A by cathy.

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I am Cathy. I am a Certified Public Accountant and a business consultant for years. I want to share my expertise thru this blog which is intended to help people who are planning or who are already in business. The topics range from Accounting for Small Business, Cash Management, Inventory Management, Assets Management and Financing. The terminologies will be simplified for laymen and business jargons will be explained for clarity.

Monday, October 08, 2007

Reasons for the failure of small businesses

Subtitle of the blog: Why the businesses of Overseas Filipinos and or OFWs fail.

After working abroad, the OFWs/OCWs dream of putting up their own businesses so that they can make their savings last without having to go back abroad. The overseas Filipinos aka permanent residents of foreign countries set up businesses back home to provide employment/sources of revenues for their dependent relatives.

I read somewhere that ninety per cent of these ventures fail. The news did not mention the causes of failure. So here I am enumerating what must be the causes.

1. Lack of experience- Most of the wannabe entrepreneurs are enticed by the relatives to go into a type of business which they think are making money. One of them is internet cafe.

The first time, I made a balikbayan, I went to an internet cafe near our place. The per hour rate was 50 pesos. And I still have to go to Alabang. That time, the internet cafes are not yet dime-a-dozen. The second time I went home, I found many internet cafes closer to where I was temporarily staying. The charge was 30 pesos per hour. There were only 10 units that obviously are home assembled pcs ala Frankenstein. Malaki tipid than buying the finished branded. I thought that the guy knows the business.

A friend here in the US asked me if I know somebody who want to partner with him in the internet cafe that he is buying from a friend who's also here in the US. First question, I asked was, why is the owner selling?

He said something about misappropriation of funds by the trusted relative who managed the business. He did not say, it is "bloody bleeding" at the bottom. translation: losing.

It was a principle of instead of giving fish, teach them how to fish that made the overseas Filipino financier/owner to set up the internet cafe for his relative in the Philippines.

house-mousecomputer mouse
The relative's knowledge about computer is only the distinction between a pc mouse and that little rodent that run on the keyboards every night when the lights are out.

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Wednesday, October 03, 2007

Reasons why small businesses fail Part 1

Sub-title: Why my mother was not cut-out for business.

My mother was a lousy businesswoman. She was more of philanthropic, "sobrang honest" and "sobrang pakikisama" type of "trying hard entrepreneur". For a small plastic bag of pan de sal that she baked herself with all the necessary ingredients followed to the smallest measuring cup, she'd delivered it for free. Good marketing strategy perhaps but the pricing was just too low to recoup the investment. Nakakahiya naman daw kaseh kung mataas ang presyo. Pero sabi ko nga premium quality ang kaniyang ingredients kaya tama lang na high quality, high price. Kaya lang, she would not be able to compete with unscrupulous businessmen who cheat on ingredients. Yon ba yong ang pan de sal ay malaki tingnan pero pag kinagat mo, hangin lang ang laman.

After several months, the oven bought for the small business venture became a good repository of plastic bags. Bad location too. Our house was inside a private subdivision where no sari-sari stores would thrive because most of the residents do their groceries for weekly provisions.

She was damn too trusting that our passenger jeepney which had a route in Cubao became a good source of beer money for the hired drivers. They complained of engine trouble, brought the vehicle to their favorite machine shop, changed the good spare parts with bad recycled ones, sold them to spare parts stores and left us when almost everyday, the jeepney was close to having major repair. The vehicle was sold for a measly few thousands.

She tried raising tilapia at our backyard. The small pond was constructed with few hundred fingerlings of tilapia to start the tilapia-raising project.

Sa awa ng Maykapal, hindi lumaki ang tilapia bago nakakita ng frying pan.

Either namatay sa init o kaya kinain ng mga pusang gala na nakakatalon sa aming mataas na bakod sa Tandang Sora. Paggabi, marami ring daga ang nangingisda. Moral of the story, "do-it-yourself business kits," do not tell all. Why are business consultancies flourishing?

After several business attempts (just so she will not get bored), itinaas ang bandilang puti at pabalik-balik na lang sa Estados Unidos.

My grandmother was the shrewd businessman in the clan. Siya yong tipong ipabenta mo sa kaniya ang buwan, pati planeta-na-hindi-na-planetang Pluto ay maisasama niya sa deal.

In our few months of stay in the ancestral home by the sea, I witnessed her hands-on-management of what was left of her "business empire". She was kinda semi-retired that her business of wholesale-retiail in that small island was merely to keep her active.
She would travel via small motorboat to get to the metropolis, bought sugar, soap and other basic necessities in bulk. Back to the house cum store/watering place during the night for tuba/wine lovers, she would repack them for the "TINGI" Filipino system of selling basic goods
consume everyday.

The sales can be cash, barter or credit. I did not see any listahan on the wall or posts. That' s not the way my grandmother conducted her credit transactions. She got pieces of paper were the names of the customers were written. She may have been disoriented once in a while with regards time or day because of her age but she would never forget the faces of those people with "utang".

Related articles:

1. Reasons why small businesses fail Part 4.
2. Reasons Why small businesses fail part 3

3. Reasons for the Failure of Small businesses Part 2