Red Tape hampers One Archer's Place deal

It has been more than a month since I last talked about our investment in One Archer's Place. In my previous post, One Archer's Place or OAP is a realty investment that I made with a group of friends from High School. We went to investing in the project to rent it out to students or sell it to another buyer.



Before I proceed I would like to clear up a few details. I am investing in 3 units in OAP with 2 different groups. Lets call the first group EBSG (Earl's Business Support Group) and ZRO (my high school barkada). With EBSG, I have part ownership of 2 units in OAP. I have a part ownership of the last unit with ZRO.



The problem I'm having now is that the ZRO unit is not yet set unlike the EBSG units where we are already paying our monthly ammortizations. Gregory How and I are supposed to take a loan from the Philippine National Bank (PNB) and we expected that we will be able to get it in time to turn the money over to Eton Properties (OAP developer) but there were some guidelines and difficulties about our loan which hasn't been resolved yet.



First off, PNB didn't want to issue us the loan because my business (kendoughmagic Kaffei) is only less than a year old. They require that it should be 2 years or older. They suggested that we should change the name of the property to Gregory How (friend/co-investor), because his business is stable and has been in operation for years. Greg manages his family business GlobeCare, they dispose industrial waste the safe and environmentally friendly way. I thought it would be that easy but apparently Eton doesn't allow a change of name of the property unless it was a relative of mine. They wanted to know if we can make Greg the guarantor instead of changing the name of ownership of the property. Guess what?! the Bank will only allow Greg to be my guarantor if he was a relative of mine. I mean this has become really ridiculous. What if I was the only one in my family? hahaha the Funny part is we can payoff the loan because we're 6 in the group.

We'll have to see what happens next but definitely this situation is unbelievable. For the Banking Institutes that gives their customers this much of a hassle have to take a lesson or two about Customer Service. hahahaha

MomPreneurs

Today we celebrate the greatest women of our lives, our mothers. Happy Mother's Day to everyone and I hope we can all take the time to appreciate the things that our moms have provided us. And as a tribute to all our mothers, we will be discussing MomPreneurs.

Well the day and age has finally come where boundaries between men and women has finally come crashing down. Women are free to pursue their careers, they enter the corporate world and give the guys a run for their money. They're out to prove who is the better sex and in my opinion, the women are the better sex. hahaha

There are more moms who are venturing out into doing business because 1. prices are getting higher and the husband's salary stays the same or is getting smaller. 2. monthly child care and expenses and 3. I think their getting bored of just cleaning after the kids hahahaha

according to Ellen H. Parlapiano and Patricia Cobe, the authors of MompreneursOnline.com, Running a business is a lot like raising a family. You have to be well organized, disciplined, nurturing, good at relationship building, and able to shift gears quickly. And these are skills that mothers use everyday—which is why moms make such great entrepreneurs. But these skills alone are not enough to bring in a successful business.

Here is an article about 10 steps to starting up and it covers more or less the basics for a starting mompreneur.

again to all the moms out there in the world. Your children loves you (even if we sometimes forget to show it). Happy mother's day

Good Learning ang Listening Attitude

Yo Kenny,
Your blog is highly entertaining and informative.The thing is, can you please switch the position of the pictures... i.e. your iced tea picture--it's in landscape mode, can you at least make it portrait mode. It's kinda hard to tilt your head and view the pic and read again. (OK will change the picture hahaha) You know? ergonomics.Secondly.... May alam ka bang business seminar na pwede kong i-attend? :) I'd like to know more about entrep and marketing. :)
May 8, 2008 10:03 AM



The comment above is from Mitzi Alojipan, a very close friend from college. Her family is very nice and I consider them as family. Mitzi, base on our conversations, is trying to change her mindset of being an employee to being an entrepreneur and I am more than happy to help. Ladies and gentlemen we will have a convert by the end of this entry hahaha.


Mitzi was asking if I know or recommend any business or marketing seminars that she can attend. Well there are a lot of business seminars out there if you really look hard enough. But most of them are created to sell you stuff. Like "free seminar on soap making" but buy your raw materials from me - hahaha. Start your own perfume business and be like every shop corner fragrance store you see in the mall. If you are interested in starting those kind of business, go ahead attend as much as you want to learn the technical stuff but they wont teach you the "HOW" to earn money part.

