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Setting an Apartment Rental Business

(Originally published on August 21,  2011; reprints previous original material published in this section)

For those looking for a steady source of income with minimal time to spend, an apartment rental business is hard to beat. You may have heard a lot of horror stories about problem tenants, but notice that most landlords will never sell their apartments.

The truth is a lot of retirees depend on the monthly rental payments for their everyday expenses. Despite everything, apartments normally do not go bankrupt like many small businesses. That is why they are a favorite investment for people who want minimal risk.

However, there is a downside to the safety of this business. The lesser risk comes at the price of lower returns. It will take a relatively long time to get back your investment compared to other ventures. The cash flow, while steady, is small in comparison to the size of the investment.

You must also be updated with current rental laws. The rules on how much you can increase rentals and the ejectment procedures constantly change, so you must be abreast.

Be very selective in screening tenants. Reject those who have a strong chance of not paying their obligations. Do not allow those who will likely cause too much wear and tear on your apartment, as well.

Your lease agreement must be carefully drafted. It would be best to have one drafted by an attorney with experience in making lease contracts. Buying a ready-made document from a store may not only result in an unfavorable agreement, but your tenants will have a lesser view of the agreement.

The registration requirements for an apartment rental business are simple. Assuming that you will be constructing your own, here are the basic steps:

1. Check first if the property you have or plan to acquire is zoned for the construction of a residential apartment. Know, too, about restrictions like the maximum number of floors you can build. These restrictions may possibly make your investment not feasible.

2. Register with the Department of Trade if you will be the sole owner of the property or with the Securities and Exchange Commission if you plan to be a corporation. Have your accountant or lawyer prepare the needed papers.

3. Get a Barangay Clearance.

4. Obtain a Building Permit and Occupation Permit from the municipal or city hall. You must also secure your Fire Safety Permit there.

5.Register with the Bureau of Internal Revenue (BIR). Get your certificate of registration. This will contain the schedule of your tax obligations with the national government. If you still do not have a Tax Identification Number, obtain it at the BIR along with your authority to print official receipts.

6. Have your receipts printed. Starting an apartment is a sound investment, but you must know what you are doing to avoid mistakes. Since apartments require a substantial capital, and laws and trends change fast, it would be prudent to know more about this venture before proceeding.

 

BusinessCoach, Inc., a leading business seminar provider, conducts seminars on starting an Apartment or Commercial Stall Rentals Business. Contact them at (2) 727-5628/8860 or e-mail businesscoachphil@gmail.com for details.

 

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

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Business Coach: The Seven Common Pricing Mistakes

(Originally published on August 21,  2011; reprints previous original material published in this section)

By Ruben Anlacan Jr.

Of all the components of the marketing mix, pricing is the most neglected. This is a common mistake made by entrepreneurs because despite everything, price is the primary determinant of sales and profits. To a large extent, your company’s strategy and physical appearance are affected by your pricing decisions.

The truth is, figuring the best price to sell your product or service is no simple task. In fact, many books have been written on this topic alone. To be able to offer useful advice, I am constrained to limit our discussion only to the worst pricing bloopers usually committed by entrepreneurs:

1. Adopting the going rate. The majority of businessmen choose this option because it is considered a safe choice. Going with the general market price, many think, is a great short cut because your competitors are unlikely to sell at a loss. However, this is not always the case. It is possible that they are able to obtain supplies at a far lower cost and you may suffer a loss if you copy their price. On the other hand, there may be compelling reasons why you should price higher; your quality and service may be superior and a premium price is justified.

2. Neglecting to cost in your overhead. You must be able to recover not only the materials you bought, but also cover expenses like rental, depreciation and labor costs. Going through all the expenses that make up your total cost with an accountant is time and money well spent.

3. Engaging in a price war. Rarely is this a wise choice for an entrepreneur, as everyone loses in a price war. You must have a lot of reserve capital to sustain this strategy, and most of the time it is not the ideal course. In case you find yourself being attacked by a price- cutting competitor, a better strategy is to differentiate your product or to launch a lower cost brand.

4. Refusing to lower prices when necessary. There are times when you need to lower the price even below cost in order to make the item move. But many would not sell below their cost, preferring to wait for months or years to dispose of the item. This results in capital being tied unproductively, besides incurring storage costs. Another bad side effect of this is that your customers will not like being offered shop-worn and passé items.

