Friday, April 30, 2004

Business Tips

Business Times p.B2
Friday, April 30, 2004

By Moje Ramos-Aquino
Business Tips

I’ll put the topic of cost cutting again on hold. I am not killing you with suspense. First you need to know where your funds are coming from and the costs of fund acquisition for you to really appreciate the expenses you incur in running your business and in building your bottom line.

Whether you are contemplating on going into business or you are already deep into it, please answer these questions first with either “frequently” or “occasionally” or “rarely.”

1. I have a long-term relationship with one bank.
2. I understand what my market niche wants.
3. I understand the financial aspects of my business.
4. I regularly contribute to a retirement plan.
5. I save at least 10% of my income each month.
6. I spend money prudently.
7. I pay off credit card debt each month.

Give yourself 3 points for each item you answered “frequently”, 2 points for “occasionally” and 1 point for each “rarely.” How will you finance your business?

If you scored 25-35 points, you have well-developed plans for financing your business and may just need to explore a few other areas. Prepare to transition from employee to entrepreneur.

If you scored 15-25 points, you need to develop a more realistic idea of how you will finance your business and work on this area. Don’t leave your present job yet.

If you scored 0-15 points, you need to concentrate on developing your finances before you even think of going into your own business. You need to secure your present job for sometime.

Starting up or running an enterprise requires more than just interest, talent and commitment. Obtaining financing is difficult especially if you are a novice entrepreneur without a proven track record.

Even your parents will probably raise their eyebrows if you so suddenly ask them for money for a business adventure. Why don’t you just join the family business? Why don’t you just get employed or be content with your current employment? Filipinos are generally raised and schooled to become employees. When you graduate from high school or technical school or college, you are job-ready, not business-oriented.

We encourage our talents to even get employed abroad for the dollar they will eventually remit, never mind the social cost. That is why we have job fairs for graduating students, but no enterprise fairs. Except when you come from a business-owner family, your parents would be proudest to see you join Philippine Airlines, Ayala Corp., Lopez Group of Companies, Citibank, The Manila Times, VCP Trading International, Vibrametrics or others. It is the fulfillment of their dreams. Then you can aspire to become a super, then a ‘ger or even vice president or, who knows, president! Then you can enjoy salaries and benefits such as car, medical, travel, housing, education and many others. So why do you want to worry about opening your business? Sakit ng ulo ‘yan. Walang kasiguraduhan.

Well, all these big companies that are successful now started as a small or medium companies. They all started with a single idea, a dream. They used their money—plus a lot of talent, passion, energy, hard work, risk-taking, persistence and innovation—to follow their dreams.

Your initial major concern is seed money or capital. The amount of money you need is relative. When you have lots of money you have many relatives. Now that you need money, you have no relatives. Sort of.

Immediately, you’ll need money while you are thinking about and preparing for your business. This is called Pre-Operating Capital. You’ll be paying for business registration, for licenses and franchise, for a lawyer to prepare your Department of Trade and Industry (DTI) and/or SEC registration, transportation, business permit, for a consultant, perhaps, to help you with your business plan, initial market research and feasibility study and others.

Then you need money for Capital Expenditures to buy or lease land and building; improve or build your own building; and buy or lease machines, equipment, furniture, fixtures. These are your big ticket expenses but they are sometimes one-time expenses that might even outlast your business.

Finally, you’re off and running. Unless you hit it big immediately like Go Nuts Donuts at the Fort, you’ll need Working Capital to help you make it through the first six months or so until you start earning your own keep and making profits, too. You have to buy raw materials, office supplies, pay your employees, pay for expenses like transportation, water, electricity, telephone, and many others that you will discover in the course of your operation.

Whew! Where do you get all that capital?

For your Start-up Capital, you need to draw mostly from your personal savings, or proceeds from the sale of your jewelry, car and other possessions or loans from your family, relatives and best friend which are usually interest-free and based on your emotional bank account with them.

Luckily, some businesses accommodate new entrepreneurs by way of low rent or shared office space and business services. They might even coach you on running a small company, provide you with small loans or help you acquire financing. These are incubators for new start up enterprises within a certain time limit after which you need to move your business out.

Otherwise, you can choose debt financing, loan which you repay to the lender with interest, or equity financing, money from an investor in return for a portion of your business, profits, and possibly, control of your company.

A good business idea begets money. You can seek the help of venture capitalist firms and “angels” or private investors who provide start-up money for new companies in exchange for part ownership of your company. You need to present to them a business idea that has the potential to grow quickly and provide a large return on their investment. Some would also want to take an active role in the development and management of your business until it becomes a viable model.

Of course you can always go to your favorite bank or other financial institutions, present a case for your business plan and offer an attractive collateral, e.g. your real estate property. Cooperatives and thrift banks offer micro financing or small loans without collateral.

Government agencies like the DTI assist small businesses with micro financing, too. These agencies also assist by way of providing opportunities for duty-free importation of capital and training equipment and tax credits on imported raw materials.

The type of financial assistance you take will depend on such factors as the type of business you want to start, your experience, and how much financing you already have. Your personal investment in your own venture will signal your commitment to the lender. Remember that nobody will lend you 100% of your capital requirements. Not even your parents.

Now that you are in business, you wouldn’t want to squander your hard-earned capital. You want to grow your business. One way of doing that is by controlling your costs.

ASTD 2004. Two important topics up for discussion the in ASTD International Conference and Exposition in Washington D.C. this May 23-27 are about getting centered. Stress is not the problem, says author Thomas Crum; the problem is how to balance the stress/relax responses of your autonomic nervous system. He describes one centering exercise to get you started toward achieving that balance. Likewise, Thomas Crum will present “A Journey to Center: Turning a Life of Work into a Work of Art.”

For details on ASTD 2004, please log on to and for travel plans, please call Ms. Grace Victoriano at 715-9332. Please use Delegation Code 10429860 to avail of big discount on your registration fee.

(Moje, president of Paradigms & Paradoxes Corp, assists entrepreneurs in planning and growing with business. Her email address is

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