By Greg Ballesteros Rivera
Few people may not realize just how much micro, small and medium-sized enterprises (or MSMEs) comprise total businesses in the Philippines. Based on 2012 data from the Department of Trade and Industry, out of about 945,000 registered Philippine businesses, 99.6% is made up of MSMEs. 99.6%. That's not a typo error. The companies that you see in the news and those you hear about are only the tip of a very massive iceberg.
All over the world, countries have various ways of defining whether a business is classified as an SME or not. Excluding Micro companies, most countries define SMEs according to the number of employees, asset size, or a combination of both. In the Philippines, a business is defined as an SME if it has between 10 - 200 employees or if it has an asset size (excluding land) between PHP10 million - PHP 100 million, regardless of the type of business ownership (sole proprietorship, partnership, or corporation). Any company with less than 10 employees or PHP10 million asset size can be classified as a Micro enterprise.
SMEs are vital to sustaining economic growth and bolstering job creation. Large companies and the general public need their products and services on a daily basis.
But a lot of times, things don't work out as planned for the SME business owner it could be due to a number of factors: changing consumer preferences, fierce competition, mismanagement, outdated technology, the list goes on. So the entrepreneur reaches a critical decision to sell the business. How does he or she go about it? Maybe he or she will talk to clients, suppliers, friends, neighbors their high school teacher maybe? A selling restaurant owner might choose to just sell the equipment and probably keep some of the equipment for use at home. These are the types of situation you don't see in magazines or articles no one wants to read about failed businesses. Everyone wants to read about the Henry Sys and the Injap Sias of this world, the great big blue success stories that make you want to find your passion, a word that gets thrown a lot these days (which I feel is a dangerous and misleading concept but Ill save it for the next article).
There are also businesses that get sold because although the company might be doing well, the owner wants to move on to do other things. Maybe the entrepreneur gets petitioned by his or her folks in the US 25 years in the making, maybe the entrepreneur wants to walk into the sunset and retire, or maybe it's simply not as fun anymore. How do you go about selling a good business? Much easier than a losing business obviously, but how do you extract the best value for your business?
Then there are startup businesses with their owners toiling and burning money for working capital and major capital expenditures in the early years. Its hard for some of them to make critical decisions knowing there are costs every step of the way with limited visibility on when the money will flow in. All theyre relying on at this point is their gut-feel. They would sometimes be caught staring blankly outside the window, asking themselves what the hell theyre doing. And so people ask: how do you find investors to back you up? You hear about venture capital firms or VCs, angel investors, seed funders, incubators, and all these big 21st century synonyms for investors. How do you find them and how do you pitch your business to them?
Having worked in a private equity firm for over half a decade (for those of you who don't know, private equity is a form of equity investment much like VCs where they invest directly in companies, only private equity firms generally invest in businesses with a profitable track record and are not focused on a particular sector like technology for VCs), Ive had the privilege of meeting dozens of business owners facing various business prospects and challenges. A large proportion of these business owners dont have access to advisors or investment banks to help them sell or raise funds for their businesses. After hearing their stories, I realized there lies a big gap between the supply of service providers out there the Big 4 accounting firms (SGV / Ernst & Young, PWC, KPMG, Deloitte), advisors, and investment banks (foreign and local) and the demand for the services they provide. Only large enough SMEs gain access to their services which leaves out a majority of SME players, especially those outside Metro Manila or Cebu (where it usually doesnt make economic sense for advisors or banks to open offices there).
And so EntrepZone.com was born, to serve the underserved market. Its primarily an online marketplace for businesses coupled with features designed for the SME entrepreneur. It also offers advisory services for entrepreneurs who might need these. It allows users to reach out to a wider but targeted audience.
Our goal is to empower entrepreneurs during the critical stages in the life of their business and to get the most out of it. EntrepZone.com hopes one day to become an important resource for entrepreneurs across the ASEAN region and help them make better informed business decisions. This is the start of an incredible journey for us at EntrepZone.com, and were excited to help.