5. Forgetting to factor in taxes. There are taxes that must be paid, and you must take them into account when setting your price. The most important tax to consider is the value added tax or VAT, because unless you are VAT-exempt, this must be paid even if you do not make a profit.

6. Applying the same markup across all items. If you carry a lot of inventory, you must take the time to study the best markup for each item. One tip I can give you is to price competitively on popular, fast-moving items. I know some retailers that have a reputation for low prices, when in fact they are low on only a handful of popular items.

7. Neglecting to continuously monitor market prices. While I advised not blindly copying the going market rates, ignoring it is a worse blunder. You must always be vigilant in checking the prices of competitors. Having this knowledge early will give you more time to plan how to react before too much damage on your sales is done.

Pricing is the most potent variable in marketing that you can easily control. The pricing policy you adopt can make or break your business. As you realize its importance, it will be wise to ponder your current pricing strategy.

 

Business and management consultant Ruben Anlacan, Jr. is the president of  BusinessCoach, Inc. and a resource speaker for various business topics. He

discusses overviews and tips for business from the point of view of a small- or medium-scale entrepreneur who has started several successful enterprises. Those who wish to ask questions or to make comments may visit http://entrepcoach.blogspot.com or e-mail entrepcoach@gmail.com.

 

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Business Coach: Surviving Your Business, Surviving Marriage

(Originally published on August 14,  2011; reprints previous original material published in this section)

 

Can Husbands and Wives Run a Successful Business?

 

By Ruben Anlacan Jr.

Most couples dream of having a business together. Being in love, and believing in “for richer, and for poorer,” it sure seems a good decision for couples to be working together in the same business. Unfortunately, this is not always true.

A husband and wife together in the same business can bring chaos in the workplace. It is almost always inevitable to bring personal problems in the company, and vice-versa. In fact, I know some employers who would not even employ couples in their company.

Their personal problems become the issues of their bosses.

After getting married, my wife and I immediately started a business. It was not easy the first time because we brought work home. We debated on work-related issues over breakfast, lunch, and even dinner. Yes, we went to coffee shops during weekends, but still we talked about business while sipping coffee. It was a nightmare!

Also, at first, we decided to bring home just some paperwork. But later on we brought almost half our jobs home so we could work on it overtime. Our bedroom consisted of two worktables, computers, printers, telephone lines, broadband Internet connection, and tons of paper.

Working together, we faced a lot of struggles. It was difficult because you cannot terminate your spouse when he or she doesn’t meet your expectations!

Employees’ Problem, too

It was also difficult with our employees, as they have to decide between “He Says, She Says”, or face the consequences. A few Machiavellian employees sometimes played us against each other to their advantage.

I thought that always being together would allow us to share more good times, but that was far from what happened. Since both of us had key roles in the company, it was virtually impossible to take vacations without worrying.

It is not as easy as it looks, but we survived. Let me share how we did it:

• Know your strengths. This is so you can divide your work, and prevent tasks from overlapping. This also brings a clear understanding on who’s in charge of what. Designate positions to minimize confusion and clarify who is responsible for a task.

• Make it clear who makes the final decision. Decide on who is “The Real Boss.” Despite all the talk about equality, there comes a time when a major decision must be made.  When there is a tie, then one of you must have the authority to make the final decision.

• Respect each other. Even if you have opposing views, speak calmly and listen well. When you disagree, refrain from attacking each other on a personal level. On the other hand, you can also use this opportunity—as my wife and I did—to learn not to be sensitive to criticism.

• Separate personal from business finances. Be clear about money matters. Even if you are a co-owner of the business, discuss expenses with your spouse. Refrain from just getting money from the cash register, or issuing checks without the knowledge of your partner. Separate your business from your personal bank account.

• Be honest about your limitations. If you believe you are having difficulty with your responsibilities, admit it to your partner. Explain that your qualifications do not jive with your current work situations, if that is the case.

• Have quality time for each other. Do things apart from work. Allot time together for hobbies, and don’t forget about family. Just because you are always together doesn’t mean that you no longer need to have time for things other than business.

• Celebrate successes. Give importance to each other’s contribution by celebrating achievements. Never take things for granted. Even if you are together 24/7, treat each other for every milestone in your business.

