Let's play the "Build a Business" game

[aticus]

If you had P100,000 to invest, what business would you start, how would you spend the P100,000, and what plans would you have for long and short-term profitability?

You are allowed to take out a non-collateralized loan of up to P200,000, at a fixed interest rate of 20% per annum for a maximum of 3 years. But this must be factored in any long-term profitability plan. Plus, at the end of 3 years, you must make a profit.


Some guide questions:

a) Would you take in partners? For what reasons? What roles do they play? How would profits be divided? Will it be more profitable to do so?

b) Would you use all the money? Would you save some of it, or invest some of it some kind of revenue-generating device? How would you manage your cash and other assets?

c) What about employees? How many? What salary, if ever, are you willing to pay?

d) What about rent? Do you need a stall or shop area? Where? What about other incidental costs like signage and other promotional materials?

e) What kind of business registration would you get? Corporation? Single-proprietarship? Partnership? Why?

Just wanted to get some like-minded folk thinking. Plus, this seems like something most of the business people here in PEx can do, in real life, so if we get something good going, we may even make money from all this. :)

And for the other PExers who aren't yet working, or who might want to start their own small businesses, this might be an excellent way to learn from the skills/knowledge of some of our more illustrious personages like Kuya Danny, zimdude and others.

The game is on.

[zimdude]

Hey it's great to be called illustrious... but I need to learn more financial skills, or even gain interest in it; it's a stumbling block for me mainly because it does not catch my fancy. I'm hard-headed when it comes to learning things that I don't enjoy.

Therefore, in this game I'd partner with some trusted PExers for finance, and sales and marketing; I can do the latter but more in an "evangelist" role rather than a product-pusher.

With P100,000 free I cannot put in capital expenses, or burn it on costly services (like Internet service) so my business would be more "an intellectual property" thing that would leverage my experience in the Internet industry and contacts made and forged in my career to date.

But then again, I've never invested my own money in a large business anyway :D

[bagyoboy]

This is very interesting, aticus.

Let's take the case of the business that I am running now. Its a trading company strong in product mix and in a promising market, but short of cash. Clickhere (http://www.companyontheweb.com/filsiam)
for more information.

a) My strength is in sales and marketing and my weakness is finance. I would partner with one strong in finance. Someone who can handle the money, and has contacts for financing. I will be based in BAguio, and he/she will be based in Manila. Profits will be divided based on capital outlay of each. Getting one partner with this strenth will probably be more profitable in the long run.

b) Right now, I would use the money to rent 100 sq. m. of warehouse space (in Subic: $7 per sq.m.). None would be left of the P100,000 if one-month advance and two months deposit is required. Duties and Taxes for the imported products: no need to lay out cash if its in a sort-of-a "bonded" warehouse. Duties an taxes are paid only when the goods are brought out of the warehouse. If I ask the customer to pay up-front first, then I would have the money to pay the duties and taxes.

c) Employees: just me and my partner. The warehouse has its own employees who will do the inventory. I hate staying in an office. 80% of my time I spend in the field. I operte with a mobile office.

d) Rent: P4,000 a month for an office in Baguio where I will be based; P10,000 pesos a month for an office in Manila where my partner will be based; P35,000 per month for 100 sq.m. warehouse space.

e) Business REgistration: Corporation. Good for further expansion and growth and protection from creditors. Mine is currently a general partnership.


In summary:
Initial Outlay:
Warehouse P105,000

Monthly Expenses:
Baguio Office Rental P5,000
Manila Office Rental P10,000
Warehouse Rental P35,000
Salaries P40,000
Transportation P40,000
Total P130,000

I wouldn't take the non-collateral loan until there are no partners interested.

The products are high-end and can be specified in design of industrial floors, tunnel linings. Dramix steel fibers, for example, have been used in Makro Store No. 5 in Tondo. (This can already be used as a reference project) Three more Makro's will be constructed next year, many other distribution warehouses, and airports where the product can be used. One mine can use 600 mt a year. More or less US$60 profit per mt.

Dramix has been used in San Roque Dam in Pangasinan and in Casecnan Dam in Pantabangan. All previous deals were "indent"(i.e., the customer deals with the manufacturer, and I earn commission). It would be better for the customer if the stock is already here in the Philippines.

Makro, for example, wouldn't want to order until I have the stuff on stock. The next project starts on January, so if anyone wants to partner with me, now is the time. :)

[Kaboom!]

Just some initial thoughts...

I definitely would invest it in something where I have core competence and something that I actually would be driven to do which makes it different for everyone already.

