Professional Documents
Culture Documents
Copyright 2015
Disclaimer
This book is intended for informational purposes only.
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Users of this guide are advised to do their own due diligence when it comes to
making business decisions and all information, products, and services that
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responsible for the success or failure of your business decisions relating to any
information presented in this book.
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Introduction
W HY AM I SHARING THESE M ISTAKES?
Before anything else, wed like to clarify why we are sharing these
common mistakes. Its definitely NOT to scare you or to discourage you from
aspiring to be an entrepreneur. In fact, we want you to succeed by being
aware of these mistakes so you can prepare yourself properly.
Most of the time, we find that the literatures about entrepreneurship
focus too much on the good things of being an entrepreneur. This time around,
we want to balance it out by sharing some of the things you need to watch out
for. Ok lang ba yun?
Again, our intention is not to scare you, but to prepare you for the exciting
journey ahead. These pitfalls can be avoided and we will share some quick tips
on what you can do to prevent each of them. What is important is that
you stay focused on your goal and believe that you can achieve it and be a
millionaire someday.
Kayang-kaya yan, tama ba?! :)
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ABOUT M E
Jerry Ilao is a Certified Public
Accountant (CPA) and Certified Internal
Auditor (CIA) by profession. His love for
business started when he was a kid, selling
old toys to his classmates. In college, he was
an academic scholar and despite his
financial
constraints,
he
graduated
Valedictorian and Magna Cum Laude of his
class in 1999, garnered the highest overall
grade of his Class and was selected as M ost
Outstanding JPIAn of the Philippines and
a finalist in the Top 10 M ost Outstanding
Students of the Philippines (TOSP).
After passing the CPA board exam, he
worked for Procter & Gamble (P&G) for 7
years. During this time, he tried to engage in
different part-time businesses. He started with a boutique, moved to a mobile
carwash, then after that, set up a weekend restaurant in Naga City (Bicol), his
hometown. But all of those businesses closed within a year of ope ration,
bringing with them his 5 years worth of personal savings worth P1M.
Still unfazed with his business failures and determined to eventually
succeed in business, he said to himself Pasasan ba at tatamaan ko rin yan!.
In 2005, he tried his luck with his 4th venture, an ink refilling business he
named Ink All-You-Can. It was during this time that he finally struck luck with
business. Filipinos loved the savings and quality they got from using the
products so the company quickly grew. From a home-based business, it
became a full-fledged operation within just one year.
In 2007, after 2 years of doing the business part-time, he became a
certified leapreneur when he finally took the leap of faith and resigned from
his corporate job to focus on his growing business. Ink All-You-Can was able
to penetrate the key SM Supermalls such as SM M all of Asia, SM M egamall,
SM North Edsa, SM Fairview, SM Southmall, etc. offering quality inks and
great service to its customers.
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ABOUT LEAPRENEUR
Ive already mentioned Leapreneur in the previous page but we havent
actually defined it yet. Afterall, its the websites name so it might be good to
know what it actually means.
Leapreneur is a word I personally coined from Leap of Faith and
Entrepreneur. You wont see it in the dictionary yet because I just invented it.
However, I do hope that someday, more people will use it and it will be included
in Wikipedia, as a word that originates from the Philippines.
The way I define Leapreneur is an employee who took the leap of faith to
become a full-time entrepreneur. So if you have a part-time business and are
still working as an employee, you are not a Leapreneur yet. You will only
become a certified Leapreneur once you have taken the leap already by
resigning from your job to become a full-time entrepreneur.
Most of the entrepreneurs I know are Leapreneurs. They started as
employees first where they gained experience, then after few years, they started
a part-time business before finally taking the leap as full-time entrepreneurs.
This is the path that I recommend because its safer, especially if you
have no background in business yet. Here are some of the key benefits of
becoming an employee first, before starting a business:
1.) You learn important skills and discipline that will be very helpful when
you start your own business.
2.) You can use your savings from your salary as capital for your business.
3.) You build a network while working for a company that will be a huge
advantage later on.
Unfortunately, despite being the preferred way of starting a business,
there is no specific guide for employees on how to really start a business. Most
books, trainings or seminars that are currently available are too generic that
dont really address the unique situation and needs of employees who want to
be entrepreneurs.
So this ebook is my own humble contribution in inspiring more
employees to become Leapreneurs.