My final piece of advice: if you don’t have a strong relationship with your spouse, don’t go into business together, especially if both of you have dominant personalities. It is not simple, and will just weigh down the marriage if you are already prone to arguing with each other. But if you love and treat each other with respect, I’m sure you’re both going to make it just fine. Good luck!

 

Business and management consultant Ruben Anlacan, Jr. is the president of  BusinessCoach, Inc. and a resource speaker for various business topics. He discusses overviews and tips for business from the point of view of a small- or medium-scale entrepreneur who has started several successful enterprises. Those who wish to ask questions or to make comments may visit http://entrepcoach.blogspot.com or e-mail entrepcoach@gmail.com.

 

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Business Coach: Answering the Call to Transfer

(Originally published on August 7,  2011; reprints previous original material published in this section)

By Ruben Anlacan Jr.

I received an e-mail from a reader recently. She wanted to know if it was okay to look for another job while still employed. She wanted to transfer to a company in the same industry that offers a higher pay. Compounding her problem is that she is currently in a dispute with her employer.

This is a common scenario in the corporate world. Anyone in the same situation would probably feel aggrieved, but it’s best not to let your emotions rule your decision. Many people planning to look for another employer share the same problem. Many of them have done it well and are now enjoying a better job. However, there are those that made the wrong moves and are presently in a worse position than before.

The situation must be carefully studied before deciding on a course of action, since a wrong move may do enormous damage to your career.

There are many aspects to consider; among these are the legal, ethical and practical consequences.

Think first of your legal standing. The first thing that you must do is to review all the employment related papers you have signed with your company. There might be a non-compete clause in your employment contract. This forbids you from seeking employment from a company in the same type of business.

If there is a non-compete clause, you should consult a lawyer with extensive experience in labor cases if you are still determined to transfer to a company in the same industry. I suggest you try to work out something mutually acceptable.

If you want to be tough, you may be able to win your case in court but that will entail much time and money if the company decides to give you trouble. Besides, there is always the possibility that you may lose your case.

An other potential legal impediment is if it states in your contract that you are required to be employed a minimum number of years by the company; this is usually the case if you were given special training. This was an issue some time ago when several pilots resigned to work for another airline. Their previous employer sued them because they have not yet completed the required number of years as compensation for their training.

Study all the practical implications of your resignation. What are the benefits that will be foregone? There may be loans that will be immediately deducted from your separation pay. Check the terms of your Pag-ibig and SSS loans, if you have outstanding balances that may automatically be due in full. You may be counting on your separation pay to tide you over while unemployed, without knowing that it may be significantly reduced.

Take note that no matter what your personal opinion is of your present company, now is not the time to burn bridges. It is virtually certain that interviewers will check on your current employer and if you are not in good terms with them, they are unlikely to give a good recommendation. In fact just around a year ago, I was interviewing an applicant who was out of work for two years. She was highly talented, and she did not know that the probable reason why no one was hiring was because one of her references gave her a terrible feedback.

Although you are likely to be interviewed by a fellow employee, sympathetic to your cause. Never badmouth your previous employer. Since there is an abundance of applicants to choose from, it will most likely eliminate you from consideration if there is the slightest possibility that you are a troublemaker.

Regarding the ethical aspects, I do not see any problem applying before filing your resignation—unless you are using company time and resources in your job search. As long as there is no malice in any of your acts, like intentionally filing your resignation at a time when it will cause the most inconvenience, then the thirty days’ notice should be sufficient for both legal and ethical considerations.

The main problem with looking for work before filing your resignation is that prospective employers cannot call on your current employer to check on your performance.

Hopefully your credentials will outweigh this disadvantage.

Finally, be extra nice on your last days in your company. Instead of slacking off, exert more effort and try to make the transition for your successor as easy as possible. Just

as the first impression has a long impact, so are your last actions long remembered; so try to leave on a high note. A cordial exit may reap future benefits later in your career

Business and management consultant Ruben Anlacan, Jr. is the president of  BusinessCoach, Inc. and a resource speaker for various business topics. He discusses overviews and tips for business from the point of view of a small- or medium-scale entrepreneur who has started several successful enterprises. Those who wish to ask questions or to make comments may visit http://entrepcoach.blogspot.com or e-mail entrepcoach@gmail.com.

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Business Coach: Insights on Retail Location Hunting

(Originally published on July 31, 2011; reprints previous original material published in this section)

By Ruben Anlacan Jr.

