Game of Money – Four Quarters of Life

Life is like a game of chances. You can win or you can lose. Everyday, we are faced with challenges, which can either lead us to become a winner or a loser. Learning financial literacy is essential to increase your chances of winning the game of life. Consequently, it is best to play the cash flow game to gauge how well did you grasp the concepts in winning the game of money.

Recently, I watched another video again of Robert Kiyosaki as now he talks about the so-called Game of Money where he described the four quarters of financial life dividing it into 10-year horizons and asked, “at which age will you win the game of money?”

Let’s view the four quarters of life with some inputs so that we know how will we win the game of money and retire as young as we can be.

1st Quarter (25-35 years old) – By this age, you’re probably done with your college education. Most of us start our careers when we land on our first quarter of life. We want a high-paying job, buy a car, have our credit cards and enjoy life. While many of us just want to enjoy life after graduation, it is advisable for us to:
Savings should be our top priority. When you receive your paycheck, take out a certain amount and deposit it in a savings account. Once you accumulated enough savings, transfer the bulk of it into a higher yielding deposit account. Compound interest will help it to earn more interest.

Get Insurance. Get insurance especially if you now have family and kids to support with at this age. The higher and the healthier you are, the cheaper insurance costs will be.

Learn Investment Options. Think of investment options where you can invest your extra cash. You can invest it in stocks, mutual funds, real estate, bonds, etc. Start to educate yourself financially.

2nd Quarter (35-45 years old) – By this age, you are probably at the top of your career and definitely earning much more. But this quarter may also be the time when you’re starting to have your own family so that also means higher expenses. It is advisable to:

Plan for children’s future. You are now working not just for yourself but also for your children. Plan for your children’s future by getting an educational plan or open a time deposit that’s under your children’s name and deposit an amount into it regularly.

Make sure you have enough for your emergency fund. Emergency fund is amount totally dedicated to emergency expenses such as health problems, etc. A good amount would be equal to six months up to 1 year of your monthly income. Place it in an easy accessible type of investment so that when your need arises, you can easily withdraw it.

Have a business. By this age, you could have probably known a lot of networks from friends, colleagues, acquaintances, etc. And since you’re earning much higher, then you could start your own business. Gauge yourself on what business you should start. Examine your passions and skills in choosing the right business for you.

Half Time – Kiyosaki referred after the 2nd Quarter as half time because you are in the middle before retirement. It’s also called as “mid-life crisis”. It is now time to examine yourself. You are not getting any younger anymore. Have you had enough savings to cover for your future? What did you accomplished in your life?

3rd Quarter (45-55 years old) – By this age, you are probably on top of you career, possibly a manager or vice president of the company. You could be earning more and your children may be in their college years or are already working. Retirement is just around the corner waiting for you. In this quarter of life, it is advisable to:

Allocate much of your income to investment capital. Review your investment portfolio and ask yourself if you need to transfer your funds into a higher earning investment scheme. Just be sure to have a through due diligence before you transfer your funds.

4th Quarter (55-65 years old) – By this age, your children may well be on their own now with their respective families already. You are now at the age where you can retire. You may choose to still be employed but it should not be on stressful work as you are now prone to health problems brought about by old age, which means higher health care expenses. In this age, it is advisable to:
Protect your capital. Try to preserve your capital so that you can live with on its interest. And make sure to make your last will in order.

Over Time – Kiyosaki referred after the 4th quarter as over time. If you haven’t had any accomplished things when it comes to your financial future, then that would be a great problem because sooner or later you would be “out of time” and the game of money will be “game over”.

We don’t want to retire old. As much as we could, we want to retire young so that we can still enjoy the things that we want. How could we enjoy it if we are already old with a lot of health problems associated with old age?

Personally, just like what Kiyosaki did retiring at the age of 47, I also want to win the game of money and retire on the second quarter of life. I want to enjoy life as early as I could without having to worry on going or having to work. And that is the very essence of financial freedom.

Journey to “FINANCIAL FREEDOM”

What is financial freedom? For me, it simply means having the freedom of time, a time where we can spend to the things that we enjoy and the things that are important to us.

Why do we need financial freedom? Ask yourself the following questions and you’ll find out the answer.
“If you are an employee, will you be willing to work for the rest of your life?”

“You keep working and working as an employee, who gets rich in the end? Is it you or your company?”
“Did you ever notice that as your pay increases as you work your way to climb that corporate ladder, your income taxes also increases?”

“Did you hear stories of some top executives who committed suicide or risked their health into diseases because of so much stress and failures that they faced from their respective careers?

“Did you hear stories of some children whose life were misled because of lack of guidance since their parents didn’t have enough time for them because of work?”

Everybody wants to have that freedom of time. We definitely don’t want to be working all our lives. And of course, we want to spend more time to the things that we enjoy and that are important to us which is our family.