I am currently attending an informal seminar by Tim Bennett of Millionaire's Anonymous (MA). I've mentioned Tim before in my previous blog Race to 1 Million pesos. Tim is a British national but has lived in the Philippines for so long that he considers this his home, . And the only goal of his company MA is to create 1000 filipino millionaires in 5 years. That is his goal! His seminar sessions used to be free but he realized everyone who wishes to be a millionaire should invest in what he or she is doing to reach that goal, so now he is charging a 200 peso door charge on his weekly seminars in Makati. Not a bad investment in learning from an actual Millionaire!
If you are interested to attend his sessions it is every tuesday night at the 7th foor of Radisons bldg. in Aguirre St. Makati (just behind AIM). If you have anymore questions about the seminar you can ask me directly... send me an email klao8@yahoo.com or kendoughmagic@gmail.com I will gladly answer anything.

Another good seminar that I personally want to attend is Josiah Go's Blue Ocean Strategy Seminar. As I recall, I think it's a 2 day seminar worth 13 thousand pesos. Pretty expensive for someone who is just starting in the business and quite short on funds. I suggest that you just buy his book because it is more apt in the Philippine setting. For those of you who don't know what the Blue Ocean Strategy is, it is a marketing strategy where we should try to create a product or a service that does not fall under the red ocean (competitive market; price wars; similar products etc) and sail in the blue ocean ( creating a market of your own, not affected by price wars and being pioneers)

Here are just 2 seminars that I highly recommend but there are still a lot out there like the seminars conducted by Entreprenuer Magazine Philippines. They have a lot of interesting seminars that we can all attend.

But all these seminars will not work if the individual is stubborn and arrogant. A student to a path of wealth must have a good learning and listening attitude. We should be open minded to ideas and realities around us. We must be open to change. And most especially we must be open to advice. We are not rich because there is something wrong in what we are doing. And just like any problem the first step is accepting that we have a problem and we need help. Seminars and books are a lot of help but if we remain in our frame of thought and not be open to new ideas, we will only be stuck in the mud instead of climbing our way to wealth.

Asian Institute of Management (AIM)

I am now enrolled at AIM ( Asian Institute of Management). It has been 2 weeks since I've started taking classes here and to be honest it seemed like I've been here for months. I've never studied this much ever. hahaha

I transfered from the Ateneo Graduate School of Business because an opportunity presented itself to me. I was already taking my second term in Ateneo when a very kind benefactor (you know who you are... thanks!) offered to sponsor me to finish my MBA at the AIM. Taking that opportunity is a definitely a good choice for me. AIM is very different from Ateneo and I believe that I will learn more in AIM's education program. I'm not taking away anything from Ateneo, I love the school but I realized that the program was not for me.

I'm staying at the dorm and it has been a blast. Studying until 2 am, going to class at 8am, study some more after class... hahaha I know our batch is better off compared to what our seniors have to go through so I can't really complain.

Let's see where this new chapter in my life takes me...

Race to 1 Million Pesos

I am currently in a race to 1 million pesos. The most life changing thing that I ever did. hahaha
Just so you know what the hell am I talking about, I'll give a background story.


I attended Seminar held by Tim Bennet of Millionaire's Anonymous and by attending that seminar it sort of opened my eyes to what we can accomplish. Once you have decided to join
in the race it is up to you on how you reach that 1 million level. the basic rules of the game is
we all start from ZERO! No use of savings, no lending of money, do not use current income. Start from zero and work your way up. Tim Bennet's philiosphy which I think really rings true is "If you can't make money without money, you can't make money with money."

My Business Sense Blog is actually a spinoff of another blog that I am writing in (as a co-author). The blog is www.pathtomillion.wordpress.com and it has been up for 3 months already as of today. There we document our experience and the lessons we have learned and are very eager to share. We also talked to millionaires in their own right, how they started and the life lessons that seems they all commonly share.