I recently wrote an article (archived at http://www.businesscoachphil.com/finding-the-bestlocation-for-your-retail-business) on how to look for a good retail location, but due to space constraints there were many vital considerations that were not discussed.

For the benefit of those who want to know more about choosing a retail location, we will go deeper into the other factors:

• Know what type of goods you are selling. While location is a vital element in any retail establishment, its degree of importance depends on the type of goods sold. Convenience items like groceries need to be very accessible since buyers are unlikely to travel far to buy these type of goods. On the other hand, “shopping” type of goods like clothing and furniture are usually canvassed and compared so people may spend more time and effort looking for the items.

• Pick the far corner lot. We all know that a corner lot is more desirable than an inside lot because it is more visible and has more frontage, but since there are four corners in an intersection you must know which corner is the most desirable. Generally, it is the corner to the right after crossing the intersection that is more attractive. This concept is crucial to apply if your store is relying on vehicular traffic for a significant portion of your sales.

• Know what the past tenant was paying. Even if you know the going rental rate for a location, it is a good idea to find out what the former tenant was paying. If it turns out that the last tenant was paying far below the going rate, you could use that fact in negotiating for your rental. It would not hurt your bargaining position and you may get lucky especially if the landlord is in a hurry to have the place rented.

• Know if the franchisor wants to get the site for himself/herself. If after submitting your proposed site to a franchisor you receive rejection in a couple of days, then you must worry if the franchisor is after your site. It is highly unlikely that the franchisor had already properly assessed your site in the span of two days.

• The role of frontage. All retails stores will benefit from a larger frontage, but a counter type operation will need a bigger frontage than a self-service operation. In a counter type retail store, it is more advantageous to double the frontage than to double the store area.

• Store size in itself is a traffic magnet. Consumers believe that the larger the store the better assortment it has and the more reliable it is. We learned this the hard way when we drastically reduced the floor area of a drugstore branch to save on rental. However, after one year, while we did not reduce our inventory, sales fell by almost half.

• Study census data. This information can be gathered from the National Statistics Office (NSO). Find out the population, income and other data in your location that may help you have a better idea of your market.

• Use Google Maps. This is a website by Google wherein you can get an actual satellite view of your site. Previously, only large companies could get an aerial view by hiring a helicopter or plane. Much of what they obtained at a prohibitive cost then you can now get for free. There are so many things you can learn from studying your potential location in Google maps. You can see both customer generators, obstacles and other useful data that you may miss on foot.

• Check if there are zoning problems. Do not be complacent just because the previous tenant or owner of the site was able to operate the same business, they may have clout with the local authorities or their operation was tolerated because it has been there for a long time.

• Factor in the cost of renovation. Often you will find a location that seems amazingly cheap, but it is just an unfinished shell. The cost of fixing and furnishing the place may greatly exceed the savings from the lower rent. Furthermore, there may be some specifications (like the need to use tempered glass) that you must comply with that will jack up your projected budget.

• Walk around the property in all the different locations. Allocate several days to walking around your prospective site. This will allow you to have a better feel for the place and you will learn many things that will not show up in a market research report.

• Ask people that may be in position to know about the site. Be resourceful and interview suppliers of the past tenant. Strike a conversation with people who see the place everyday, like the sales clerks in the adjoining store, and ask about the number of people patronizing the place. One very successful food entrepreneur even interviewed a garbage collector of a restaurant to gauge how strong their sales were!

• Make sure you are signing up with the owner of the site or his/her authorized representative. Ask around the neighborhood to verify ownership. You can even check with the register of deeds in city hall to confirm that you are dealing with the right party.

Do not be too shy to ask for the proper identification since you will be giving out a substantial amount of money.

Location is the most important decision in most retails stores because reversing a mistake is extremely costly or impossible. Spending more time and effort to choose the best location must not be considered an expense, but instead view it as an investment with a very high rate of return.

 

Business and management consultant Ruben Anlacan, Jr. is the president of BusinessCoach, Inc. and a resource speaker for various business topics. He discusses overviews and tips for business from the point of view of a small or medium-scale entrepreneur who has started several successful enterprises. Those who wish to ask questions or to make comments may visit http://entrepcoach.blogspot.com or e-mail entrepcoach@gmail.com.

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Business Coach: What Comes After Your Retirement

(Originally published on July 24, 2011; reprints previous original material published in this section)

By Ruben Anlacan Jr.

