chance of succeeding. Is there a market need for the product you want to offer or is it something people can wait until after the Covid Pandemic to purchase? To answer this question, you can do market research. If you think market research is too tedious and difficult, you can try to use the Pestle Method which I touched on at CH 2 : The struggles of an Entrepreneur (https://smepinoy.com/the-struggles-of-an-entrepreneur/).

I will discuss in my future articles how to create a business plan, but for the meantime try to put yourself in the shoes of the bank. What are the things you will ask the business loan applicant before you approve their application? Example of some questions I might ask myself are:

  • How will the loan applicant spend the money?
  • How will the loan applicant give back the money?

Lastly, he told me all banks he visited said they are not offering loans for small businesses. As a guide, this are the institutions whom you can approach to ask for funding:

  • Development Bank of the Philippines and Landbank are government banks which they use as conduits for loans to MSMEs. (https://www.dbp.ph/developmental-banking/micro-small-and-medium-enterprises/sustainable-enterprises-for-economic-development-seed/879-2/)
  • If you Google “MSME loans in the Philippines” you would get a list of private institutions, not only banks, offering loans to MSMEs.
  • Crowd and Seed funding, if your business project has a technology or social impact you can also Google “Crowd/Seed Funding Philippines” to get a list and instructions on how to do Crowd or Seed Funding for your business.

This are just a few institutional sources of funding for your business, but before you even start looking for funding, create a business plan. Next week I will talk on how to pitch your business plan.

CH 2c : Pitching for Funding – 2021

I am revitalizing my 2020 article into a video.

Below is my article in 2020:

CH 2c : Pitching for Funding – 2020

As promised, this week I will talk about how to pitch to the bank or potential investors to get funding for your business. It is not enough to have a business plan, you also need to sell it to potential investors. Even after your business is operational, you still need to continuously pitch your products and services to potential clients.

There are different kinds of pitch but personally I just use two, a short or informal pitch and a long or formal pitch. The short pitch is used to get the attention and attract the potential investor to setup a meeting for a more formal presentation where you will need a Pitch Deck or a PowerPoint presentation.

SHORT PITCH

There are different kinds of short pitches such as the Twitter Pitch, where your pitch is limited to 140 characters, and Elevator Pitch, where your pitch should not be longer than 2 minutes or an elevator ride. Although there are a lot of variations in doing a short pitch this are the essentials :

  • A strong opener that will capture their attention.
  • Introduction of your business, including what you do.
  • What is the problem your business is trying to solve?
  • What is the solution of your business to the problem?
  • Why is your solution unique and why it is hard to copy?
  • What you need, i assume its money?
  • How will they be assured to get their money back with interest? If your talking to an investor, how much money will they make by investing in your company?
  • Close by setting an appointment for a more detailed presentation.

Here is a video of how to do an elevator pitch;

LONG PITCH

If you are successful in your Short Pitch, be it in the phone, social media or an elevator it means you need to prepare a Pitch Deck. Here are the essential information that must be present in your PowerPoint presentation:

  • A strong opener that will capture their attention.
  • What is the problem your business is trying to solve?
  • What is the solution of your business to the problem?
  • Your product that will deliver the solution.
  • Present the team, with short description, that will create the product.
  • Show the competition or alternatives to your product.
  • Describe your target market.
  • Present how you plan to make money.
  • Show your financial projections including how much investment is needed and how it will be spent.
  • A strong closer, including how much money they will make by investing in your company.

There is a 10/20/30 Rule in PowerPoint Presentations, it should have 10 slides, should not last more than 20 minutes, and contain no font smaller than 30 points(1). So where do you put your contact information if you already have 10 slides? I put it at the bottom of all my slides.

Lastly, do not forget that you are still talking to a human therefore always add eye candies or anything that will touch on the human emotion.

References:

  1. 10/20/30 Rule : https://www.pier8group.com/the-10-20-30-rule-of-powerpoint/