With an amount that small, single proprietorship is my preference since you'll have to find board members, register with the SEC and issue shares, have a higher maintaining balance in you current account, etc. if you incorporate.

I would take in partners who have something to bring to the table, whether it be connections, experience, or talent. It's also always better to have a "team" atmosphere when you start something from scratch so you can push each other in all situations.

If you can get away with a home-office at the start, do so but if having a "front" is important for the business, then you don't have a choice.

In terms of details as to exactly what kind of business, I would have to think about it some more cuz if I already knew, I'd probably be doing it already in real life. Again it was to be something I would enjoy doing.

Peace.

[aticus]

Great going so far, folks! :)

I realize that some of our plans may need more cash, but the reason I purposely made the amount that low is because I wanted even students and other PExers to realize you don't have to be a millionaire to build a viable business model.

zimdude, am waiting for further updates. Many people need to learn from your expertise, especially with I.T. start-ups. nix can also help a great deal here.

bagyoboy, excellent planning. I see you're already past the basic incubation stage for your business. Could you give me more details about this business of yours?

Kaboom! what business would you suggest? Are you also into this internet/computer revolution sort of thing? (You did help build up PEx, after all.) I'm sure that PEx didn't start with even a P100,000 budget.

Nice going. Could we keep it up?

[Kaboom!]

aticus:

Aside, from being an ABS-CBN talent, I also work for iAyala (Ayala Internet Venture Partners) part of the team who evaluates potential companies to invest in. Since Pinoyexchange is an investee of AIVP, I also handle the operations for the site. So it is part of my job to know something about this new economy.

I still don't have an idea as to what kind of business would be good but maybe "services" (kinda like what you're into with the consulting) might be something to get into especially with the rapid changes that go on nowadays.

Peace.

[KuyaDanny]

I'm watching this. Comments coming soon.

[nix]

Hmm ... I have been following this thread closely myself.

Let's try a practical case study: We own this URL, PocketPinoy.com, which we hope to translate into the wireless PinoyExchange. We currently have an existing business strategy for it, but quite frankly, although it is compelling, there still are some holes to it.

I won't be posting that strategy here just yet, for obvious reasons (there's nothing like it elsewhere, and there is a possibility of duplication), but my challenge is this -- if you owned PinoyExchange, and had the chance to do with it as you please, what would you do? Also, would you or would you not bring PEx to the cell phone and create PocketPinoy?

[aticus]

Frankly, I'm not so sold on the whole W@P revolution thingie right now. At last count, for example, I think Globe had less than 10% of 1% using Wap! (That comes out to less than 1,000 subscribers...) I'm not sure there's enough to justify the prolonged use of WAP for PExing... especially since you can write longer messages via Internet and stay much longer for a much cheaper rate.

I would instead focus my energies on developing instant messaging technology similar to AOL or ICQ. (This was suggested in a previous thread by one of the mods, I think...) THIS kind of thing might be worth looking into, especially since your BBS allows members to "see" each other at the bottom of the page. (Kinda like Diablo.Net) It might improve the frequency of visits for PExers because they now have a chance to directly chance with the people they meet in EBs without having to wait.

You can even host chat rooms with special guests. For instance, I've noticed how hot the Local and Foreign Issues forum has gotten lately. Why not a chat with Cory Aquino? Or even Chavit Singson? Don't you think that would be wildly popular. Heck, I can envision tons of people shifting over to PEx just for the chance to chat with some of the most prominent celebrities in the Philippines. I'd love to chat with Imelda, for instance, because I have SO many questions I'm prepared to ask her...

Got lots more where those came from. But all these would cost way more than P100,000 to develop.

[nix]

Actually, the cost would not really go beyond 100K, at least in terms of inviting the guest and setting up the chat infrastructure. As for the cell phone effort, I am not referring to WAP, but SMS or text messaging ...

Our problem with instant messaging is, we are not sure how this would affect the board per se. But we will definitely expand beyond being just a message board. When, and how exactly we will do that is not yet cast in stone.

Oh, and even if it costs more than 100K to develop, that's okay (for PEx purposes at least), not because we have a big cash hoard, but because we have the luxury of partnering with possible sponsors or business partners.

[aticus]

Isn't the problem with text messaging the fact that you lose your sense of anonymity on PEx? Now everyone will be able to get, say, Chiqui's cellphone number, and I would really hate for idiots like Memnocch to have access to that...

But just for the sake of illustration, could you break down the costs of the chat facility and invited guests thingie? I think other PExers would like to know what it takes to put up at least a portion of a working web-site. It doesn't have to be in exact figures...