You may be getting a big sum of money on your retirement and all of your kids would have already finished college by then. What are your plans after retiring? Do you want to travel? Do you want to buy an expensive car? Do you want to renovate your house?

You may dream of several ways to spend your retirement money, but you still want to think carefully about what’s best for your future. Perhaps you would want to keep your “nest egg” in the bank, where it would earn at best two to three percent per annum. But think again, because that percentage is nothing when compared to inflation rate.

If you are about to retire, there are many career options for you. I suggest you leave your retirement money alone for now (you may live longer than you think) as there are opportunities waiting out there. Even if you were able to prepare and have enough savings to last your lifetime, it’s not yet time to buy that rocking chair. You can find so many things to do, and some of the choices may help bring more happiness to your life.

There are people who still want to work after retirement. For reasons like money, socialization, health, or for sanity’s sake, people choose to pursue a new career after their retirement. But before you join the bandwagon, ask yourself these questions: What do I want to do? How much money do I have? How much time can I allocate for work? Do I have the strength and the will to start a new venture? Only then can you decide on your career choices.

In deciding, always think towards what would make you happy. If you prefer to stay at home and be the doting lolo or lola, then do so.

I asked around and found that most retirees prefer to look for something to do after leaving the workforce. They feel that they would just end up weak or sickly when doing nothing. In fact, this is the belief of Malcolm S. Forbes, owner and publisher of “Forbes” magazine. Forbes says, “Retirement kills more people than hard work ever did.”

Here are options you may consider:

• Be a consultant. According to a survey by Merrill Lynch, offering consultancy is the number one choice of retiring employees. You have already mastered your craft from your many years of experience that imparting your expertise can earn you big bucks. If you have just recently retired from work, you are still updated about current trends and events in your previous industry. Whether you’re from accounting, logistics, the academe, sales or marketing, consulting jobs are a good career option.

• Ask a former employer if you can work freelance. If you are a good salesperson, then ask your former boss if you can still bring clients, no longer under payroll, but with sales commissions. This may be smaller than what you were previously receiving, but it is better to be doing what you are already familiar with.

• Submit articles for publication or write a book. Put your knowledge and experiences into writing. Share your wisdom and get paid. Contact publishing houses or website owners, and give them a sample of your work. If you have sufficient capital, you may also opt to put up your own publishing company. This is a good source of money, and a legacy to your family as well.

• Turn your hobbies into a fortune. If you love photography, you can ask friends and relatives to contract you for your services. If you know how to play the guitar, you can want to give guitar lessons to your neighbors. If you love gardening, you can grow plants and sell them for profit.

• Go back to school. You might need this if you want to venture into a different field. This will not only help you gain new knowledge, but also give you opportunity to network with people who might help you land a job or project.

• Train or teach. There are institutions that would acquire your services if you have proven yourself to be an expert in your field.

• Start a business. This need not be big. You may opt to put up a small sari-sari store in your garage, or a food cart in a high-traffic area. If you have sufficient capital, you may also choose to start something bigger. Just make sure you have a business plan and conduct feasibility studies to determine the marketability of your products or services.

Don’t be afraid of retirement. Welcome the idea of finally being able to pursue your unrealized dreams. You can still be active and busy. And for the younger generation, plan your retirement. Start saving, invest wisely, and most of all, stay in the best of health. With sufficient preparation, your retirement years can be the best years of your life.

 

Business and management consultant Ruben Anlacan, Jr. is the president of BusinessCoach, Inc. and a resource speaker for various business topics. He discusses overviews and tips for business from the point of view of a small- or medium-scale entrepreneur who has started several successful enterprises. Those who wish to ask questions or to make comments may visit http://entrepcoach.blogspot.com or e-mail entrepcoach@gmail.com.

 

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Starting Your Own Pet Shop

(Originally published on July 17,  2011; reprints previous original material published in this section)


Animal lovers will find a pet shop not only fulfilling to handle but surprisingly lucrative—if you know how to do it right. For those already involved in breeding pets, setting up a pet shop promises a profitable extension of their business.

