chapter 6 thinking the sm es idea

The SMEs Idea Generation:

Should you start the SMEs or Not ?

Prof. (Dr.) Kao Kveng HongPh.D., D.Litt., D.Sc.

Chapter-8

Overview Topic

• Why need to start SMEs ? • How to estimate SMEs start up? • Decision to starting the SMEs?

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• ការគ្ប់គ្ងការងារ

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Basilisa’s compelling reasons to do business Enterprise:CRISIS + FAMILY SURVIVAL + FAMILY

College Drop-out’s compelling reasons:• Regain the trust of her parents• Prove her worth among her peers

Jay Aldeguer’s 5 compelling reasons:• Transforming idea into reality• Augment school allowance from parents

• Saw a gap in the souvenir industry• Help employees achieve their own

goals• Provide security for his children

Social Entrepreneurs

Rags2Riches• Poor women living in garbage dump in the

Philippines earning just 1,200 riels a day making rags from scrap cloth.

• 8 young professionals got together to help the women through good product designs and marketing the products.

• In 4 years, Rags2Riches has supported 400 women, recycled 510 tons of scrap cloth, and gave each woman income of $9 per day.

Sri Lanka: Tea Bag Manufacturer

RED PANDA EXPRESS FOOD KIOSK

Roland Hortaleza - SPLASH• Talking to customers Roland Hortaleza

found out there was steady demand for acetone and nail polish-removing solvents. With just $300 he repackaged acetone. When hair spray became “in” he developed his own product.• Today his company Splash is one of the

biggest personal care companies in the Philippines.

Roland Hortaleza - Splash Corp.

Bright ideas run the world. Can you imagine a world now without light bulbs, airplanes, cars, mobile phones, computers and Internet?

Bright ideas for business can be generated by Drivers of Business Opportunity:

1. Perspiration (Competence) – this driver of opportunity comes from your talents, skills or hobbies.

GJ and Maricel Jimenez

BANAPPLE• Started with sampling to friends and

officemates for free pies and cakes baked in their kitchen.

• Soon GJ, the husband was selling to friends and officemates and orders kept growing. He then resigned from his job to focus on the business.

• Established first bakeshop called Banapple in 2007. Today it has 9 branches and very successful.

Nicole Whisenhunt Started as a hobby making chain

necklaces in 2002.

Initially sold the necklaces to classmates in college. In 2009, started a company using new and better product designs.

Today, distributes the products in 18 locations including the Philippines, Singapore, Spain, New York, and Las Vegas.

Boni Comandante – Buhi Worldwide• Boni Comandante was amazed when

the fish he placed in an open cooler without water was still alive after several hours. He researched about this marvel and has since developed a technique that puts fish to sleep while being transported without water.• His method has become a big thing in

the live fish transportation market.

Boni Comandante - Buhi Worldwide

Nina Halos – Vital N• Nina Halos addressed the problem of

food shortage by developing the world’s first safe and bacteria-based biofertilizer, Vital N. It is environment-friendly, economical, and guarantees higher yield.• Her company Amichem Corporation is

the first biofertilizer manufacturer in the world.

Nina Halos – Amichem Corp.

Examples of Bright Ideas Turned to Business

• Water-refilling stations – although good filtration, iron pipes are dilapidated.• Bottled iced tea – alternative

to high-calorie soda drinks• Events organizer – suits busy

hosts who want hassle-free party.

Group Work

Write them now! It’s a start for your own Enterprises.

What are your bright ideas that you can turn into a product/service that will add value to your target end-user?

Focus now on which of these ideas you love to do and what you’re good at.

Franchise BusinessFranchise Business

Franchising in the Philippines

• started 1995, 1000 brands NOW• 1 billion pesos in taxes.• 90% success rate vs. 25% in

retailing industry• 1 million Filipinos employed

What is Niche Market ?

• A niche market: is the subset of the market on which a specific product is focused. The market niche defines the product features aimed at satisfying specific market needs, as well as the price range, production quality and the demographics that is intended to impact. It is also a small market segment. For example, sports channels like STAR Sports, ESPN, STAR Cricket, and Fox Sports target a niche of sports enthusiasts.

What’s a niche market?Advantage of niche market is you do not compete with existing players especially if you are just starting. No need to play the lowest price game just to attract customers.

• Restaurant in Luzon Shell Station

7 Steps for Defining Niche Market • 1. Make a wish list.With whom do you want to do business? Be as specific as you can. Identify the geographic range and the types of businesses or customers you want your business to target.• 2. Focus.Clarify what you want to sell, remembering that a) you can’t be all things to all people and b) smaller is bigger. Your niche isn't the same as the field in which you work. For example, a Identify the most important lessons you've learned in life.• 3. Describe the customer’s worldview.The best way to do this is to talk to prospective customers and identify their main concerns.• 4. Synthesize.• At this stage, your niche should begin to take shape as your ideas and the client’s needs and wants

coalesce to create something new. • 5. Evaluate.• Now it’s time to evaluate your proposed product or service against the five criteria in Step 4.