Now how are we going to achieve it? What are the steps needed in the journey to financial freedom?
1. First, you must “Set Your Goals“. Make a checklist and monitor your performance as you move forward towards achieving those goals.

2. Second, you must have the proper discipline and mindset towards achieving it. You must have the mind and will power.
Think of positive things as it attracts opportunity.

3. Third, we must learn how to be frugal. We must live below our means.

4. Fourth, we must learn to invest. Assess yoursef first and choose where to invest that extra cash.
You can even learn how stock market works. Alternatively, you can also choose real estate investment.
Always remember what Robert Kiyosaki says: “Invest in assets and not in liabilities.”

5. Fifth, start as early as you can. There’s a saying that “the early bird catches the worm.” The earlier you started these steps to financial freedom, the earlier you can move closer to achieve it.

Finally, as an example, here are the steps that I climbed in my journey to financial freedom.

While it is through that money cannot buy happiness, money can buy our freedom of time. Achieve financial freedom and achieve that freedom of time.

Why do you need an Emergency Fund?

WHAT IS AN EMERGENCY FUND?
Life has a lot of uncertainties. You may not know that one day you’ve been hit by a calamity, you had an accident, you suddenly became ill, or your house got burned.

In these circumstances, you need to be prepared. In personal finance, it is often called “saving for the rainy days”. These savings is often called emergency fund that is often used when we encounter emergency situations.

WHERE SHOULD YOU PUT YOUR EMERGENCY FUND?
Since emergency funds are savings that should be used anytime you encounter an emergency situation, you should put it in a type of investment that is liquid, safe, and don’t have long holding period. We say that an investment is “more liquid” if it’s easily converted into cash. What are these types of investments?


ATM Savings Account - You can put your emergency fund by opening a regular savings account in a bank that is accessible through ATM. Choose the bank with the most number of branches so that you can almost anytime access your emergency fund when the need arises.

Passbook Savings Account - Alternatively, you can also use a passbook savings account to lessen the temptation to withdraw your funds just anytime you want since withdrawing from a passbook account is not as convenient as compared to an ATM account. You might want to open a passbook account with a bank that is nearer to your place and provides the highest interest.

Time deposits - If you are looking for a type of investment that can provide higher interests for your emergency fund, then you might as well consider time deposits. Just remember the holding period. You should consider the time deposit with the least holding period.

HOW DO YOU BUILD AN EMERGENCY FUND?

Pay yourself first: The easiest way to build an emergency fund is to pay yourself first. If you are employed, which I believe most of us are, set aside a portion of your salary every time you receive it. Depending on your expenses, the least amount advisable is 20% but of course, the higher the better.
One of the most useful personal finance equation is: INCOME - SAVINGS = EXPENSES. That is, set aside a portion of your salary as savings before you can spend the rest. Why? It is because savings is the most important expense as it buys your own future.

Budget. Learn to budget your money. Prioritize your expenses more on the needs and not on the wants. There are a lot of ways on how to squeeze your money into savings to build up your emergency fund.

HOW MUCH SHOULD YOU SAVE FOR AN EMERGENCY FUND?
The amount you need to save for an emergency fund depends on your situation. If you are the sole breadwinner of your family, it is advisable that you need to save at least 6 months to 1 year worth of living expenses. Compute you average monthly living expenses and you need to save 6 months up to 1 year worth of that. This is also enough just in case you get laid off in your job.

However, if you don’t have a lot of dependents or if you have other sources of income to support you, you might want to consider up to 3 months worth of your monthly living expenses.

Just remember if you were able to save for your emergency fund already, invest your extra cash in other types of investments where it can provide more interests for your money. Here are some of the options on where to invest your extra cash.

Where to Invest Extra Cash?

In my previous article regarding Time Value of Money, if you have extra cash, it is better to invest it somewhere since keeping it in your drawer or cabinet alone is not the right approach. Doing so will let your money be subjected to a depreciating purchasing power as every year, inflation rises. Let your money work for you. Make your cash work hard for you as you have worked hard to earn it. Here are some of the reasons on why do you need to invest.

As discussed, there are three considerations in making an investment decision. You need to assess yourself first about RETURN, RISK, and LIQUIDITY.

Now, after carefully weighing these three considerations, you can then proceed to invest your extra cash. Here are some options that you may explore as an investment vehicle for your cash. Note however that each of these investment vehicles require minimum amounts and for some, even involves a holding period.


Savings – This is the most common and easiest form of investment. Just park you extra cash in the bank. The interest, nowadays, ranges from 0.5% to as much as 2.5% per annum.

Checking – A checking account with a bank means that you can withdraw your money anytime by using a demand draft or a check. Because of this, most banks do not pay interest for money deposited in a checking account, although there are some special checking accounts that have interest.