The following are the steps and tips to get you started on this fascinating business:

1. Register your business with all the proper government agencies. Before you start, get a business name from the Department of Trade (DTI) if your business will be a sole proprietorship, or from the Securities and Exchange Commission (SEC) if you plan it to be a corporation or partnership. Obtain a barangay clearance before you proceed to get a business permit from the mayor’s office, and then acquire a certificate of registration and authority to print receipts from the BIR. Other entities you have to comply with are the SSS, Pag-ibig, Philhealth, DOLE, Bureau of Animal Industry, and the Department of Agriculture.

2. Know the laws that govern the sourcing, handling and selling of animals. There are endangered species that cannot be sold legally. You may also be liable for cruelty to animals if you fail to implement the proper care of the pets, which includes proper feeding, facilities and handling.

3. Choose a location where there are other pet shops or a mall. People buying pets tend to shop around before they buy. They want to check a wide variety so buyers tend to flock to places where there are many pet shops in the same area. You can observe this in Arranque, Cartimar and other places where plenty of pet animals are sold. However, a pet shop may also be successful alone if it is located inside a large mall. Here the advantage of convenience and high foot traffic can give good sales to pet shops.

4. Invest in good displays. Make sure the containment structures are of the right size for the animals. There must be enough room for the pets to move around and maintain their health. Remember that some animals quickly outgrow their space.

5. Source from reputable dealers. Get only from sources that can provide the legal papers. Never get from illegal sources, not only to avoid future legal problems but there is also that strong possibility of getting a disease-carrier.

6. Know what animals can be kept together. Due to space constraints, it is impractical to keep every animal in its own cage. However, make it a point to find out which animals are antagonistic toward each other. Note that there are members of the same species that cannot be put in the same cage or aquarium.

7. Have a veterinarian on retainer. Your pets will need medical care, from vaccines to antibiotics and vitamins. These are the things that only qualified veterinarians know. They can also provide you valuable advice on how to best take care of the pets.

8. Carry a line of pet supplies and accessories as well. These will help you have a more even cash flow. You may even earn more from the supplies and accessories because they are purchased regularly. People will also want to have all they will need for their pet available in one place. Every time they go back to your store, there is also a chance that you can sell them more pets.

9. Learn as much as you can about the pets you are selling. Customers will patronize pet shops that can give them reliable information. You will also minimize losses due to pets dying of faulty care. Healthy pets also look nicer; hence, they are easier to sell. Knowing about the animals you are selling also ensures you can be in better compliance with the regulatory agencies.

10. Set the proper prices. To price profitably, you must always be aware of the prevailing market prices by canvassing your competitors. This will enable you to set your prices at a level that will sell and still have a good margin. Nevertheless, there are some rules of thumb that are useful to know. Life animals usually go for at least double the cost of the pet including transportation.

11. Market your pet shop. It is not sufficient to just wait for customers to walk in; you must also be continuously promoting your store. Come up with flyers with special offers and learn internet marketing. It is also cost effective to place advertisements in local publications in the area where your store is located.

Pet shops consist of a delightful business to operate but because your inventory are living things, extra special effort must be exerted to ensure their well-being.


If you want to learn more about BusinessCoach Inc., call (2) 727-5628 or 727-8860 for details or e-mail businesscoachphil@gmail.com. You can also visit their website at http://www.businesscoachphil.com to see more business opportunities.

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Business Coach: Best Way to Motivate People

(Originally published on July 17,  2011; reprints previous original material published in this section)

By Ruben Anlacan Jr.

Motivating people is a primary concern of business owners and managers. Whether the enterprise is a small retail store or a billion-dollar multinational, what will make the crucial difference is the people running the daily operations. But even with this basic rule of thumb, many managers keep making the same blunders in their approach.

The reasons for lack of motivation stem from countless sources, and this is what makes it so challenging. Since there are a number of causes for low morale, there should be a corresponding variety of solutions. However, managers tend to rely on a limited repertoire of responses that are often inappropriate for the problems. Below are some ideas that may serve to help improve your motivation efforts:

• Foreign fads and formulas rarely work unless modified. There is a strong tendency for managers to read the latest so-called solutions, immediately believing that it is the panacea to all their motivational problems. This is seldom the case, and usually the expense and disturbance it causes far outweighs the benefits. Every system must be adapted to your particular situation and extra care must be taken for it to fit our local culture.

• Motivational talks only have a short-term value. If you are the type of manager who believes the sole way to motivate workers is to have a pep talk from time to time, then mend your ways. This technique must be combined with more lasting measures to provide a complete solution; although in critical situations this is very useful.

