Posts Tagged ‘business favors’

A few months ago, a friend of mine requested if I could help her nephew (an undergrad student from an Ivy league school) with his business practicum project that he was becoming frustrated with. Their business practicum’s goal was to produce and sell as many “uniquely different” T-Shirts as possible and she requested if I could just help him out a bit and get him back on track.

When we met, I asked him what the problem was and he said “well you see, my team mates do not want to shell out the capital that the group needs to produce the T-Shirts”. So I asked him how much capital he needed.  He said, “Well, we need 200,000 pesos…” I raised my hands to stop him in mid sentence and said: “Whoa, back up there a little bit, 200,000? Why do you need that much money to produce and sell T-Shirts?”

“Well sir, because to ‘market test’ and produce the shirts, we’ll have to purchase the machine to print on the shirts…”, “Who said that?” I asked. “My adviser” he replied, “Does your adviser have a business?”  He said, “No, but she’s been teaching this course for a while now, and she says that in order to know if your business venture will make money, you must learn how to do a break even analysis, and to do that, you must know the costs…”

“Okay”…I said, “…now I understand why your team mates are not willing to put up the capital. Well for one, you are asking for P200,000 and two, because it is not necessary. Let’s simplify things for you, forget the costs of the machine for a while, how much is the cost of a plain non-printed T-Shirt?”

He grabbed several spreadsheet print outs from his bag  and began searching for the costs of the T-Shirts.  Five minutes later he still could not give me an answer and said “Sorry sir, to get the costs, I have to reverse-engineer the calculations that I did…”  Needless to say, I was a bit surprised to hear that he had to “reverse-engineer” anything to come up with the costs because in my mind, to know the price of a T-Shirt, you simply have to ask the price from the supplier of the T-Shirt. Apparently, he did not do that but instead was taught to calculate costs based on some sort of theoretical model.

After a few more minutes of waiting, I said “Okay please listen for a moment, I’m going to estimate right now that the price of a plain white shirt is about P100 give or take, so to get you and your team started, you don’t need P200,000. All you need to do is to buy maybe 10 shirts x P100 = P 1,000 then add the cost of printing of whatever design you have. So I’ll assume that printing the design will be another P100 give or take, so with these top of mind estimates your initial costs will be about P2,000, not P200,000.”

“But 10 shirts only, that’s pretty small isn’t it?” he asked. “Well I said, since you are ‘market testing’ the shirts, you just need samples of the shirts initially. Then what you do is to get pre-orders and get a down payment for those orders from your customers. You can also sell the shirts immediately and produce more of them after, based on demand.  Once you get the down payment, you can then purchase the materials (shirts) needed to produce and deliver the T-shirts.”

“But how do we go about producing the T-shirts when we don’t have the machine to produce it” he asked.  I then answered, “there is no need for you to buy the printing machine yourselves to produce it, doing so would be ridiculous because this is just a project for you. Also, we are no longer in the Industrial age where you have to produce everything yourself.   We are at an age of outsourcing jobs to avoid huge capital investments.  You can simply outsource the printing of the shirts to a company that does that.”

“But Sir, what about the design and price of the T-shirts? We were taught that we have to have a unique design and that we should price it very low so that we can sell a lot of shirts.” I responded “If you can come up with a unique design that people want, then I do not recommend that you price it low, in fact quite the opposite, you should price it at a premium because of its uniqueness.”

“Listen,” I said to the student, “Business is simple.  It need not be based on theoretical mathematical models, nor does it have to be over analyzed and over complicated.”

Even though this story just involves a college business practicum, the common misconceptions about business is just as true with most start up businesses. A lot of times, people feel that if they are doing something “sophisticated” or with big capital, or with common phrase clichés, that they are doing it right. The fact is, Business is not complicated at all.  Just find the simplest way to make a profit. If it is simple, trust me, it is right.

Authorbox:

Mark So is the Chairman and CEO of Businessmaker Academy and Forex Club Manila.  He regularly holds seminars on Business, Finance and Investments.  To read about past articles from the BIZMAKER column, you may visit www.markso.wordpress.com.  For more information about his seminars, you may contact Tel Nos. 6874445, 6874645, 6873416 or visit www.businessmaker-academy.com or www.zerocapitalclub.com

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Bizmaker1I was invited to talk to a public crowd in the Fil-Negosyo expo in SM Mega mall a few years ago about how to start and succeed in business. And I happened to mention in that talk what I believe to be the golden rule that any business person (or individual) should follow. Now this saying is as old as the bible itself as this is where it comes from:

“Do unto others what you want others to do unto you.”

Here’s a true story that will prove my point.

A few years back, I had partnered with a local IT Training company to bring in a foreign Software company into the Philippines. (I’m leaving the names out as you will see why in a bit). This was a 60/40 arrangement, I had 40% of the profits but I do not spend a dime. They agreed to have 60% of the profits but would shoulder all the financial requirements (How I did it will be a story for another article).  We needed an IT trainer who was knowledgeable and seasoned enough to head the training program. So I chanced upon the resume of this guy who stood out from the rest. He really wasn’t that senior and he didn’t have that much experience with the particular software but after I had a chance to talk to him, I knew he was the guy. I asked him how much his salary was at the IT company he was working for at that time, kept mental note of it then told him that I would get back to him within the week.

I pushed for him as the man for the job, negotiated a compensation package with the IT Training company and they agreed. Long story short, when I told him he was to report for his new role for head of technical training, the next Monday he was near tears as his income more than tripled.  I had helped him move up.

Soon after, the partnership became a success, project after project we were making good money, but after a year and a half, the IT company had re-organized and the new management had different plans. the partnership was dissolved and the guy that I helped had moved on. Well, at least it was good while it lasted I just said to myself.

Many months later, out of the blue, I get a phone call from an unknown number. I picked it up and wouldn’t you know it, it was him, the guy I helped hire. He was pirated by an even bigger company and wanted to thank me for what I did for him before, and there was one more thing, his Clients from the past wanted him to handle a specific IT training for them. He could easily do it by himself he said, but he just couldn’t do that to me and felt an obligation to bring business to my door.

I asked him how much the deal was and what he needed from me. He said, he’ll only take a small training fee and the rest of the profits will be mine. The deal was for P535,000 and he only took P50,000 for his teaching fees. The project was for next month he said, all I have to do is say yes to it and he would make the necessary arrangements. The project pushed through and several projects more, this time he had repaid me with the same (if not more) prosperity as I had provided him. This is called Reciprocity. And this is why I say in business, the golden rule is: Do unto others as you want others to do for you.

Now, how can you practice the art of Reciprocity in your everyday lives and not just in business? Well, in general, and if you have not yet done so, simply be nice to the people  around you – smile and they will smile back at you, frown and they will move away from you. Help them with something that they need help with without asking for anything in return. Keep doing it until it becomes a part of you and you will see what I mean.

In Business, like life, learn to give first truly and sincerely and somehow,  some way, some day you will receive something too.

Sidebar: Last week, the Philippines was hit by the worst flash flood in more than 40 years. Practice the principle of reciprocity not just in business but as Filipinos. Help those who need it and in turn you will be helped when you need it as well.