Time Deposits – These investments earn higher interest than a savings and/or checking accounts. The catch is that your money is tied up and you cannot withdraw it before the agreed time period elapses. In case you violated these restrictions, you will incur a penalty.

Bonds – These are like public investment outlet units of public and private corporations. By buying bonds, it’s as if you are lending money to a corporation. The bond certificate promises to pay you a fixed interest after a certain period of time. For more details, visit my article on investing in bonds.

Stocks – For those who have high tolerance for risks, you can go into the stock market as a long-term investor. Buy blue chip stocks that you plan to keep for a long time. Just remember, buy low and sell high. For new players, here is an overview on how stock market works.

Unit Investment Trust Funds or Mutual Funds – Trust Departments of banks and Mutual Funds of investment corporations both work this way: You deposit a minimum amount and the bank will invest the money for you, in various high-income and high-risk investments. They get a commission on the earnings, and the rest is yours. So it is possible that you will receive more interest than a specified time deposit account. But you can also get less, if the investment does not make enough. For more information on UITFs and Mutual Funds, you can refer to this article. 

Treasury Bills (T-Bills) – Treasury bills are National Government’s investment outlet units issued through commercial banks. These are like bonds but issued by the National Government. And so, by buying T-Bills, it’s as if you are lending money to the National Government. And it also has a certificate which promises to pay you a fixed interest after a given period of time.

Foreign Exchange (FOREX) – Open a dollar savings account or any currency of your choice along with your local currency. Do not overdo it though. The market is volatile at times, and you could lose money if you do not do it wisely. Invest in dollars or in any currency when the rates are going up.

Real Estate or Land – Some Filipinos find this as traditional safe havens for their excess cash. Depending on the location, real estate is not easily converted into cash when your need arises. Some investors go for growth of their real estate or land investment, others for their marketability. For readers, I would recommend to consider the ‘best location’ when buying a property together with the affordability of the price, of course. A very good real estate investment can be a ‘self-liquidating asset’ that can give you huge passive income in the future. Consider this situation: Buy a strategically located condo where you can have instant tenants! Just pay the down payment and the rest of the monthly amortizations will be paid by your tenant’s monthly rental payment.

You can refer to my article on real estate property investment tips.

Retirement or Pension Fund – Many insurance companies offer this kind of fund where you receive a monthly pension after reaching a certain age beginning 55 years old or above. Or alternatively, you can also receive its cash surrender value upon maturity of the fund.

Educational Fund – We all know that education costs a lot. This kind of investment is best for people who have school-age children or dependents. Get an educational plan as early as possible from a reputable company. Many who availed of such policy years ago now reap the benefits considering that college education nowadays involve huge expenses.

Life Insurance Fund – You do not benefit from this investment but your beneficiary will. This is a form of investment that protects the most important asset and that is yourself. You need to invest in yourself. Without you as an income-generating individual, especially if you are a breadwinner of the family, your family will be at a big loss. Avail of a plan that gives your beneficiary double benefits in case of your untimely death. There is also so-called ‘variable life insurance’ where a huge portion of your premium payment is allotted to several investments depending on your choice and risk appetite. In this scheme, this will give higher potential returns. Ask your insurance agent about it.

Memorial Plan – This may be scary but true! Life is full of expenses up to the very last minute which is your death. Do not make it difficult for your loved ones you leave behind when you exit the world. We all have to go eventually.

Jewelry – When you want to invest in jewelry, I do suggest going for gold instead of precious and semi-precious stones. Gold’s value has appreciated over the past several years. More so, gold can easily be pawned while stones are frowned upon as pawnshop collateral.

Durable Goods – These can be furniture, art paintings and sculptures, antiques and the like. Quality is the key word to call this as an investment.

Lend Your Money – Of course with interest, a collateral and a signed and notarized promissory note. Ask for postdated checks as your assurance for payment, and do not forget to register your real estate mortgage or chattel mortgage if you receive collateral. You can ask your city hall register of deeds for this.

Invest In a Business – If you want to avoid the hassle of putting up and managing your own business, then become a part of an existing business venture. This principle applies to Multi Level Marketing systems or MLMs. If you want to join in an MLM company, you might as well read these 25 questions to ask your sponsor.

Pay Off All Your Loans – This is especially true if your interest payments are more than what you can earn by investing your excess money. Sometimes, being debt-free is more than a payoff.
So if ever you have that extra cash, it’s a must to invest it to fight that inflation! Regular saving and investing are the only key to achieve our financial goals.

Power of Compound Interest

As I mentioned in my previous article on return on investments, we will now tackle the power of compound interest. You will see how powerful compound interest is as it is one of your allies in achieving financial freedom.