• Some motivators may no longer be effective. What motivates people changes over time. A bonus of P1,000 may have thrilled employees years ago, but it takes several times that amount to get the same level of enthusiasm now. Get regular feedback from employees to gauge past programs.

• Consider that people have varying motivators. I know of a pharmaceutical company that had a poll among its hundreds of employees on where to spend their multimillion peso budgeted Christmas party. The result was a wide variety of preferences. Some wanted to give it to charity; others wanted it given as a cash bonus; and there were the traditionalists who wanted to spend it all on the Christmas party. The lesson here is that you must not assume that everyone wants the same thing. Prior consultation with employees before implementation would prevent gross blunders.

• Know how to properly use cash as a motivator. Cash is the most potent motivator—given enough cash, most people would do anything you ask. However, it has its limits. There is a point where it is no longer cost-effective. Know how to properly utilize the two types of cash compensation:

• Fixed compensation. This is the most important motivator for people to accept the job, but it is not an effective incentive to improve performance in the long term. You may be offering a higher than average compensation, but this is soon taken for granted. Nevertheless the level of fixed pay is important to attract talent. You must be willing to give at least the industry going rate in order to hire qualified personnel.

• Variable compensation. When you associate the amount of pay to performance like sales targets, a strong motivation kicks in. This method is most effective in functions where the outputs are easily measured, like in sales jobs. However, this is very difficult to apply in situations where the output is not easily measured or attributed. For example, a manager may be able to show an increase in profits by cutting corners, like sacrificing quality or postponing maintenance work. These managers hope that by the time the effects of these poor policies become evident, they will probably be in another position.

• The values of benefits are relative to what others are getting. Monitor what other companies are giving to their employees because, fair or not, there will be comparisons. A P10,000 bonus may seem generous, but if a similar-sized company in your industry is giving P20,000, then you cannot expect a cheerful reaction.

• The most cost-effective motivator is to give people more opportunities to make use of their abilities and to grow professionally. Providing a way for people to exercise more of their talents builds feelings of self-esteem and may even save on costs. This also encourages further improvement of their skills. A program to develop the delegation skills of managers will boost efforts to bring this about.

Motivate people will always be one of the core issues of managers and entrepreneurs. There will be no final book on this topic because by the time the book is written, the best companies have moved on to fresher ways to drive the enthusiasm of their workforce. The best way to inspire your people is to constantly be on the lookout for the best ways to motivating your workforce.

 

Business and management consultant Ruben Anlacan, Jr. is the president of  BusinessCoach, Inc. and a resource speaker for various business topics. He discusses overviews and tips for business from the point of view of a small- or medium-scale entrepreneur who has started several successful enterprises. Those who wish to ask questions or to make comments may visit http://entrepcoach.blogspot.com or e-mail entrepcoach@gmail.com.

 

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Beginner’s Guide to Project Management

(Originally published on Wednesday, July 10, 2011; reprints previous original material published in this section)

How a major project is handled can either make or break a person’s career—and even his company’s fortune. Unfortunately, many of those new to project management are left to “sink or swim” with insufficient guidance. While in developed nations many people engage in formal training in project management, here in thePhilippinesvirtually all project managers learn about project management on the job.

To be able to grasp the essentials of project management, you must know its definition: a project is a temporary undertaking with a defined beginning and an ending, done to meet unique objectives. Its transient nature means projects are not part of operations that are repetitive work to produce products or services.

While reading this article will not make you an instant expert, the basic ideas of project management listed below would be very helpful in guiding the beginner:

• Clarify the project objectives and requirements. You must document precisely what the project seeks to attain, as well as its constraints. Establish the deadline for completion, the budget, and the quality standards. You must consult with all the departments or persons that will be affected or needed to complete the project. Things like possible legal impediments must be ironed out. A lot of brainstorming and negotiation occurs in this stage. Getting the support of internal and external stakeholders is also important for a project’s success.

• Create the project plan supported by using the appropriate planning tools. Before beginning, you must create a detailed plan. Get detailed cost estimates and setup milestones to monitor progress. Tasks must be arranged in the proper order and the dependencies (a task that must be finished before another task is done) noted. In doing this, it is impossible to organize a project properly without the use of planning tools. There are dozens of possible tools, but there are some that are commonly used. One is the Gantt chart, a type of bar chart that illustrates a project schedule. For better control, the more sophisticated tools often used is the Critical Path Method (CPM) and Program Evaluation and Review Technique (PERT); these enable you to apply additional resources to relieve bottle necks that delay the whole project.

