Growth strategies for small entrepreneurs

I am the eternal optimist. The latest reason is my third, and newest, grandchild, Emiliana Consuelo Concepcion Puno; Millie for short. It will have been a year and a month since my dad passed, so it’s a kind of poignant reminder of life’s renewal. Having a growing family needs faith in the future, and now I have more reasons.

Another reason is the increasing number of entrepreneurs seeking mentorship at our Go Negosyo events. I personally mentor during Go Negosyo events; it gives me a chance to get a feel of trends and the mood on the ground.

One young lady I mentored during our 3M on Wheels run in Cavite runs a 25-square meter kiosk in a small community mall where she rakes in seven-figure sales each month. What I found remarkable about this young entrepreneur was her understanding of what makes her product appealing.

Her cookies are baked on site. She purposely chose an open-air space so she can bake there and advertise her cookies through their freshly baked smell. She follows it up with attractive packaging, and then makes sure that her cookies deliver the taste that was promised by their sight and smell.

It’s no wonder she ROI’ed in as short as six months. She is looking at opening more stores, but is understandably cautious. Expanding a business is a balancing act. Move too fast and you risk burning through your capital; move too slow and someone is bound to take your idea and run with it. Nevertheless, I told her that she has to move and expand.

From what I observed, she will not have a hard time borrowing from the banks because she’s already proven that she can have ROI in as short as six months. Her positive cash flow (plus a loan from the banks) will allow her to open (and own) about 10 stores, at which time she can open more stores or start franchising. By then, she will need three or four trusted field supervisors to help in the expansion and ensure that quality is maintained across all stores.

Maintaining quality is crucial at this delicate stage of a brand. She already poured so much effort into branding that it would be a shame if she were to lose customers because of inconsistent quality. This is especially important because her product is expensive. I suggested that she put her stores in the high-end malls, but develop a line to capture the lower end of the market.

Many entrepreneurs are hesitant about franchising because it requires some trust. That’s why I advised this young entrepreneur to get help from professional groups like the Philippine Franchise Association because her problems have been solved before. But before anything else, I advised her to register her brand to counter copycats, who I am sure will jump at the opportunity to piggyback on her hard-earned success. I have found that having 20 to 30 stores can be unwieldy for single-proprietorship arrangements so it’s best to have that second act in the business, involve trusting other people.

The problem of another small entrepreneur I mentored was that her chicken pao business is not growing fast enough, considering she’s been at it for four years now. After talking to her, I found out that she experimented with offering several items on her menu instead of focusing on her best-selling chicken pao. The product had already found its niche with people who want a healthy, convenient snack. I told her to believe in her product and stick to what she’s good at. Having different products on the menu will only eat into her capital and become wastage. Focusing on one product will let her resist the temptation of grabbing at any market all at once. At this stage of her business, she can afford only small mistakes.

I advised her to first aim for volume and then open one mall-based store, kiosk or cart. This gives her visibility and an opportunity for market research. From what I see, she will not need much capital if she sticks to her core product. I assured her that malls have programs that support small entrepreneurs like her. New kiosks keep things fresh and interesting for mall visitors, and can even become anchor attractions if they click. Anything is possible.

She told me that she has always wanted to try a mall-based outlet but is spooked by the horror stories of other small entrepreneurs who failed. I admit, it’s always a risk, but this is where positive reinforcement comes in. You learn from other people’s mistakes but you must refuse to be paralyzed by their experiences. Entrepreneurship requires some risk and that’s a fact.

Focus applies not only to the food business. I mentored entrepreneurs in the appliance repair business and they face the same temptation. They want to service multiple brands because they want to help customers. I understand: sayang naman the customer, if only we can repair several brands.

But from a business standpoint, servicing multiple brands takes more effort and capital to maintain several SKUs of parts. It makes better business sense to service only the top three brands because there are more of these out there that are potentially up for repair. This also helps maintain quality service and eventually, opens the possibility of becoming an authorized service center.

From the mentees I’ve coached, I advise them to keep learning. Keep coming to organized events because this is how you meet people and create networks. I also encouraged them to balance their learning diet and get perspective. If you’re a woman, familiarize yourself with issues facing female entrepreneurs. Even if you’re not in the tourism business, listen to entrepreneurs in the travel sector and maybe discover a hidden market for your products or services. If you’ve never explored content creation, expand your knowledge by listening to the digital-savvy generation. Even industry discussions that appear to be high-level have nuggets of wisdom to offer. Stay open, keep learning and remain optimistic.

Source: Go Negosyo - www.philstar.com