Let’s see how compound interest works by comparing simple interest vs. compound interest. You will see that it is really advantageous that you should really leave your money UNTOUCHED in the bank.

SCENARIO 1: Suppose you were able to save your first 100,000 at the age of 21. You decided to deposit it in the bank that gives a fixed 2% interest per year. You left it for 5 years.

Simple Interest:
Using the formula for simple interest where P is the principal amount, r is the interest and n is the number of years:

Interest = P multiply by r multiply by n = Prn = 100,000 (0.02) (5) = 10,000. So every year, your 100,000 earn 2,000 and after 5 years, it already earned 10,000.

Amount = P(1+rn) = 100,000 [1+(0.02)(5)] = 110,000. So your 100,000 became 110,000 after 5 years.

Compound Interest:
Using the formula for compound interest where ^ denotes exponent:

Amount = P[(1+r)^ n] = 100,000 [(1+0.02)^5] = 110,408.08. So your 100,000 became 110,408.08 after 5 years.

That means you have an extra interest of 408 as against the 110,000 earned using the simple interest. How did this happen? It is because your principal changes every year, as the interest earned every year now becomes part of the principal. To illustrate this, let’s see the computation below on the interests and principal amounts:

1st year interest = 100,000 (0.02) = 2,000. Add this interest to the original 100,000 principal, the new principal becomes 102,000.

2nd year interest = 102,000 (0.02) = 2040. Add this interest to the 102,000 principal, the new principal becomes 104,040.

3rd year interest = 104,040 (0.02) = 2,080.80. Add this interest to the 104,040 principal, the new principal becomes 106,120.80.

4th year interest = 106,120.80 (0.02) = 2,122.416. Add this interest to the 106,120.80 principal, the new principal becomes 108,243.22.

5th year interest = 108,243.22 (0.02) = 2,164.8644. Add this interest to the 108,243.22 principal, the new principal becomes 110,408.08.

Let’s see an example of frugal person leaving below his means, equipped with the right knowledge in investments and he regularly saves money.

SCENARIO 2: Suppose Charles is a frugal single person, age 21, living with his parents, and because of his employment and other sideline jobs, he was able to save 200,000 per year. He is equipped with the right knowledge in financial literacy and he was able to find a well performing fund that guarantees at least 10% fixed interest per year and he invested his money into it. How many years will it take him to be a millionaire?
Let’s see how powerful compound interest in this scenario given that he’s adding 200,000 each year to the principal.

1st year: 200,000 [1+0.10] = 220,000.
2nd year: 220,000 [1+0.10] + 200,000 = 442,000.
3rd year: 442,000 [1+0.10] + 200,000 = 686,200.
4th year: 686,200 [1+0.10] + 200,000 = 954,820.
5th year: 954,820 [1+0.10] + 200,000 = 1,250,302.

So Charles is a millionaire even BEFORE the end of 5th year at the age of 26. What if the fund earned 12%? 15%? 20%? He can definitely achieved a million in less than 5 years.

So imagine, if you equipped yourself with the right knowledge in financial literacy and you are regularly saving as a result of your frugal living, the power of compound interest will help you as you build your pile of assets eventually achieving financial freedom as time passes.

Saving Wisely With Our Paychecks

I know a lot of us are employees working for a company and struggling hard to survive on our paychecks. I belong to that category. When that paycheck comes, a lot of us spend it from paying our bills to treating ourselves like buying gadgets and other entertainment wants.

If we want to achieve our financial goals, then we must start to save as early as possible. And that is NOW! The earlier we started our savings attitude, the more possible we can achieve our financial goals.

We are used with this equation, INCOME - EXPENSE = SAVINGS. This is the scenario given above. As long as we received our paychecks, we spend it on a lot of ways. Whatever left from our expenses is our savings. I always believe in the concept of ‘delayed gratification’. That is, we delay our satisfaction in order to prepare for a future goal.

And this is where we need to save wisely. We need to arrange our equation. Instead of the equation written above, why not use INCOME - SAVINGS = EXPENSE. In this scenario, we pay ourselves first more than anything else. Each time we received our paychecks, we set aside a portion of it to our savings. We treat SAVINGS as an EXPENSE.

Savings is the most important of all expenses because it buys the most important thing - YOUR FUTURE.

If we view ourselves as a corporation, then a corporation must have a plan and budget for expenses. What is the first priority expense of a corporation? Yes, it is the payroll of employees. If you agree with this, your first priority should be “paying yourself first” because you are the sole employee of your own company. Paying yourself, in this instance, means compensating yourself for the use of an income-generating asset which is yourself. This compensation is your savings. Thus your income must first be reduced by your savings. What is left after will then be available for your living expenses.

I was lucky, I’m still living with my parents with less bills to be paid. And so I’m saving my paychecks regularly from a minimum of 20% to a maximum of 50% every pay day. And I started doing this at the age of 21.

