WBW 44: No More Excuses! The Best Time to Start-up is Now! part 2 of 2 with Rudy Ang

“Kung gusto may paraan. Kung ayaw may dahilan.” This saying perfectly depicts how people tend to make excuses and look for the perfect scenario before undertaking an entrepreneurial opportunity. If one really wishes to make it happen, he or she really could make it happen and find ways to augment his or her weaknesses or shortcomings. In this part two of two, Rudy Ang shares with us his entrepreneurial researches, insights and tips on how and when to start a business, and teaches us these through different stories of startups - that it is mostly up to us to make our own opportunities and future.

Who is Rudy Ang?

Professor Rodolfo "Rudy" Ang has been a faculty member of the Ateneo de Manila University since 1991, holding a variety of adminstrative and teaching positions over the years. He is currently Dean of the John Gokongwei School of Management, a post he has held since 2003. Professor Ang is not only a teacher, but an active business practitioner as well, with entrepreneurial interests in the fast-food industry and small-scale commercial real estate development. His professional and research interests are in the area of business franchising and entrepreneurship.

Professor Ang is currently enrolled in the doctoral program of the University of the Philippins' College of Business Administration. He completed his Master of Business Administration at the Carroll Graduate School of Management of Boston College in 1988, graduating Class Valedictorian. He holds two undergraduate degrees, AB Communications, and BS Management (Honors program) from the Ateneo de Manila University, graduating with Magna Cum Laude honors.

He is a past President of the Jollibee Franchisees' Association (2007) as well as of the Alumni Association of Xavier School (2001-2003). He is currently a member of the Technical Panel for Business and Management Education of the Commission on Higher Education, or CHED, and a member of the Board of Trustees of Xavier School.

Show notes:

The fact is there is also serial entrepreneurship

• The reason why many entrepreneurs are serial entrepreneurs is because their first business usually fails, so they have to start a second one, and a third
• The reason why we know about them is because they went on to setup what was eventually their own successful business

Lack of contacts

• How many contacts do you really need?
• Do not underestimate the power of a good idea. You do not need to know anyone if you have a great idea. Once people know about your idea, they will come to you.
• Go out and meet people by joining business associations, alumni associations, fellowships and even attending wedding. Lets say you were at the same table as the architect who designed the house of the newlyweds. Architects and interior designers attend weddings all the time, and it is not because they are looking for free food, but the fact is that the friends of the bride and groom are eventual customers for them. The friends of the bride and groom are just married or about to get married and they are in that age range.
• Do not complain that you do not have enough contacts. It is well within your power to go out and meet people. Join organizations like the Jaycees, the rotary are other ways of meeting lots of people who can eventually become good contacts. Your high school friends, your college friends and classmates can also be very excellent contacts for you.

Lack of ideas

• Older people always say that they do not have any idea what kind of business to set up. Somehow, younger people don’t. When older people say that they do not have an idea, its more likely that they do not have an idea that is 100% sure to click or be successful. They do not have an idea that is absolutely sure that it will be incredibly successful, so its like he doesn’t have an idea.
• Young people never have such problems. In fact, if you are going to set up your own business, think of what you are most passionate about and look for a business there. Vince Padilla, when he looks for franchisees for Padi’s Point, he looks for people who like to drink. Why should it be important that you like to drink, if you want to invest in Padi’s Point?Other franchisers, as long as you have cash, they will allow you to open a franchise. Vince looks for people who like to drink, and he says that majority of the business is done at night. If you don’t like to drink, you are not going to stay at your outlet very late. By 9PM or 10PM, if things do not look good, you will go home and rest. You need someone who likes drinking and will stay late and enjoy drinking at his outlet into the wee hours of the night, providing the sort of hands on management that is important for a business that is in retail.
• You have to look for something you are passionate about. Not just a business with okay financials and looks like a good investment.
• A classmate of his in the US was very much into fish and had lots of aquariums. Some may have the same hobby, or some other hobby where your parents keep telling you that the hobby is worthless and that it’s a waste of money. This classmate, after graduating from business school, setup a business about fish. He did not setup a pet shop, but an aquarium business. When you go into these high rise buildings, usually in the lobby there is a big painting or mural. After the awhile, the painting or mural looks the same, you don’t even notice it anymore because you are so used to it. This classmate would make a pitch to big buildings – instead of a painting or mural, why not setup a big aquarium in the lobby? The tropical fish swimming around provides movement and color that a painting cannot provide. The business was not selling aquariums, but maintaining aquariums. The aquariums were sold really cheap so that the company will have no problem deciding on to invest in it, even if a loss was incurred. Once the aquarium was setup in the lobby, they would pay him a monthly fee to maintain the aquarium. For every aquarium that was installed, it would mean another monthly addition to his cash stream.  He cannot think about just selling aquariums. How many buildings can he sell aquariums to? The business model was about maintaining the aquariums and he was highly successful at that.
• Look for ideas; don’t wait for the idea to come and hit you on the head. You need initiative. Attend trade shows. Attend franchising expos. Go out and look for ideas.