• Prepare for contingencies. Plan for problems that may be encountered. Build on some slack into your time schedule in order to mitigate the inevitable delays that will result from unforeseen events. Besides the extra time needed, you must also have some allowance in the budget for emergencies that will need additional expenditures.

• Submit timely and well written Project Status Reports. Study how to make project status reports for your superiors. Find out if there is already a prescribed format or precedent before coming up with your own. Reports should be as short as possible without missing important details. Avoid using jargon that may not be understandable to all those who may read your reports. Report if progress is on schedule and being done within the budget. Also, keep copies of your report for future reference.

Effective project management is extremely important and you must try to learn as much as possible to avoid costly mistakes.

To learn more about this important function you may call (2) 727-5628/8860 or e-mail businesscoachphil@gmail.com for details.

All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

Business Coach: On Dealing with Difficult Customers

(Originally published on June 19,  2011; reprints previous original material published in this section)

By Ruben Anlacan Jr.

It has always been our belief that the customer is always right. But there are some customers who are just really difficult to deal with. They are the type who would rob you  of your patience, not to mention your sanity. Some would even go as far as treat you like trash—that is, if you let them.

While the objective of any business is to attract clients and treat them well, there are some who take advantage of customer service and push you to wits’ end. As purchasers, some customers believe they are gods and treat sellers as followers ready to do their bidding. There may be times when you wish these people do not exist, but the fact is that you have to learn to deal with them.

There are different types of customers, and you may already have encountered some of them:

• A client asking you several times for a meeting, only to learn of the cancellation when you are already in the venue.

• A client promising to give you orders, but only if you give high rebates. This is the only way you I can get the contract, but you feel guilty of entering into a ridiculously priced deal.

• A client you have been prospecting for six months now, but who still doesn’t know your name or your company’s. This clearly shows a lack of interest.

• A client asking for quotations for over a year, and yet a sale remains elusive.

• A client requesting illicit deals or trades, such as giving you the contract in exchange for sex.

• A client asking for personal favors, like asking to be driven home, be given gadgets, or asking you to pay for his/her trips abroad.

• A client who does not know what he/she wants, changing the specifications of a project everyday and you are already having difficulty in keeping up with the modifications.

• A client who is always complaining that you did not do the project as specified, and always threatening to replace you with a more efficient supplier.

There are other examples to add to this list. The fact is that there will always be clients who are more difficult to handle than others. But if you become choosy with accepting

clients, you could also end up having no customers at all. The general rule here is to learn how to deal with your difficult clients. The market is a jungle; and if you don’t know the kind of beast you have to work with, your business’ survival might end up moot.

Here are some tips on dealing with difficult customers:

• List your clients, and write your experience with each of them. Make plans on how you react the next time you transact with them.

• Always have a contract of agreement signed. This way, whenever a client complains, you can show him/her that the project was done as specified. This would also serve as a guide to ensure that procedures or protocols were followed in the completion of the project.

• Dress professionally and conservatively. You would get fewer indecent proposals if you present yourself as smart and respectable.

• Learn when to say “No”. If you believe you cannot meet the deadline, say so. If you think you can’t stomach what is being asked of you, politely decline the offer.

You cannot really get away with working with hard-to-manage customers. But come to think of it, some of your difficult clients are probably the ones helping you strive to be more competitive. Listen to what they have to say, as they can also give you valuable inputs to improve your business.

In my experience, many of the previously intolerable clients have turned out to be very pleasant persons once we have broken the ice. Their intimidating demeanor was just a facade to gain negotiating leverage.

Remember that if you develop the knack for dealing with difficult customers, you already have the advantage of winning over your competitors who cannot handlethem. Check mate!

Business and management consultant Ruben Anlacan, Jr. is the president of  BusinessCoach, Inc. and a resource speaker for various business topics. He discusses overviews and tips for business from the point of view of a small- or medium-scale entrepreneur who has started several successful enterprises. Those who wish to ask questions or to make comments may visit http://entrepcoach.blogspot.com or e-mail entrepcoach@gmail.com.

(All rights reserved. Copyright Manila Bulletin. May not be reproduced or copied without express written permission of the copyright holders.)

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