I hope you will also do the same and start building your savings by saving wisely with your paychecks to prepare for your future financial goals.

Cashflow 101 E-Game

As I continue my financial education, yesterday I first played the Cashflow 101 E-Game. I never played the actual cashflow game yet but thanks to a college friend who gave me a copy of the cashflow 101 e-game. I can definitely say that it’s one of the best games to play when you want to increase your financial literacy.
Basically, there are two tracks of the game: The Rat Race and The Fast Track. The rate race is simply for the average person while the fast track is for rich persons. You can play the game against a maximum of 4 other players.

Both of them are tracks of income and spend but for the fast track, you’ve got options for lavish lifestyles and big expenditures such as taking a vacation, funding a research, running for a mayor position, etc.

I think the dice perse in the game represents the uncertainty in the real world. In the rat race, there is an income statement and balance sheet column for which you need to place each transaction in the game and sum it up. This is also a good practice to know basic principles of accounting and auditing.
For every roll of the dice, you can land into one of the following:


Doodads. Doodads are simply the expensive wants that we can’t resist. In the game, you cannot resist it and definitely you are compelled to buy it which you can pay by either cash or credit cards. These are things such as a huge discount on items, a promotional discounted vacation, etc.

Opportunity. Opportunites serve as deals for you to grab. It is broken down into two: small deal and big deal. Small deals are deals that involves small money while big deals involve large sums of money. Deals can either be stocks, mutual fund, business, or real estate opportunities. Each opportunity represent an ROI or return on investments. You can borrow a loan from the bank to fund these deals if you don’t have enough cash provided you can also pay them or else you will go bankrupt.

Market. Markets serve as opportunities for holders of assets. When you land in this option, you are offered by a buyer. Say for example, you bought a land when you landed on the opportunity option, it is this time that a buyer will offer you to buy that land. Be sure though to implement the basics and that is to buy low during the opportunity and sell high during the market.

Baby. Baby depicts the real happening of raising a family. In the game, when you land in this option, there will be an additional cost that will be added to your expenses. And there will be a maximum of 3 babies in the entire game.

Paycheck. Paycheck depicts the real world of employment. At the start of the game, you will be notified of your profession or your job. And each time you land on this option, you will get your paycheck that will be added to your cash. The paycheck though, in this game, is not fixed. It would be based on your net monthly cashflow in your income statement.

Downsizing. Downsizing also depicts the real happening of being fired or unemployed. In this case, you will lose 2 turns and lose a portion of your cash to fund your needs.

Charity. Lastly, charity relies on the concept of the law of reciprocation. In other words, you should give but it would be an option on your part. If you chose to give, then the amount will be deducted to your cash. Kiyosaki says that if you want money, you should first give money.

So there you are the rat race track. The very idea of the game is to accumulate enough passive income by buying assets. As you increase your passive income, the green color also increases. And if you have enough passive income, you can now go to the fast track where you can now enjoy a lot of your dreams.

Once you are already in the fast track, it is very easy to win the game as your income will be multiplied by 100. You will have a definite passive income goal to win in the fast track and to win the entire game. It would then be a race towards that goal against other competitors. Beware though that there is such thing as divorce in the fast track where you will lose all your cash.

I initially played the cashflow 101 e-game thrice. The first time I won with 910 points against one competitor. The second one, I went to play against two other competitors but unfortunately, I ended up bankrupt because of a bad deal that I went into. And the third time, I finished the game as a second placer against two other. Good thing I bought a high cost business that has zero cashflow at first, but eventually improved in the course of the game raking in a passive income of $400, and I ended up selling it as there was a buyer that offered me good amount when I landed on a market. After I sold it, I used the cash to pay all my debts.

Overall, the cashflow 101 e-game is very educational. Each time you roll a dice, you have the option to watch the video of Kiyosaki teaching various lectures on financial education. I believe this is a very powerful tool in one’s financial education and in achieving financial freedom. I’m looking forward to play the actual cashflow game with humans as my competitors.

I will next play the cashflow 202 e-game and I will write a post about it once I played it.

Overcome Fear in Investing

Without doubt, each of us don’t want to invest because we are afraid of losing our hard earned money. The fear of losing money is the main reason a huge percentage of the public struggles financially. But fear isn’t the real problem. It’s how people handle fear that matters. Kiyosaki tells people that the primary difference between rich people and poor people is how they handle the fear of losing money. Some people, when hit with a financial loss, give up. Others transform the loss into a win. As John D. Rockefeller said, “I always tried to turn every disaster into an opportunity.” Losers are defeated by failure. Winners are inspired by it.