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dahil
marunong
ka
maglaba, pwede
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ka
na
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the
risk
of
pilferage
is
very
real
here
in
the
Philippines. Ask any entrepreneur who have been in business for more than 3
years and he will have his own story to tell.
When your business is prone to pilferage, its very tempting for your
employees to take advantage, especially when they know that you have not set
up the appropriate controls yet or when they know that you have no idea yet
what the normal sales should be.
Some examples of businesses with high risk of pilferage or misdeclaration of sales are:
a.) Quick-service businesses like spas, barber shops, etc.
b.) Businesses with inventories that are hard to measure or count like ink
refilling, restaurants, fruit shakes, etc.
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c.) Businesses with inventories that is easily replaceable from other sources
like groceries, clothes from Divisoria, office supplies, etc.
d.) Businesses that dont normally issue Official Receipts.
It doesnt matter if you earn 20% from every product you sell. If your
employee pockets one (1) item, you need to sell 4 additional items just to pay
for the cost of the lost item. This is a very real threat, even if you treat your
employees well. I guess there will always be bad apples in a basket. I have
experienced it and my fellow entrepreneurs have all experienced it, one way or
another.
A friend of mine started a lugaw business. He was selling unli-lugaw for P15
only. It was supposed to be a profitable business because he said that the cost of
the lugaw was just P3.
During the first few weeks, sales were good. He was hitting his sales
objective so he was very happy. After the first month, sales began to decline.
When he asked his staff about it, his staff told him it was because fewer customers
come in, maybe due to sawa na or naumay na sa lugaw.
Since my friend was managing the business part-time and still has his fulltime job, he was not in his store during weekdays to monitor all the transactions.
However,the strange thing was, he noticed that every time he spent a day in the
store, sales would more than double.
Weeks past and the sales continued to decline, but improve every time my
friend was in the store. Later on, he found out that his staff was pocketing the
sales instead of declaring them. Due to the losses and frustration, he eventually
closed his lugaw business.
7 Deadly Mistakes of Aspiring Entrepreneurs
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I will share with you why I hate T-shirt business and why carts and
kiosks in malls are thriving more than ever. It's a lesson that I learned the hard
way.
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cash, which is the most important asset you have when you are just starting
out.
b. Additional expenses on storage and monitoring If you have to store the
inventory in a warehouse, thats an additional expense. Also, monitoring them
and doing inventory counts are necessary expenses.
c.
not hard enough, the risk of pilferage also increases dramatically as the
number of items increase. Some inventory might also become obsolete which
is an additional expense for you.
e.
Law of diminishing returns As you increase the items you sell, the profit
contribution from each additional item will continue to decrease. Selling more
items often results to minimal increase in your sales. Given all the costs of
managing inventory that we just discussed, you will reach a point where you
will stand to lose if you add more items.
If you analyze these factors, they are one of the reasons why carts (like
Siomai, French fries, or Corn) and kiosks in malls are thriving more than
ever. They just concentrate on one or few products, instead of selling a whole
lot of items. Because of this, they just need 4sqm or 6sqm, thus, their rental
is significantly cheaper than a full store. Do you agree?
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Lets say that you are considering two (2) business ideas.
Idea #1 is to sell printed T-shirts with your own designs. You have around
100 unique designs. Total projected monthly sales is P100,000.
Assuming 100 designs, you have to cater to different sizes like small,
medium, large, and X-large. So your 100 items are now 400 items and thats only
for mens sizes. If you also cater to women, thats a total of around 800 items.
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able to sell it at P400. Little did I know that I will not be able to sell my entire
inventory so I had to factor that cost ofunsold stocks. Moreoever, after few
months, laos na yung design so nobody wants to buy them anymore.
On the contrary, having a product that doesnt easily spoil, expire, or
goes out of style, lessens your headache. For example, my inks can last for 3
years so I can stock up without having to worry about products expiring.
To make things worse, they have more than 100 branches so forecasting the
sales of every single store is extra difficult. Once the product is scrapped, his
expenses are not only the cost of the product, but also the delivery expense to the
store, the retrieval cost back to the commissary, and the disposal of those
products. This is truly a very complicated business not meant for a first-time
entrepreneur.
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Next, I will share with you one of the most common mistakes of first-time
entrepreneurs
and
how
a global
company
with
Billion
Brands desperately failed in the Philippines with the very same mistake.
