Burst PDF Print E-mail
Monday, 01 September 2014 00:00

(Burst is an article written by business consultant/trainor and media columnist Monsi A. Serrano. Thru Pep Talk, he is sharing his business thoughts and advices to business people who are planning to expand their business.)

My client has a lot of money to expand and diversify his business both locally and globally. However, because of his aggressiveness, the inevitable is bound to happen --- his company is becoming chaotic. Many are starting to feel demoralized, corporate politics is becoming strong with the old-but-not-so-competent employees against the new-and-dynamic guns of the company. This unnecessary tension, if not stopped, may brew to a boiling point and lead the current situation of the company to peril.

For a multi-million conglomerate if not multi-billion, diving with one’s nose would be very painful. Never mind the failures along the way, because that’s part and parcel of doing business. But I am scared for those who might lose their jobs along the way, when the company starts to suffer financial losses due to over expansion.

There is nothing wrong with being aggressive and expanding when there are opportunities, but one has to be mindful of the readiness of the entire organization towards the right direction. Remember, you do not hatch an egg by hammering it. The simple cardinal rule is: “Don't bite off more than you can chew.” Do a reality check and SWOT (Strengths, Weaknesses, Opportunities and Threats) analysis within the organization. Do you have the right people who will lead the expansion? Do they have the right KSAV (knowledge, skills, attitudes and values)? Are the systems in place? These questions are very critical in considering to going global or at least, in aggressively expanding the business interests of a company. Never mind if there are so many opportunities that will be missed along the way, as long as you will not burst like the frog in Aesop’s fable. Don’t inflate the frog to the size of the ox.

Here are the things to do before you expand your business:

1)      Know yourself. This may sound elementary but this critical part is often neglected. Oftentimes, many business owners fall into this trap of looking too far too soon, without making a fair and real assessment of the organization. Do you have the right people to take the lead? Do you have the resources to fund the expansion? How much are you willing to put into the expansion program? Do you have the tracks to run on just in case you are not there to micro-manage the business? If not, then why expand.

2)      Know and understand the market. We have heard the 4Ps (product, price, promotion and place) of marketing. How will you fare against existing competition. If you are a new player, how will you handle the other brands that will come to the market to challenge you? Gone are the days when “The First to Market Advantage” works. This is already a thing of the past. Now, the “gaya-gaya, puto maya” is really prevalent in Philippine business. It’s an embedded trait in us Filipinos and the question is, are you ready for that? I mentioned know and understand the market. The former means, you identify your competitors, while the latter is to determine how they play the game in the market. Are they a fair player? What are their strategies? How deep is their pocket? How good are their people? After identifying these, it would be good to ask yourself, how will you make your move after knowing and understanding your competitor and the market? If you are new and unchallenged, the question is how will you protect your turf and maintain the market share. Prudence has a place in the business. We have seen and heard the pitfalls of other companies who forgot to consider all of these. Take the case of Uniwide. Back then, they were very strong in the retail industry, a force to reckon with so to speak. But with their eagerness to expand their business, they bought properties left and right hoping that they can make it as a cash cow to fund their expansion. But when the financial crisis hit Asia in the mid ’90s, it was too late for them to realize that they were not liquid anymore; that they should have maintained a certain “liquidity ratio” in order to have balance resources for the company. Because of this, they were forced to close some stores and others were sold until such a time that they burst in the market.

3)      Money Matters. This is what we always hear – money matters. Money or any resources for that matter when not utilized properly will go down the drain. Unless you are super rich --- capable of watching cash burn. A classical example is a brand new fruit flavored juice drink that placed TV ads on a news channel. This is a total waste of money. Perhaps, the people behind it do not fully understand what marketing mix is and who their target markets are. In school, our math teachers taught us, “any number you multiply by zero is equal to zero,” right? The same goes with this promotion. A news channel is definitely not the right avenue to sell fruit-flavored juice drinks. How much does it cost to produce a TV ad? How much is the airtime for TV? What is the viewership of the news channel? The TV zapping becomes a practice among the viewers. Why? Because nobody wants to see TV ads when a particular program is compelling or when the viewers are particularly interested in critical matters like the news. For this product that doesn’t need so much visual promotion, radio ads would be more viable and cost effective considering the broad reach of the listeners. True, at the end of the day it will be a battle of resources. But remember, resources are also limited. I don’t think any company would embark on the sky-is-the-limit resources. If they do, they are bound to go kaput and it’s just a matter of time.

Doing business and grabbing opportunities (or even the contrast of letting them go for the time being) are good. But one must always do it slowly but surely. Not too timid and not too aggressive either, especially if you know deep in your heart that there are some things needed to be fixed “internally”. When a building has a weak foundation, it is bound to crumble like the Leaning Tower of Pisa. Again, it’s just a matter of time.

As the Jewish saying goes, “The reason why people fail is not because they are weak, but because they thought they were strong.”

(Monsi Serrano is a business consultant and a media colleague being one of the Business and News Anchors of The Philippine Business and News Forum. He is also a special reporter and correspondent of Filipino Reporter one of the oldest Filipino newspapers based in New York, USA. He earned the moniker "The Business Guru" of the Philippines from the Philippine Franchise Association (PFA).

Currently, he is an appointed International Business Development Consultant for Asia Pacific Region by the Hamilton Business District Community, a non-government organization based in New Jersey, USA.

His business insights and outlook are featured in the Entrepreneur Magazine December 2002 issue on the section of "Marketing Tactics". He is also one of those who reviewed the book of Atty. Bong Belaro titled "Legal Forms for Entrepreneurs," which is available in bookstores nationwide. He is the founder of Metaopsis a business and management consultancy based in Manila. Visit www.metaopsisconsultancy.com to inquire about the trainings he conducts.)

Titus 3:14 (NIV) “Our people must learn to devote themselves to doing what is good, in order to provide for urgent needs and not live unproductive lives.”

By: Dante Corteza