Perhaps you’ll find that the niche you had in mind requires more business travel than you’re ready for. That means it doesn’t fulfill one of the above criteria—it won’t take you where you want to go. So scrap it, and move on to the next idea.

• 6. Test.• Once you have a match between niche and product, test-market it. “Give people an opportunity

to buy your product or service—not just theoretically but actually putting it out there,” • 7. Go for it!• It’s time to implement your idea. For many entrepreneurs, this is the most difficult stage. But fear

not: If you did your homework, entering the market will be a calculated risk, not just a gamble.

Kenneth Cobonpue – Interior Crafts• After his studies, Kenneth returned home

to manage Interior Crafts, the family furniture design and manufacturing firm. Kenneth added his own style by combining modern design with natural fibers and materials as alternative to western design.• Today his clients include Angelina Jolie and

Brad Pitt and his creations were featured in the movie Ocean’s Thirteen.

Kenneth Cobonpue - Interior Crafts

Consultant - Naturalife Asia• Organic health supplements products 1. Single ingredient – one plant

2. Multiple ingredients – many plants

• Market: Persons vs. Companies

• Client company, AIMG, now biggest buyer of Naturalife Asia products in the whole world.

How to differentiate your Business SMEs?

MAGNIFYHow do you MAGNIFY something that is already in the market?• ADDING INGREDIENTS/MORE

VALUE – toothpaste with flouride• STRENGTHENING – doublestitched

denim pants• ENLARGING/THICKENING –

LCD TV

MINIFYHOW DO YOU MINIFY products that have been bought regularly?• MAKING SMALLER – thin mobile phones• REDUCING/SHORTENING/MAKING FASTER

– Fedex overnight delivery• Other ways to MINIFY – OMIT/LIGHTEN – Coke zero, Diet colas SPLIT UP – 2- door refrigerator/freezer

SUBSTITUTEHOW DO YOU SUBSTITUTE?USE ANOTHER INGREDIENT/MATERIAL – crown of softdrink bottle replaced corksUSE ANOTHER PROCESS – cook seafood balls in seafood broth not oil.THINK “WHO OR WHERE ELSE?” - outsourcing

S = P x Q x FSALES equals

PRICE x QUANTITY x FREQUENCY Mr. L – an affordable price in a steady quantity and on a regular frequencyProduct: hair clips, pins, combsPrice: $1.15 a piece (C market)Sales: $115 per dayStore: 100

How to Estimate the Market Volume ?

Tess Ngan Tian – LOTS’A PIZZASales EstimationDaily traffic count 5,000

X 0.03 (3%)Potential customers 150Average spending per X 3.39customer (in dollars)Estimated daily sales (dollars) 508.60Number of foodcarts in area ÷ 3LOTS’A PIZZA share of wallet $169.55

Should Start the Enterprises or not ?

Tess Ngan Tian – LOTS’A PIZZA

Happy Ongpauco and Allana Montelibano – Boutique Bed/Breakfast

• The two ladies put up The Boutique Bed and Breakfast, the first luxury bed and breakfast that offered ultimate personalized services, so personalized guests can choose room scents, etc.

• By giving discriminating customers what they wanted, Happy and Allana added value to their rooms and distinguished themselves from other hotels in Tagaytay.

Happy Ongpauco and Allana Montelibano - The Boutique

• Toothpaste 1: For parents who want whiter teeth and prevents decay to have a strong teeth in old age.• Toothpaste 2: With nice kiddie flavor and

colorful packing so for kids.• Toothpaste 3: Guarantees fresh breath so

for 2 young adults.

“FIT” THAT CUSTOMERS WERE LOOKING FOR IN RESTAURANT:

Shell Station in South Expressway

I first classified (segmented) who my Customers were:• Busy commuter transients traveling

along the local expressway.

• Middle-class neighborhood residents along the traverse of expressway.• Leisure/vacation travelers on the way

to the South Luzon provinces.

I then asked myself that if they are regular travelers, what are their needs?• Quick-service meal• Food on the Commute• Pambaon (school, vacation)• Pasalubong

Knowing my competition and what they’re offering, I took the challenge, why buy from me?• Fill hunger• Lessen anxiety• Save time and energy – too tired to cook• Convenience – gas and eat at one place• Comfort – cool and clean rest room• Curious – recommended• Save money – too expensive at the malls• A change – tired of usual fastfoods

Eventual FIT for restaurant is any or all of the following:

• Quick-service Filipino meal• Food ready to eat or

heat• Not fast food• Your kitchen away from

home

Barbecue• Dine- in• Snacks on the commute• Vacation foods/Kid’s foodTake-out meals• Hurried and tired commuting workers who

have no time to cook but still want to eat at home

• Gift for family/Food for vacation trip• School/ home breakfast meal

Does the PRODUCT FIT what my customers are looking for?