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Dollar
is
one
of
the
most
common
mistakes
of
first-time
entrepreneurs. They often look for a revolutionary product that will change the
world. They think that they always have to find an innovative product that
absolutely nobody is offering yet. Once they find something new and be the
first one to sell it, they think that money will just roll to the bank.
The fact is, its a little more complicated than that. It is a little tricky
because you want to avoid businesses with either no competitors, as well as
those with too many. An industry with no existing competitor means that it is
a new industry. While this is good because you dont have any competitors, it
also means that nobody knows about your product yet. So you will have to
spend more on education, marketing and building the industry.
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On the contrary, industries with too much competition are not advisable
because you will also have to spend more to build your own brand and become
known or to stand-out amidst the clutter. Some examples of these are Siomai
food carts, internet cafes, ink refilling stations, etc.
Either way, you will have to spend more. So you would like to be
somewhere in the middle, i.e. in an established industry with manageable
number of competitors and no clear market leader yet.
After more or less 2 years, the product was discontinued by P&G in 2001.
On hindsight, if they introduced it this year, when everyone is going organic and
very health-conscious, it would have been much more successful. Maybe it was 15
years ahead of its time and not even a giant company can save the product.
So think twice before committing to your goal of changing the world. Let
the Apples, Googles, and Facebooks of the world who have deep-pockets, do the
heavy-lifting. As for you, look for ideas that you can easily execute and sell fast
while learning your way as an entrepreneur.
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Up next, I will share with you the secret that I discovered when I started an ink
refilling business that most computer technicians back in 2005 had no idea
about. It could have spelled disaster in my company had I not discovered how
to fix it.
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Of course, you can always study the ins and outs of your product and
industry to catch up, though it may take some time. Just hope that your
competitors are complacent so you get enough leeway to catch up.
When I started an Ink Refilling & Continuous Ink System (CIS) business
back in 2005, I initially thought that it was an easy business because installing the
Continuous Ink System seemed pretty straightforward. Just to be sure, I used my
product first for two (2) months so that I knew exactly how it worked before offering
it to anyone. I heavily used my printer installed with the Ink System to print my
flyers and other marketing materials.
Then, one (1) month after, my printer suddenly stopped. It was not printing
or moving and just had a blinking red light. I was very afraid and thought that my
product damaged the printer. I then went to computer stores that sold ink and
talked to their technicians. Unfortunately, as I was describing the problem, I
sensed that they were clueless regarding the issue.
After much research, I discovered something that most technicians at that
time did not know. It turned out that printers have an internal counter of the
number of prints or inks used. When it reached a certain number, it would stop
printing unless you reset the counter inside the printer.
Since most people were using original inks that time, almost no one was
reaching the maximum count because inks were very expensive. In my case, I
used the printer heavily because my inks were very affordable. As a result, the
maximum count was reached. Thankfully, I was able to get hold of the software to
reset the counter and my printer was back again. Otherwise, I could not sell my
product without a solution to that problem.
Nowadays, a lot of people know about this counter and can even reset it on
their own. But ten (10) years ago, it was a trade secret that almost no one knew.
7 Deadly Mistakes of Aspiring Entrepreneurs
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Next, I will share with you why I would rather choose a business with 30,000
income to start with, rather than a stable business producing P50,000 income
for years.
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on. It is for this reason that franchising becomes a very attractive way of
replicating your business. Think about this. If you earn P30,000 for each
store but you have 100 franchisees, that easily means P3M per month! Thats
why its important that you also think about the opportunity to expand the
business later on, not just the potential income now.
Some businesses, however, are harder to replicate or scale than others,
especially if the business operation is heavily dependent on one person or the
circumstances of the business success cannot be replicated to other areas.
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For the last part of our eBook, I will share with you the sales strategy
implemented by the Telcos here in the Philippines and why you should never
fail to consider it in your business. I will also share with you simple tips on
how you can continue selling to the same customers so you can keep on
earning. :)
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I hope that you will not put to waste what you learned here. Change can
only happen if you execute what you learned. Its time to take action! Good
luck!
By the way, it doesnt stop here. As a FREE Member of the Leapreneur
Community, youll also get access to the Leapreneur Insights where I interview
successful entrepreneurs weekly to learn how they started and what tips they
can give to aspiring entrepreneurs. We will continue to share with you valuable
tips and insights as well as motivate you to follow your dream and take the leap.
Lastly, if you like this eBook, check out the full edition of the
Leapreneur How to Take the Leap from Employee to Entrepreneur and Im
sure youre going to learn a lot from it!
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