Kiyosaki often commented that the real reason for lack of financial success was that people played it too safe. “People are so afraid of losing money that they do lose it,” he would say. If they have some cash, they buy big houses and big cars rather than big investments. Or they invest all of their money in balanced portfolios—in CDs and low-yield bonds and mutual funds and a few individual stocks. These are people, driven by fear, playing not to lose.

Rich Dad Tip:

“The primary difference between rich people and poor people is how they handle fear.”

Of course, a balanced portfolio is a lot better than no portfolio at all. It seeks safety through diversity. Having a financial plan for security and comfort first are important. But if you have any desire to become rich, you must focus, not diversify. You must put a lot of eggs in a few baskets rather than putting a few eggs in many.

FEAR: I’ll lose all my money if I invest in anything riskier than CDs, bonds, and mutual funds.

FACT:  If you lose some money, you can learn from the failure. Once you become an educated investor you’ll be positioned to reap potentially huge rewards.

FREEDOM:  Financial failure can be transformed into financial gain.

If the prospect of failure frightens you, then play it safe. Keep your daytime job until you have enough cash to buy bonds and mutual funds and consult with a financial planner. But if the prospect of failure inspires you to fight and win, maybe you should challenge yourself to change your financial habits. Educate yourself and take some financial risks. The more education you have, the less risk there will be.

In investing, the higher the risk, the higher the reward. You won’t become successful if you didn’t take risks and part of that risk is the fear of losing money. Personally, when I increased my financial education, my risk appetite also increased. I started investing in mutual funds and unit investment trust funds and then went to a riskier type of investment - the stock market. As I increased my business acumen, sooner or later, I will begin engaging myself into business. The more financially educated I am, the less the fear that I am feeling about.

Source: Robert Kiyosaki’s Coaching Program

Cash Flow Management in Business

Cash flow is the heart of a business. Cash flow determines if your business will prosper or fail. A positive cash flow provides good return of investment while a negative cash flow means that you are draining money in your business.


Whatever kind of business you have, you must have the right cash flow management skills. Attention to details in the early stages of your business will pave the way for success. Here are some pointers I learned from Rich Dad Coaching Program to help you contain and direct your cash flow in your business.

- Call on an accountant, banker, or financial consultant for advice in structuring your cash management system.

- Delay taking a salary until your business is generating cash flow from sales. If you’re terribly strapped, keep your day job and start your company part time.

- Review your cash position daily, looking at cash sources and needs for the coming week, month, and quarter. This way you can plan for any large cash need before it becomes a crisis.

- Keep a close eye on your ratio of assets to liabilities. This will enable you to move quickly when money needs to be borrowed. Be alert when liabilities rise over assets. You should be generating enough cash flow to pay for those liabilities.

- Bill customers as soon as your product is shipped or your service provided. Do it outright. Don’t delay.

- Require payment up front until credit has been earned by your customers. Business customers need to gain your trust before you can avail of credit.

- Pay your bills promptly, but ask for extended-payment terms from day one. Ask for extended-payment terms again after you’ve made several timely payments.

- Keep your overhead to a minimum. Don’t purchase anything new—such as a copy machine—until sales justify the purchase. You must examine your expenses thoroughly. Expenses are negative cash flows and if not managed properly, it can eat your business.

- Invest your cash on hand to maximize its earning potential. If you have extra cash in your business, try to look for other investments options where it can generate the highest yields.

- Establish tight internal controls over the handling of cash.

- As your business grows, continue to keep a close eye on cash management. Losing sight of cash flow during expansion is a common reason businesses go under.

- Make sure your bank account is reconciled by someone other than the person preparing checks or signing them. Always have a check and balance.

Rich Dad Tip:

“The ability to run a company from financial statements is one of the primary differences between a small business owner and a big business owner.”

Follow your cash from receipt to deposit, from purchase order to writing the check, and have an outside accountant review your system to make sure you have adequate internal control procedures

Success Story of Chikka

Chikka, a tagalog word literally that means “talk”. Filipinos are one of the most scattered races worldwide. We are literally in every part of the world. We love to talk, connect with our loved ones, asking how we are doing. With the introduction of mobile phones in the Philippines in the late 1990s, text messaging or short message service (SMS) has become very popular.

In fact, we are now considered as the text capital of the world considering the millions of text messages wandering in telecom networks everyday. This fact was taken advantage by the pioneer in wireless applications services development, having created the world’s first mobile instant messenger that runs on short message service – CHIKKA.

Let’s see another success story of an entrepreneur who made innovations in short message service that made him millions.

Dennis Mendiola is the man behind the success story of Chikka. He is I think considered genius looking at his educational background. He graduated Summa Cum Laude with a perfect 4.0 grade point average from the University of Pennsylvania, completing a double degree B.S. in Economics which he took up in Wharton and B.S. in Electrical Engineering which he took up in Moore. He also had MBA degree from Harvard Business School.