Fear

• Here is the hardest thing to overcome. I’m already stable, making one hundred thousand pesos a month at so and so multinational company, my kids are in private school, I have 2 maids, a driver, a car, I’m happy as a clam. My secret desire is my own business but it is scary.
• Start young, when your responsibilities are few. A lot of young people want to get experience then setup a business when they get older, but when you get older, what actually happens is your obstacles to setting up a business are higher. The worst that can happen is that you continue living in your parents home, which you are doing now anyway.
• There are many strategies for lowering risk. A lot of what he does is food quick service / restaurant management. He gets franchises. He gets an honest assessment of what he can and cannot do. He teaches full time. Franchising works for him because he can rely on the head office for support. The amount of time and energy on his part is reduced by the fact that he has a good franchiser to support him
• He cannot do startup. He does not have the time, energy or creativity perhaps to set up a new business. To franchise was something he chose to do
• How does he diversity his business risk? First is, his strategies include opening a lot of small stores rather than a single big store. For instance, its costs 15-20 million to setup a Jollibee outlet. It costs 8 million to set up a Red Ribbon outlet. For the amount of money it would cost to setup Jollibee, he would setup 3 Red Ribbons.  If the single store of Jollibee loses money, there goes your capital. But if we decided to go with three Red Ribbon outlets, you would have to be very unlucky for all three to be in bad locations
• Second would be by to diversify by getting partnerships in different fields. In the quick service restaurant, they get franchises of different brands. What sometimes happens is that when some brands are down, the other brand is up, so it diversifies the risk a little.
• Lastly, there is also diversifying geographic risk. His first store was in Marikina. Because it did well, he opened up to five stores, all in Marikina. After typhoon Ondoy, it was great that none of his employees were hurt. But if he thought about what happened to the stores, it would be depressing. Four out of five stores went underwater. All the equipment totally destroyed with head high floodwaters. He will not longer put all his eggs in the same geographic basket. He needs to diversify by choosing locations that are far apart. God forbid that his choices should be Pasig, Cainta, Marikina and Montalban.
• The other type of diversification is that of financial risk. Starting out, they did not have any money really so they got a lot of partners. They had the opportunity to get a franchise of a food outlet. His classmates attitude what they did not want to get in because of the large amount of capital required. His own attitude was he did not have enough money but he will be able to get funds. He got lots of partners. Even if he could afford to set up a store himself right now, he would not. He would prefer to own 10% of 10 stores rather than 100% of one store.
• If you are afraid, there are many ways of diversifying risk. It does not have to be the case of putting all your eggs in one basket.
• Test the waters. Do it part time before you actually take the plunge. A lot of people do this. An example would be Mr. Rogelio S. Nemeño. He started with blenders in the cafeteria. He would visit it during his breaks and after work he would collect the money. When it got bigger, he got into 2-4 cafeterias. At some point, he said this business would work already. He is ready to resign from his business. You can always take it a little at a time.
• Always have an exit strategy. In the worst case scenario, what is the worst that could happen? Do not put everything into business. If you are seventy years old and you have retired and you have all this retirement pay, he would not advice entrepreneurship. Because if you invest it all in one business and you lost it all of it, there is no exit strategy for you.
• A lot of people are not entrepreneurs for a variety of reasons but always have all these excuses. If you really want to be an entrepreneur, stop saying “I’ll do this when”, “I’ll do this 10 years from now”, “I’ll do this eventually”. Do it now. No more excuses. Go for it and pursue your dreams, because you owe it to yourself to pursue it. You have talents and resources available to you that you may not be aware of.  And this country needs more entrepreneurs. Go forth and pursue your dream.

Click here for WBW 44: No More Excuses! The Best Time to Start-up is Now! part 1 of 2 with Rudy Ang