Original article posted at EntrepZone
Few people may not realize just how much micro, small and medium-sized enterprises (or MSMEs) comprise total businesses in the Philippines. Based on 2012 data from the Department of Trade and Industry, out of about 945,000 registered Philippine businesses, 99.6% is made up of MSMEs. 99.6%. That's not a typo error. The companies that you see in the news and those you hear about are only the tip of a very massive iceberg.
All over the world, countries have various ways of defining whether a business is classified as an SME or not. Excluding Micro companies, most countries define SMEs according to the number of employees, asset size, or a combination of both. In the Philippines, a business is defined as an SME if it has between 10 - 200 employees or if it has an asset size (excluding land) between PHP10 million - PHP 100 million, regardless of the type of business ownership (sole proprietorship, partnership, or corporation). Any company with less than 10 employees or PHP10 million asset size can be classified as a Micro enterprise.
SMEs are vital to sustaining economic growth and bolstering job creation. Large companies and the general public need their products and services on a daily basis.
But a lot of times, things don't work out as planned for the SME business owner it could be due to a number of factors: changing consumer preferences, fierce competition, mismanagement, outdated technology, the list goes on. So the entrepreneur reaches a critical decision to sell the business. How does he or she go about it? Maybe he or she will talk to clients, suppliers, friends, neighbors their high school teacher maybe? A selling restaurant owner might choose to just sell the equipment and probably keep some of the equipment for use at home. These are the types of situation you don't see in magazines or articles no one wants to read about failed businesses. Everyone wants to read about the Henry Sys and the Injap Sias of this world, the great big blue success stories that make you want to find your passion, a word that gets thrown a lot these days (which I feel is a dangerous and misleading concept but Ill save it for the next article).
There are also businesses that get sold because although the company might be doing well, the owner wants to move on to do other things. Maybe the entrepreneur gets petitioned by his or her folks in the US 25 years in the making, maybe the entrepreneur wants to walk into the sunset and retire, or maybe it's simply not as fun anymore. How do you go about selling a good business? Much easier than a losing business obviously, but how do you extract the best value for your business?
Then there are startup businesses with their owners toiling and burning money for working capital and major capital expenditures in the early years. Its hard for some of them to make critical decisions knowing there are costs every step of the way with limited visibility on when the money will flow in. All theyre relying on at this point is their gut-feel. They would sometimes be caught staring blankly outside the window, asking themselves what the hell theyre doing. And so people ask: how do you find investors to back you up? You hear about venture capital firms or VCs, angel investors, seed funders, incubators, and all these big 21st century synonyms for investors. How do you find them and how do you pitch your business to them?
Having worked in a private equity firm for over half a decade (for those of you who don't know, private equity is a form of equity investment much like VCs where they invest directly in companies, only private equity firms generally invest in businesses with a profitable track record and are not focused on a particular sector like technology for VCs), Ive had the privilege of meeting dozens of business owners facing various business prospects and challenges. A large proportion of these business owners dont have access to advisors or investment banks to help them sell or raise funds for their businesses. After hearing their stories, I realized there lies a big gap between the supply of service providers out there the Big 4 accounting firms (SGV / Ernst & Young, PWC, KPMG, Deloitte), advisors, and investment banks (foreign and local) and the demand for the services they provide. Only large enough SMEs gain access to their services which leaves out a majority of SME players, especially those outside Metro Manila or Cebu (where it usually doesnt make economic sense for advisors or banks to open offices there).
And so EntrepZone.com was born, to serve the underserved market. Its primarily an online marketplace for businesses coupled with features designed for the SME entrepreneur. It also offers advisory services for entrepreneurs who might need these. It allows users to reach out to a wider but targeted audience.
Our goal is to empower entrepreneurs during the critical stages in the life of their business and to get the most out of it. EntrepZone.com hopes one day to become an important resource for entrepreneurs across the ASEAN region and help them make better informed business decisions. This is the start of an incredible journey for us at EntrepZone.com, and were excited to help.
Original article posted at EntrepZone