Mendiola began his professional career as a management consultant at McKinsey & Co. in New York. It is one of the most prestigious consulting firms in the world. He then went into investment banking at Bankers Trust in Singapore and Morgan Stanley in Hong Kong.


After that, Dennis went back to Philippines. He was tapped to head the corporate finance and strategy planning of Subic Bay Metropolitan Authority (SBMA) which was then headed by then SBMA Chairman Richard Gordon. In 1996, he decided to set up his own venture capital company named Next Century Partners Ltd., a private equity fund manager that channels funds from investors like American billionaires Roger Sant and Edward Bass for investment in profitable enterprises in Asia.

With the success of internet wave in late 1990s, Dennis Mendiola and his Next Century Partners got involved in ecommerce and invested in Ajonet Holdings. During that time, the trend was with mobile technology. Little by little, the number of mobile phone subscribers was outrunning the number of internet users. Even more, overseas Filipino workers in more advanced countries have greater access to the internet. So Dennis and his group thought of a way to connect the wired and the wireless.

He then incorporated a new company Chikka Holdings, Inc. named after “Chikka”, the Filipino slang for small talk. It was incorporated in the British Virgin Islands in 2000 with 40% of it owned by the employees and 60% owned by institutions such as venture capital firms Sitestar Corp. of the US Pacific Northstar and Discovery Fund Venture Capital.

Soon after, Chikka Asia, Inc. was set up as the regional operating arm based in the Philippines. It was then known worldwide to develop the first mobile instant messaging service named Chikka Text Messenger. The application lets the users to send text messages to mobile phones through the use of internet.

Chikka has since positioned itself as Wireless Service Provider. In just three quarters, it already achieved break even levels in terms of profit. With the success of Chikka, Mendiola began investing in and launching other technology companies. He then founded the Incredibly Fast Internet Company, a holding company for several internet-based businesses.

In June of 2000, eRegalo was formed to tap the remittance and gift market by overseas Filipinos. Crushcow.com was also formed to introduce mobile matchmaking which was then only available online through the use of internet. Later on, Bidshot.com was also born to compete with auction sites in the internet. It is a unique auction site that lets mobile auctioneers bid on items via text message and be alerted on the status of the bid. It also introduced SMS-interactive TV in the world, enabling any cable system operator to launch their won mobile interactive cable channels.

Mendiola expanded his business further by launching other affiliates that includes Sagent, a leader in “natural language” or the SMS counterpart of “artificial intelligence”. It features a technology it calls M-brace, which is the usual 1-800 number except the numeric digits are text or SMS short codes.

His company was also behind the successful Paysetter International which started the “virtual wallet” enabling users to send and receive actual cash via text messaging service with the use of mobile phones. It then partnered with Globe Telecom to give the country its first peer to peer secure credit reloading system more popularly known as “Share-a-Load.”

Chikka is no longer a local business anymore. It has already launched Lounge, a mobile version of IRC with Chinese carrier Unicorn for Shangdong province in China. It plans to expand to other parts of China. It will also launch its mobile instant messaging service in China called Chikka China. In the US, it has partnered with Cingular and is testing its mobile instant messaging service with T-Mobile and AT&T.

Chikka may literally mean small talk but for the founder Dennis Mendiola, it means a big business as he continuously introduces innovative solutions to the mobile technology.

Source: Go NeGOsyo

Ragnarok Success Story

Are you an on-line gamer? If you are, then definitely you are familiar with the game Ragnarok? But how did Ragnarok start? How did it become as one of the online games that hit it big in the market?

What fascinated me is the guerilla marketing that they implemented to market the product. Entrepreneurs are really innovative. They come up with resourceful ideas to make it big without incurring too many expenses.

Level Up! is the company behind the successful online game Ragnarok. It was run by father and son Nonoy and Ben Colayco. Nonoy Colayco has been in the fields of finance, investments and funds management. From the early 80s to the mid 90s, he held various positions in the Foreign Investments department of American International Group or AIG.

Nonoy is currently the Managing Director of Argosy Partners, Inc. and a Senior Partner of Argosy Advisers, a private equity advisory firm. Apart from advising clients on where to invest, Nonoy and his partners also invest their own funds in business ventures they believe in. Concurrently, Nonoy is also the Country Chairman of Jardine Matheson, the Chairman of Republic Cement, Chairman of Colliers Philippines, Member of the Advisory Board of JG Summit, Director of Aboitiz Transport Group, and a Director of several other companies.

During a business trip to Korea before, he smelled the opportunity that online gaming had to offer. He met with his former AIG colleagues to explore the potential of online gaming here in the Philippines. He didn’t know anything about video games and online gaming but he knew that Filipinos are fond of gaming. This prompted him to turn to his son Ben Colayco who at that time is having second thoughts if he will pursue an MBA degree.