[nix]

I am not really a tech person, but to develop the chat service itself would probably take just a little more than 100 man hours. The chat server would cost you 50 plus thousand for a basic PIII 700 machine with 256 MB memory. The bandwidth connection, hmm ... Migs would have a better idea there. But that's about it. 100K or less lang yan! Of course, marketing costs would depend on how you execute it.

[zimdude]

If you're starting, you can work with a ~P20,000 Celeron or an old P-II. The key is colocation with the mobile operator for "LAN" access to their SMS server.

My idea for mobile PEx is simply to register on the SMS server as your PEx nick and exchange messages without divulging the number, along with features like filtering that will be controlled on the Web. The server can have a block of numbers, say +63-917-999-xxxx which it will use to track active converstations so that you can reply to the text and it will be sent to the right place (ala ICQ 2000b).

You can notify the PEx SMS server that you're in a particular location/looking for a gimmick and the like such that you can coordinate setting up instant EB's and the like.

[nix]

Good idea Zimdude, in fact we were looking at a web to sms and vice versa type of interface.

[aticus]

Ok, let's get this thread back in gear...

How about a catering business? You could invest in catering equipment (heating pans, plates, utensils, ingredients...) and save some money by basing it at home. I'm not that familiar with all the mechanics, so if any of you know how, and know how lucrative it could be, your comments are welcome.

[zimdude]

I think most mom-and-pop catering outfits are home-based.

It's also more of word-of-mouth promotion, so you don't need sales and marketing.

Your equipment capital lasts for a long time and thus has small depreciation; it's really an "intellectual" or "skill" business where you transform your raw ingredients into party-quality meals.

In summary, catering is an experience business where you create experiences for the customers and add value on that.

[aticus]

Are there any other kinds of businesses like these that our fellow PExers could, perhaps, consider?

What about PEx students? Are there part-time, home-based businesses that they can get into (please, no MLM's...)?

[bagyoboy]

Originally posted by aticus
bagyoboy, excellent planning. I see you're already past the basic incubation stage for your business. Could you give me more details about this business of yours?


We "indent" products from foreign manufacturers to end-users here, which means: the end-users deal directly with the manufacturers and we earn commissions. Sometimes we import the stuff ourselves (if the customer pays up-front, or when the volume is small such that we can afford to buy it.) I'm an engineer by training, and we deal with mining, tunnelling and construction projects. This probably explains my weakness in the finance area. Besides providing the product, we also provide the technical support.

[zimdude]

New business ideas for the not-so-bright post-Erap economy?

Hmm I met someone at an org reunion who owns the "Nuts on Nuts" stalls. Too bad I haven't seen any yet.

[aticus]

I'm actually hoping some of our other friends post here too. :) I believe this thread has been very informative so far. Thanks again for "resurrecting" it, zim. :) Just watched the Mummy Returns last night, so the term seemed apropos. ;)

By the way, KD, I'm still waiting for your long-promised post. ;) How about investing this amount in any kind of financial instrument? Stocks? Bonds? What kind of returns are we looking at? How would someone set up a financial firm? What sort of expertise are we looking at? Would a Berkshire Hathaway type firm survive here in the Philippines?

:)

[guapa]

that catering business is good. capital is not big and operation is simple. but, you should have experience, talent and connections to be successful in this one. like if you are good in cooking and a lot of friends say that you're cooking is really good, then you have the talent and experience. if the business is too big for you to handle yourself, then you can hire as assistant cook or other cooks whom you can train with your cooking style.
connections is also important because this business is more of a 'word-of-mouth' thing too. but some advertising and marketing will help too.
im not in the food business but catering business was a dream business of mine when I was 18. but i still hope to realize this business someday too.

[guapa]

nix,having a chat service in your website to attract more visitors is a good idea. but, i don't think you have to spend so much just for that service. you can get a chat service from many companies in the US for FREE! i believe that one of the reasons why some dot.com businesses here in the Philippines failed (mine is doing well) because they spend so much for their services although they can have an option of not spending much but still provide such service.
When I was starting with my own dot.com business, i was also too ambitious like i want to buy my own BB and chat room service. but later on, i discovered that i can have them for FREE and still provide that same services to my visitors and i was still able to attract more visitors to my website.
during the last elections, i created a webiste coverage of the local elections (in our province) and i provided a vote on-line and bulletin board sevices too (i got them for free) and my election website really attracted so many visitors (mostly my provincemates from other countries) that my daily average hits of 8,000/day double during the 45 day publication! and yet, i never spent any single centavo, only my "intellectual property" but gain additional popularity and thousands of "thank you" e-mails from my province mates all over the world.
good luck to your plans anyway.