Wealth of Advice

By Francisco J. Colayco

By all accounts, 2010 promises to be a better year than 2009. Most economists see it as the beginning of an economic recovery although the recovery curve is not seen steep as have been in past periods of economic recovery. In other words, it will be better but do not expect anything dramatic. Interest rates will improve a little for those with money in fixed securities. Banks will be more eager to lend but will not really bring down interest rates that significantly. Inflation will still be low and single digit. For ordinary people, financial life will continue to be a struggle.

For those with an open mind, whatever the condition of the economy, opportunities abound for an “active income” entrepreneur. Goods and services that offer convenience to the buying public will always be in great demand. Most households today run on multiple income earners. Anything that will provide them time to devote for additional income or spend for much needed rest will have a ready market. Look for these opportunities right in your own communities. In particular, the election brings a lot of additional business opportunities in services and products to be used for the elections.

The entrepreneur must always focus on proper execution, meaning performing according to expectation. Unfortunately, though proper execution is essential, it is not enough. The further challenge is to execute within budget. Unless, capital is readily available, going for market share at all costs is not sustainable. There is no point in continuously producing at a loss particularly when capital is scarce. After this is achieved, the next biggest hurdle is being able to collect. Our markets, particularly the seasonal ones (e.g. Christmas or election-related businesses) are notoriously bad payors. Buyers here get away with not paying because there are just too many eager beavers to sell. Keep in mind that selling is not the same as doing business. Doing business means producing, selling and collecting at a profit year in and year out.

Cash generation and positive cash flow is the most important factor for success. This is particularly true for start-ups when the businesses still have no cash or asset reserves to draw from. Businesses, even when unprofitable in accounting terms, are able to survive for as long as cash flows are available to fund day-to-day expenses for production and sales. This is where the entrepreneur’s reputation as reliable and trustworthy comes into play. For example, getting your supplies on long credit terms and being able to collect sooner on your sales provide the best guarantee for survival and an eventual turn-around. The ability to ensure positive cash flow stems from real knowledge about the business, i.e., having a product or service that is regularly bought by a sufficiently large and paying market, and, the entrepreneur’s capability to maintain quality and price of his product.

For a “passive” income entrepreneur, there will be similar opportunities. I always encourage every Filipino to be a passive entrepreneur. Make your money work for you. You need to save but your savings that you do not grow may not be of great help to you. The opportunities in the past have always been limited for those with small savings. In 2010 however, we can look forward to options with less risk for as little as P500 savings for investment. We are working on making these financial products available to the growing small investors community of the One Wealthy Nation (OWN).

BONUS FOR FAMILY AND RELATIVES IN THE PHILIPPINES OF OFWS

Tell your family member/relative to visit us for a free Pisobilities Handbook. Good while supply lasts.

Colayco Foundation For Education Inc.

Address: Unit 805 8th Flr. Citystate Centre Condominium, 709 Shaw Boulevard, Pasig City

Telephone Nos. 63-2-637-3731,637-3741 and 631-4446.

 

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1. Income Earning
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3. Kapatiran sa Kasaganaan Service and Multi-Purpose Cooperative
4. How To Cut Budget
5. ADB upgrades the Philippines 2010 growth forecast

 

 

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