I am telling you about this blog here because I forgot to consider this as a Business Investment that I am currently in. Thought about it as a game before but now I am very serious in achieving that 1 million peso mark from ZERO.

To see how I started out and where I am now please check the blog Our Quest for 1 Million Pesos . If you have any questions about the contest or just about anything business related email me at klao8@yahoo.com . I will try my best to answer any questions you have on starting a business, checking out an investment, deals and others. If you have a Business Venture that you are interested in, we can post it here and analyze it together.

Ken Dough Magic Iced Tea

Ken Dough Magic Iced Tea (KDM Iced Tea) is our specialty drink. Blended with natural tea leaves we have created a drink that has become one of our signature products in a very short period of time.

Shoe Vending Machine

Onitsuka Tiger, a Japanese sports brand, launched their sneaker vending machine in London and personally I think this is really creative PR gimmik but it won't be a sustainable business. The machine can only sell 24 pairs at a time, in 6 sizes.

Reebok already did the same thing with their shoes last 2004. Im not particularly sure if it took off since everyone would really want to try on a pair of sneakers before buying it and not the other way around.

Honestly, who walks around the city barefoot? Now if they had a vending machine that dispenses slippers for women who are tired of wearing their high heels all day. But then again I don't think that kind of vending machine will work because majority of women will never sacrifice fashion over convenience. Add would rather be caught dead than be caught wearing slippers from a vending machine. hahaha

Ken Delivers

Growing up in Manila, I have taken for granted the the food delivery service industry. It has become so common to see uniform delivery motorcycles that you ignore them compelety when you see them on the street. There is one exception however, the Yellow Cab pizza delivery motorcycles gets my attention everytime, I think it's the color of the motorcycles (yellow) that really draws my attention.

So going back to our situation in KenDoughMagic (KDM), we wanted to also offer the additional service of being able to deliver food within Dipolog City. The first thing we did was register for a landlyn number. The important thing is to get a number that is easy to remember. Like pizza hut 911-11-11. Anytime you crave for Pizza your memory recalls that number so you end up calling Pizza hut. We got the number 212-6000, it's easy to recall.

Next, we came up with a tagline for our delivery service and that was "KEN DELIVERS" very apt at a marketing standpoint and again good for memory recall. We wanted the customers to feel that we relate in a very personal level. We want everyone to know that KDM will take care of you. We treat every customer that way.

And lastly the selection of mode of transport. Since we were just starting out and most of the funds have already been used for construction and operations we were really hardpressed in deciding to buy a motorcycle/sccoter or not. In the few weeks after we opened we delivered food through the use of the usual mode of transport in dipolog city, Tricycles. Since the city is small, the delivery cost was very minimal if you used the trycycle instead of buying a new or even a second hand motorcycle.
For the benefit of my readers who are not familiar with the Philippine tricycles the picture on the left shows two kinds of tricycles, one powered by a motorcycle and another by bicycle.

This is actually the norm in Dipolog city. Many food establishments who offer deliveries use tricycles to deliver their products. The obvious advantages of this in the perspective of the restaurant owner is 1.you have a fixed delivery expense because the tricycles have a fixed rate. 2. you don't have overhead head cost in terms of depreciation and maintenance compared to owning your own motorcycle. 3. No more cost in terms of training or license or insurance fees for your delivery personnel since they will not be driving.

It was easy to fall into the norm or the status quo of delivering by tricycle but we evaluated and reassesed what KDM stands for and that is quality food, quality service at affordable prices. And using a tricycle was definitely NOT quality service. So we took the plunge and bought a new scooter and had a stainless delivery box made for it.

Now our scooter has a 3-fold purpose 1. for deliveries and 2. it served as our mobile advertising. and 3. elevated our restaurants image as clean, dependable, and quality service in the eyes of our customers. It turns out that the purchase of the scooter was a good investment. And Ken Delivers on its promise of quality food, quality service at affordable prices.

Venturing into Real Estate: One Archers Place

When I was still working with Liwayway Marketing Corp. ( http://www.oishi.com.cn/ ) in China, I was already thinking of ways and opportunities that I would like to get into when I go back home and one of those opportunities was real estate.

