Reasons why small businesses fail 4

Having been in business and a business consultant myself, I feel that publishing the small businesses that an OFW may engage into is not enough. The manuals and the articles do not discuss the whole shebang of putting all your hard earned money in a business that spells SUCCESS. Although there is no such thing as guarantee in getting into business, the risk of loss is minimized when there is adequate planning before the first peso saved rolls out from the pocket. 1. Verifiying if there is really a market demand or demand is not yet fully satisfied--in short the market is not yet saturated. You do not need to hire someone to conduct a survey. For example, you like to put up a beauty parlor. Easy. Wear your walking shoes, start from the point where you plan to open the business, count the number of beauty parlors that you can find within the next few kilometers. Same with fastfood or restaurants eateries, not unless it is located in a food court in a mall. But even then, the kind of food served in that location where you compete with a lot of food stalls will make you stand out from the rest. If you see that beauty parlors are more in number than the street blocks that you have passed by, forget the business. Not because your relative can cook and or you learned the " how tos" in some seminars or manual, you can already put up a sign and say welcome to my business. That's dealing only with one aspect, the technical. The market demand is the most important factor in considering a business. Not because, you have some hobby that makes your friendslashrecepientslash of the custom made or handmade stuff as gifts encourage you to start producing in quantities, you will already start arranging for a loan. Honey, try looking at your products and your friends. Are they only patronizing you, then keep the gifts in their closets --never used or displayed. Were your gifts recycled like the fruit cake that goes around the neighborhood or offices that if you're lucky, you get it back in a different cute wrapper? There may be success stories about how hobby turned into multi-million business but the writers may have omitted the part where the successful business owners learned the nuts and bolts of the businesses the hard way before they saw their "bottomlines" with profits. 2. Starting a business without adequate capital Okay so there is a market. Allelujah. So you dance the dance of joy and start registering the business, getting the place and buying the equipment and other fixed assets. Honey, the word CAPITAL does not refer to the size of the letters or the fonts used in writing. In business, there are three kinds of capital that you need. Kung baga, magkakamag-anak sila. Fixed Assets Capital- Does your business need big capital outlay before you can even open your door to start the business ? Does you business need some special equipment like oven, stoves, kitchen utensils, tables, chairs and other minor machines to operate a restaurant? Does your business need a lot of chairs, computers, need renovations for the rented office or place to operate an internet cafe ? Inventory Capital- Does your business require you to stock up some inventories of the products to be processed or sold or to be used in the day-to-day operation? You can not start a beauty parlor with just one color of nail polish or one bottle of nail polish remover. Iirapan ka ng beauty counsellors ninyo or ni Parloristang si Tanya aka Tonio. You cannot start a boutique with all goods that are on a consignment basis. Working Capital- This is the capital that "works" for you while you are waiting for the revenues to be adequate to roll over. Salaries for employee if you have one, rental payment, utilities, replenishment of inventory stocks, transportation and other unexpected expenses. Dapat mahaba ito as in if you estimate that the business will pick up only after six months, then your working capital should be more than six months. Ganiyan dapat kalalim ang bulsa ninyo. We had this experience in the business that we put up here in the US. Our fixed assets capital were merely office desks and chairs and a reliable phone system. What we did not expect was that in a matter of days, we were able to deploy nurses in hospitals. After a week, they need to receive their paychecks. That's industry practice. Violate that and you will see them moving to another registry. The hospitals and nursing homes pay only after six weeks. Others issue their checks more than six months especially of it is a hospital system where the parent company is in another state. The bank would like to see our profit and loss. Actual not the projected one. So what did we do? I include that in my discussion of tapping sources of capital. Related articles: 1. Reasons Why small businesses fail part 3 2. Reasons for the Failure of Small businesses Part 2 3. Reasons why small businesses fail Part 1 Business,marketing,Entrepreneur,Entrepreneurship,consignment

Reasons why small businesses fail part 3

This is the continuation of the discussion of causes of failure of businesses put up by OFW/OF. 2. Poor inventory management This pertains to businesses that stock inventories. Even service businesses like restaurants, beauty parlors and motor shops carry inventories of supplies. They say that restaurants or anything about food is "tubong lugaw"( porridge) . Yes, you're going to eat nothing but porridge when your business goes bankrupt because of poor inventory management. Are you aware that there may be people in your business who's doing their grocery shopping in your restaurant's food storage? This is what we call pilferage. And how do they do it when you got your security or they are being checked before they leave the premises? The easiest way to bring the items out is thru the trash can. The dressed chicken or kilos of prime beef or pork are wrapped in thick waterproofed plastic and then put in the trash cans. The pilferers do not operate alone. Another individual or individuals retrieved the pilfered goods from the trash bins. They know the shedule of garbage disposal. Then they sell these to small rstaurants or to public market stall holders who sell them in chop-chop. The easiest to pilfer are the beauty parlor supplies. The owner cannot exactly monitor the consumption of the acetone, the nail polish and the cotton swabs. I remember the conversation of a friend with her sister working in a big-time beauty parlor. She said that she had an appointment the following and she did not have time to go to the parlor for retouch of her manicure, so if the sister could please bring the color that she needed. Pilferage does not only happen in big businesses. Office supplies are the common items which are easily taken home by employees.Ouch does it hurt? In the grocery store where I do my food shopping, I noticed an employee dropping some good fruits in a cart full of soiled vegetables as he went about restocking the vegetable and fruit sections. Last Friday, I noticed that the exit going to the back side of the grocery was padlocked. There is just one exit open for customers and employees. One of the experiences I had when I was an auditor was the discovery how new unauthorized copies of books were sold in small second hand books at a price of used books. The employees were subjected to body search. Both men and women and yet the pilferage problem never abated. The books were being taken out chapter by chapter. Then they were compiled, bound and sold without the signature of the author. Inside the printing room, parts of a book were just lying down in every corner because no one suspected that these could be put together as long as they know the sequence of the pages. Related articles: 1. Reasons for the Failure of Small businesses Part 2 2. Reasons why small businesses fail Part 1 3. Reasons why small businesses fail Part 4. Business,marketing,Entrepreneur,Entrepreneurship,pilferage

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. 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. Read more »

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 Business,marketing,Entrepreneur,Entrepreneurship, marketing strategy,pricing