This short series of articles is related to expats earning a living in the Philippines. I am focusing on sales and marketing, because that is the area of my expertise… It is my trade, and it is where my education focused. I hope to pass on some of that knowledge to readers on this site. Sales, or marketing for that matter, despite what the textbooks might tell you, is not a science, but an art. There are no hard and fast laws or rules, but the influence of marketing is felt throughout the business world. It is my observation that many, if not most, expats who fail in trying to earn a living in the Philippines fail, in part, because they lack an understanding of basic sales and marketing principles. However you decide to earn a living here, you must always remember that without sales, you are not in business.
In graduate school, one of the biggest concepts to learn when developing business plans or sales and marketing plans is the concept of SWOT analysis. It is a mandatory section on every plan, and is as important as defining one’s goals in the business. Why? Quite simply, it forces one to think critically about the business, and how you will succeed, unencumbered by emotion or “feelings” one might have about a business idea or plan.
Entrepreneurs have a habit of falling in love with their ideas. Indeed, having faith in your ability is critical when starting a business. However, business does not run on faith. It MUST have sales. Every successful business in the Philippines started from a simple idea, whether that idea was Philippine Airlines or Mang Inasal, they all started small from one person’s idea. The purpose of SWOT is not to discourage dreams, but rather force the critical thinking necessary to develop a logical, feasible plan that will enable reaching one’s goals.
What is SWOT?
Strengths, Weaknesses, Opportunities, Threats
It involves breaking down the plan into manageable sections and addressing the real constraints that you will face. You take the different items you list under each section and determine the costs and the benefits of each action item.
To illustrate, let’s take a common example of starting a commercial piggery in the Philippines. The principles apply to any business, but this example is a start. We begin by breaking out the components of SWOT and asking, with a critical eye, “What are my strengths?”, and so on for each section.
- I raised pigs previously.
- My spouse’s family have raised pigs for many years.
- We have a plot of land ready to develop.
- The DTI has rural financing projects available for agricultural business.
- Quality meat is in demand in the local market.
- I can adequately finance an operation on a greater scale than local competitors.
- I have a friend in a University who can provide technical knowledge.
- I do not know the local buyers for my product (Pig dealers, slaughterhouses, etc.)
- I do not have contacts in the food / export market.
- We are susceptible to disease.
- How will we get our product to market? Where is our market? Manila? Local? Export?
- If export, can we meet health and quality standards required? Are we prepared?
- There is lots of local, established competition.
- We are susceptible to commodities price fluctuations.
- The cost of feed, fuel, and medication is rising.
- Raise organically and certify organic.
- Sell manure to local rice farmers as fertilizer.
- Raise specialized breeds, like Japanese black pork, for export.
- Offer “gourmet” cuts of meat (marinated, convenience packaging, etc.).
- Make “gourmet” sausages using other ingredients sourced locally (become part of the community)
- Hire staff locally and give incentives, such as profit sharing.
- Support local charity / government with food donations.
- Make soap from offal and waste.
- Employ a lechonero and sell locally for parties / special events.
- Establish a web site that targets OFWs, selling lechon and pork online for special events (birthdays, weddings, funerals), and delivered locally (entire Philippines), even though they are abroad, away from families.
- Opposition from other farmers may produce political / government problems. Avoid local competition.
- Adequate staffing may prove problematic.
- Competition will undercut prices / margins, while costs increase.
- Local corruption in building facilities.
- Complaints about the smell from neighbours.
- Difficulty of enforcing sanitation standards for export market.
- Lack of business expertise with the family.
After you identify all of the different points under each section, you then look at each item and decide how you will address the issue. With strengths, this is usually fairly easy: We all know our strengths. The difficulty arises in truly examining one’s weaknesses and realistically examining the threats. In particular, you need to plan on how you will address and face the threats to your business. So, using the example above:
- Avoiding local competition by not selling at the local palengke. Establish your own supply and distribution chain. Make certain that those in power locally support your efforts.
- Send staff for additional training. Be flexible with “time off” requests at local harvest times. Pay good wages, with incentives for production.
- Avoiding local competition addresses this issue, but larger operations have economies of scale that smaller operations cannot achieve. They cannot undercut you if you are too big.
- MUST have someone on site at all times who has a vested interest in having the business succeed.
- Maintain sanitation and plan facilities with prevailing winds, etc. in mind.
- Insist that inspections are carried out regularly and when required. Insist that sanitation standards are adhered to.
- Send family to DTI training or business classes. Do not listen to claims about operating a business.
Now, I’m not a pig farmer. Don’t want to be. There would be dozens of additional items under each heading were that my expertise and business. Yet, this short exercise gives you an example of the type of critical analysis to which I am referring. When you start looking at opportunities, the situation becomes even more complex. For example, in item number 3, where will you get the breeding stock? Can you raise the pigs to the requisite quality level? How will you do that?
This is why this type of planning is so critical in starting a business… Even more so when you are starting from experience that is in a foreign environment and starting in a region like the Philippines, so different and full of constraints.
Yes, it can be done, but you must plan, plan, plan… Execute… Refine… and plan some more.