When I resigned from the company and went back home to the Philippines, Robinson Hwan and Ken Tan (two of my high school friends) invited me to join their informal stock session group to learn about stocks and the current market situation. So I joined the group thinking that it would one of those lectures type of thing where you have to listen for hours about the stock market. It turned out to be even better. The informal group headed by Earl Yu ( our stock market mentor), evolved into a informal business group that are now looking not just at the stock market but also for other business opportunities.

One night, during our regular stock session meetings, Earl presented an opportunity in Real estate. The property that he was referring to was ONE ARCHERS PLACE by ETON Properties near De La Salle University in Taft Avenue. We did the math and it seemed very feasible for us to invest in it. The group decided to go with with 2 studio type rooms for around 1.4 million pesos a room. I have a 12 percent stake on the 2 rooms. We will be financing it through the bank and will be paying monthly amortization around 15 yrs.

I shared this information with my close friends and it turned out that they were also interested in looking into the place already. So we did the same thing. We got 1 unit and I got a 16.67% share. We will also do bank financing for this one but only up to 5 yrs.

So now I have three studio units in One Archers Place. I wouldn't be able to do that on my own as of this blog entry but maybe in the future I can. But I'm pretty much content in being able to start investing on real estate now with my friends.

The turnover of the units will be on 2010.

Pepsi Over Coke

In terms of market share in the Dipolog city area, I can definitely say with utmost certainty that Coca-cola has around 90% market share over their rival Pepsi. People in our area drink Coke so why in the world did we go and tie up with Pepsi? Here is our story...

A few months before our scheduled soft opening, we were already trying to set a deal with Coke to supply us with their products in our establishment. We contatacted them and expressed our interest and we talked with the person in-charge. We were glad that we have reached an understanding and they will get back to us with the paper work and the other details.

So with that large detail in our opening day operations settled we focused on other concerns like the finishings in the construction, other supplies, employee training among other things. Days gone by and we haven't heard from our contact person from Coke who was supposed to handle our account. We got a little worried and tried to contact him. Guess what? We couldn't get a hold of him and no one else from that office can be bothered to help us out. Now we were panicking.

One week left before the opening and we still haven't gotten in touch with that person. So we decided to call up their competitor instead. Pepsi. The same day we placed that call, someone from Pepsi arrived at our doorstep and was ready to finalize the deal. It was pretty standard procedure but we did have two requests to ask Pepsi, one is that we can sell our Ken Dough Magic Iced Tea and two, we wanted a new dispenser. The agent made a few calls and it was a done deal. We have a two year tie-up with Pepsi, a new dispenser, and we can serve our own blend of iced tea. We were definitely pleased with the outcome. A few days later they installed the new dispenser and we were good to go. And from that moment, Ken Dough Magic is serving PEPSI.

A few weeks after opening day, a sales manager of coca cola who was in charge of the region dropped by to eat at our place. He noticed that we were serving Pepsi and asked his assistant why didn't Coke get this account. My father overheard their conversation and told him that we were waiting for Coke but they didn't follow through. Pepsi helped us out of our situation and gave us what we asked for so we signed with them. The manager asked my father if he can still pull out of our arrangement with Pepsi and my father said that even if he could he wont do it. Because Pepsi was came through at the right time so in return we gave our word to Pepsi that we will offer their products in our store for two years.

And that is how we ended up with Pepsi instead of Coke.

Rumor: We heard news that our contact person from coke was asked not to do business with us by one of our competitors. We have no way in verifying that rumor though.

Mind My Own Business

In my previous blog entry I mentioned two reasons that are hurdles to any restaurant business and those are smaller market and close proximity to competitors. But there are also underlying facts that any entrepreneur should be aware of especially opening a restaurant in the province.

1. Income of the average household.
2. spending habits
3. Use of Time
4. taste

The usual way of doing business is the "kill the competition" attitude and there are a lot of nasty ways of doing that. Since it is a given that the market is smaller compared to the larger cities and given the fact that the proximity of competition is very close, it is very easy to fall into the trap of trying to kill the competition. You might ask me, "Isn't that what I'm supposed to do?" and my answer would be NO. What we are supposed to do is generate profit and provide good/great service.

