Coming together for small and medium business start-ups

After years of weak, patchy growth, a steady recovery has taken hold across the global economy. It’s been a long time since global business environment looked promising as it is today. Business firms should not ignore such opportunity.

Speaking of economic growth, Carl Schramm, head of America’s top entrepreneurial think tank, the Ewing Marion Kauffmann Foundation, offers this insight on what makes an economy grow. He said that based on their research, “growth correlates directly with start-ups that get big.” He called this the X factor behind America’s historical economic success – the spawning of more start-ups that later on became successful and big. When he mentioned start-ups, Schramm was talking of start-up companies that will launch a product, find a market, implement strategy and marketing plans, leading eventually to business growth over a given period of time.

Schramm’s position is rather similar to that of economist William Baumol’s take on what can spark growth in a capitalist system. Capitalism has its own flaws but it’s still the best system tha really works in enriching the lives of ordinar citizens ( look at China’s economic transformation when it adopted some features of capitalism into its economy) and from Baumol, he says the driving force behind the success of capitalism is the risk taker, the person willing to compete, and gamble time and money on an unproven idea. Going back to our models of such kind of local business risk taker are many who, in a different sense, may well be considered another group of Philippine economic heroes.

Certainly one of the most successful business stories in the country, Jollibee Foods Corp.’s tale is one nearly every entrepreneur wishes they could replicate. What Tony Tan Caktiong started as an ice cream parlor in 1978 (with a starting capital of R1.2M) has become the largest Filipino-owned brand in the fast food industry. Another outstanding role model is Mang Inasal’s founder and CEO, Edgar “Injap” Sia II. He opened the first Mang Inasal branch in December 2003 at Robinsons Place Iloilo. Now, Mang Inasal has more than 200 branches nationwide and has remained consistently profitable every year. Jollibee saw its huge potential and decided to acquire Mang Inasal at a substantial purchase price. For a young man who decisively went into the highly competitive fast food business and achieved tremendous success, “Injap” Sia fully deserved his recent TOYM award.

These two successful business personalities along with the likes of Glenn Yu (Seaoil), Jose Magsaysay & group (Potato Corner), Ted Ferrrer and Julien Belo (Generika) and many others didn’t allow themselves to be distracted by macro-economic worries; they just surfed the waves of new opportunities and business change. Perhaps, to them, everything in life is a possibility, and it’s just a matter of recognizing key opportunities to start their business initiatives.

In addition, what further defined these successful entrepreneurs was their ability to have that much confidence in their business goals. Despite different circumstances, they developed solid confidence that began with small, steady successes in localized settings, used the knowledge acquired, the contacts developed, and, above all, the optimism gained from those early achievements that helped them foster business growth on a broader scale.

That being the case, the thing to do now is to see to it that our country’s economic policies and funding mechanism be in place to encourage and inspire more would-be entrepreneurs to engage in business start-ups. The key priority is for our economy to grow continuously and eventually meet the mounting pressure of a growing population ( still one of the highest in the world ); both the government and private sector groups must therefore agressively promote and accelerate fiscal and monetary policies that will spawn more business start-ups. As Budget Secretary Ben Diokno put it, “the Philippines is now the fastest growing economy in the fastest growing region in the world.” After decades of subpar growth, the Philippine economy grew by an average rate of 6.2% from 2010 to 2015. In 2016, our growth rate of 6.9% was higher than that of China, Vietnam and other peer countries in the region.

With that in mind, would-be entrepreneurs should be reminded of the reality that the only way to prepare in a world of uncertainty is to stay as flexible as possible. One need not put all his eggs in one basket nor lock his businesses into rigid business plans. No need to catch the turning points. In the long run, a sensible, clear business growth plan will be fine.

Life, after all, is a dynamic process.

**** Atty. Billy Cortez is an independent board director at First Metro Investment Corporation (Metrobank Group). He was formerly FINEX president and chairman of the Capital Markets Development Council. abelardo.cortez7@gmail.com