Search For Business

Chapter 3: Search For Business

Our search for business was very meticulous and long. We studied our options very carefully. We considered business like a car shop with parts and services, with internet cafe, and spa set-up. We also looked at franchising a gasoline station, a convenient store, a meat shop, and a fast-food.

We also toyed with the idea of converting our home to a spa styled specialty restaurant.

The successful business models we see are those that deal with distribution, a Business that has a system. Businesses that thrive are those that are of a One-Stop-Shop.

Manufacturers are no longer the king. I studied the business model the richest men in the Philippines. They have a one-stop-shop or a distribution. Take the case of Henry Sy. He owns SMDC, BDO, SM Malls and many allied businesses.

When he needs to build more malls, he gets the services to construct the mall from his own company SMDC. The funding he borrows from his own bank BDO. When the malls are completed the biggest renter is SM which he also owns. So his money just goes around his One-Stop-Shop.

I like to set up a business according to this one-stop shop model.

There are many business opportunities one can grab and be good at. Dean Pax Lapid; one of the great advisers in the Wealth Circle founded by Bro Bo, said that the best opportunities in business are those that are related to Changes in The  Environment or Climate Change, Innovation, Solving Someone’s Problems.

“To be successful, it must be better than just a copy”. Dean Pax also mentioned that “I learned from Kaplan Norton that we must be able to Describe, Measure or Manage, and multiply business to be successful.”

I also learned from Bro Bo that “What was remarkable before is no longer remarkable now. The price of wow keeps on rising. A good business is a business that focus on relationships. Relationships lasts... products don’t. “

We also ask ourselves, what is a business that can give us the freedom to travel, use our talents, passion, and purpose to generate income to support our needs, and earn for us passive income? This has been our guide in finding the right business for us.

Next thing we consider is how much investment do we have to risk and the return to investment we expect? Fely and I love to eat out and so the first thing we check out is food business. In this line of business, there is the food source, and the outlets for cooked food.

We have friends who went into franchised meat shops (food source- the initial part of the food business stream). In fact, there were several friends who had simultaneously put up in different locations a meat shop outlet.

Each outlet had more than 1M PHP of investment. My friend Nancy Martin and now my business partner in IMG also got into this franchised meat shop business.

There were five of them who were in the same department in Intel who became partners in this franchised business. Each one of them put in half a million pesos to put up two branches. After two years of not making money, one of the branches was closed down as it cannot compete with a market stall that sells meat at lower cost.

Their efforts to bring the business up were there. Nancy even had to spend more than 12 hours each day to check in the operations and controls of their outlets. But her efforts were not enough, to even generate the commensurate returns to her investments and time.

Another friend Zen (not her real name) got into restaurant business (cooked food outlet- the end point of the food business stream). Not knowing anything about the business, it took less than 6 months for her restaurant to close shop.

Why? Because she had no experience and she did not have a system to run her business. These are important factors in putting up a business.

Another friend Sue, who went into a franchised restaurant business, got a little luckier. But the franchised restaurant also closed shop in less than 3 years simply because her chosen location is not as accessible as other eateries in the area.

Their experience tells me that even if I like food, and food business is good to get into, I must ensure I have the passion and the competence about the business, and that location matters.

I actually tried this restaurant business in a small scale first. I had it in my home for convenience and to ensure I do not put up big money for capital. I had it run for several months and my clientele remained to be about 5-7 people. These same people ate lunch in our home-style cooking that after several weeks, they no longer get excited to eat at our place and they started to eat somewhere else.

You see my home is 4 km from the main road, and it is the only house in the area. Thus, my prospective clients are limited and my little business died. I learned the lesson of knowing my client base and putting a business in the right location first-hand.

Another business I studied was the gasoline station business. The capitalization runs to more than 5 Million PHP and the daily operational requirements runs to several hundreds of thousands to have decent returns.

I have three friends who went in this business, but their stories about their daily pressures, and the cash flow controls they personally exert tells me this business is so demanding that I won’t be able to enjoy having travels which Fely and I love to do. Today only one of them is thriving while the other two friends had all their gas stations closed shop. Besides this issue of high capitalization, the business owner in this line of business is actually owned by the business: a very "active" business venture. Moreover, fuels, and lubricants are not in my list of passion. What about the internet cafe with spa, car shop, car wash and part and service center?

I love cars. That is my passion and my competence. I also love computers. I love to interact with people. This business scheme is an entirely new concept of being almost all in one. I have already a by-line: "We take care and pamper you and your car" at the same time and place! I said to myself this will be our business. I can do this. It can earn for me income, I can use my talents. But the capitalization will be running also by the millions. Besides, I did not see any possibility of passive income generation. This business will demand from me my presence, and personal management and control. I do not want to risk our remaining retirement money on this venture.

I also checked out the internet business. I got a lot of friends who got into internet cafe business. In the early stages this business was very profitable. My friend Malvin Leano and now my business partner put up an internet shop in 2008. A portion of his retirement money went into putting up his internet computer shop. He was able to achieve about 30k PHP income per month in this business. But in 2010 he is earning less than this in spite of the fact he added more computers in his shop. And he sees his earning dwindling down further in this business in years to come in view of the many shops that have sprouted in their area.

Add to this, his operational cost keeps rising, and he has to beef up his security controls against theft, and vandalism.  

The business income is not permanent but in fact goes down on the long run. Furthermore, there is no passive income generation. He closed down the business in 2012.

This business of internet shop is just one of the components of the business I want to put up, and I already see major challenges, and huge investments.

This internet shop alone easily would need about half a million for the computers, and the rent. The operational expense will be the electricity, the salaries of the attendants, and the maintenance costs of computers. Add to these the security expense. If you combine this to what is needed for the car shop and the car parts, this will run to more than a million. The biggest consideration in this business is the location and the size of the property it has to be set up in. It is way above what I would risk in a business.

Another business I looked into is the Real Estate Business. Be a contactor to buy lots and build units. I have friends and family members who are successful in this endeavor. They thrive in this business and achieved great heights in it. They are able to build a lot of rental properties as well as properties for sale and I am happy for them. However, I still find it not aligned with my own passion and calling. Moreover, I don’t want to risk losing our entire retirement funds.

I also have friends who are very successful in Internet Marketing and Networking. They build big teams and earn big money but our hearts are not into either these line of passion. 

There were other business opportunities that I considered. These are food cart stalls, drug outlets, office supplies and copying services, remittance service and many others. I did not see how we can use our core gifts and competencies in these businesses. Food, car, and drug related business are good business and some people are successful in it. But I did not have that needed passion in any of these businesses.

So what is the business that is aligned to my competence, passion, and risk tolerance? The answer was actually not found on “what” business, but “why” we got into a business. The business we got into is a business we also need for ourselves.