The two things that immediately comes to mind when asked how to "kill" the competition, is spreading rumors about them and cutting prices to attract more customers. This is what we have experienced early in our building stage. Imagine, we haven't even started painting our walls we're already receiving bad press. And some of our current competitors have cut prices on similar products that we are selling to attract customers. This is not how business is supposed to be done. And we believe that minding our own business is the way to go.

Our philosophy of minding our own business is not about being indiffirent with what is happening outside the business (ex: competition, trends etc) It is about looking to improve your own business base on the knowledge and facts that we've gathered and not distract nor let what our competition do affect us. We have to understand that every moment we spend in trying to "kill" the competition is every moment spent away from what we are supposed to be doing and that is innovation of our business and commitment to service.

Moving on to the 4 facts mentioned above, we should always take note that you will only be able to sell something if your target market is able to afford it. In this particular province most of the population are in the lower income bracket so we positioned ourselves to have affordably priced food but not cheap food.

Second is on their spending habits, since there is limited money going around in the average household and eating out is already considered a luxury we make sure that they receive "luxury". Everytime a customer comes in our establishment we definitely make sure that they have an enjoyable experience because first impressions last (particularly true in this area). You only get one shot to convince that customer to come back and dine at your restaurant because it might be weeks before they get to spend again on eating out. And we want to be the first thing that pops into their heads when they decide to eat out again.

The third thing that we should take note is how does our consumers value time and how do they make use of their time. We know very well that time is a commodity and we make sure that speed of our service is quick and reliable. Many residents of the area do not own cars they usually ride motorcycles or walk. Customers who are working in offices are not going to spend their lunch hour walking to our restaurant so we decided to get delivery orders as well. Most clients that call us for deliveries are employees from banks.

Last point is on taste. People have subjective taste and I personally think that it is impossible to please everybody so just please the majority. We thought of making our own blend of iced tea instead of doing what every other establishment is doing, serving ready mix iced tea. It was a pretty big task especially when serving ready mix tea is the norm. We didn't think much about the norm we just did our own thing. We experimented on different batches until we felt that we had the right mix of our very own ice tea. We let it out into the market and had mix reviews at first. We listened to their comments and improved our formula. Our Ken Dough Magic Iced tea is now the best selling drink in our restaurant.

In our brief experience as a provincial restaurant owner, we believe in doing things our way and concentrate on our business and our customers. In the end of the day that's what we are supposed to do, minding our own business.

Building Ken Dough Magic Kaffei

Ken Dough Magic Kaffei started construction around February of 2007 and had its soft opening on July 2007. It was a very difficult when we were first starting out. In the Province the competition is really stiff because there is a much smaller market compared to the big cities. Second the proximity between you and your competitors are really close so it is really constant battle between businesses. But in my opinion it doesn't have to be like that. (I'll tell you why next time)

While we were on our construction phase of the business we were already getting flack from local government units because people who have contacts in the government see us a legitimate threat to the current restaurant market in that particular province. So we just complied to every government regulations and standards that they put us through and we passed all of them in the end.

We did not get any fancy high-priced interior designer to design the place but we did talk to an interior design student in Manila and she gave us a lot of good ideas to go around with. She also gave us design but we ended up doing our own thing.

Back in the day, my father (ignacio) used to work as a contractor. They had projects with China Bank, they constructed branches for them back when they were expanding their banking chain. He has sufficient knowledge of the construction business and that came particularly handy during construction.

Our total floor area is around 70 sqm (4m x 17.5m). The ceiling was too high so my parents decided to build a mezzanine and there we built an office, washing area, stockroom and freezer. On the ground level, we have the kitchen, the bar, a bathroom, the dining area that could seat around 40 customers. We also placed smokeless griller outside for our barbecue dishes.

This is Ken Dough Magic Kaffei now, after the construction. Let's see where this business venture takes me and my family.