Ben Colyaco was passionate about one thing: gaming. When he graduated from high school, he decided to take up law. He took up Political Science at New York University and after graduating, he decided to take up law proper. Nonoy Colayco is having doubts if his son Ben is really interested in pursuing to become a lawyer. He advised Ben to take up a break, do whatever he wants to do for one year, and from there decide whether or not to pursue a law degree.

Ben decided to follow his dad’s advice. He joined Grey Advertising and got his first marketing experience. While in Grey, Ben learned how to come up with advertising campaigns for detergent brands. After a year, Ben was no longer interested in pursuing a law degree. He changed his mind and got interested to pursue MBA instead. He told his dad Nonoy about his plans. Nonoy said he won’t pay for it and encouraged Ben to go back in the Philippines to spearhead a new business project. Ben decided to quit his MBA plans and went back in the Philippines.

Nonoy recalled that at the time they started, the network game Counterstrike was the hit online game. Basically, kids would go into gaming centers like internet cafes and play the game against other kids who were connected in a network. But their plan is to bring gaming to a whole new level, a level they called “MMOG” or Massively Multiplayer On-Line Games. The internet was growing and gaming was going towards that direction.

However, Ben asked how they are going to monetize it? How do they get people to pay for the games? For network gaming, it was easy – you just pay the cashier of the gaming center or internet café. But how would it be in the case of MMOGs? Anyone could virtually play anywhere with the use of the internet. So they thought that there should only be one center point of registration. And the only way to do it was for gamers to log-in and be required to pay before they play.

When both father and son Ben and Nonoy started spreading the word about their planned business, a lot of people were skeptical about it. But they went on unfazed. They got the publishing rights for two online games – Oz World and 3D Chat.

These games were not that popular but they served as their testing ground to see the response of the market most especially the number of subscribers and the ability of the infrastructure to handle large amounts of traffic. The results were not spectacular but they decided to continue on and got a more popular game. It was the time they got Ragnarok from Korea.

Rather than advertise in traditional ways such as newspapers, televisions, radio, and other means, they concentrated on distribution. This is the part where I liked most. They implemented some form of guerilla marketing. What they did was to produce as many Ragnarok installations as they could. They literally flooded the market with these CDs by giving them away. They gave it to publishers of local comic books and gaming magazines. They distributed them in anime, sci-fi and toy conventions. They sponsored proms and high school parties and they gave out these CDs. They connected with their target customers which are the youth. They made friends with the kids.

Pretty soon, kids were hanging out in their office. They developed “street credibility” by being one of them. It didn’t take long before news about Ragnarok spread. Before they knew it, they already had around 20,000 subscribers. It was at that point that they knew they had accomplished something special.
If life was indeed a game, Nonoy and Ben were definitely the undisputed top scorers and masters of the game! The game was not yet over for these Ragnarok pioneers. They were already looking beyond the Philippines for expansion and they were eyeing Brazil and India as potential markets.

Source: Go Negosyo

Manny Pangilinan’s Life Success Story

I would start featuring success stories of famous entrepreneurs and leaders to serve as inspiration to others. Today, I will feature the life story of the highest paid Philippine Chief Executive Officer Manny Pangilinan, the CEO of the most profitable company and the largest company by market value - Philippine Long Distance and Telephone Company or PLDT, the Philippine’s pioneer in telecommunications.
His life story came from his speech during the Ateneo Graduation last 2006 where he himself studied. During his speech, he narrated his own rags to riches story in three journeys from being a student to eventually becoming a corporate magnate. Let’s learn from him and be inspired.



Opening

Manny Pangilinan

This day of academic ceremony must be a day of touching, personal memories. It is also a day to pause, and give honor and praise to your parents and to the good Lord for the grace to be at this place, at this time. While all of us may be seated, we’re actually standing on their shoulders, proud and thankful. Your years in college were a journey of discovery and preparation, a discovery of yourself and the gifts bestowed upon you. You’re now about to commence a new journey, of becoming an adult, of finding your place in society, of starting a future. Today, I’d like to share with you my own journey, as I traveled from being a student, to being a professional manager and an OFW, and now, an entrepreneur and corporate activist.

First part of the journey: A Student
The first part of my journey begins with my family. My lolo (grandfather) started as a public school teacher in Pampanga and Tarlac, rising through the ranks to become superintendent of public schools and, eventually, secretary of education. My dad began his career as a messenger at Philippine National Bank, and retired as president of Traders Royal Bank, one of the larger banks in the ’80s. During my elementary years, I had ten centavos to buy a bottle of Coke, five centavos for crackers, another ten centavos to take the bus home from San Beda in Mendiola, which I made sure I wouldn’t lose, otherwise I would have walked home. In college, my weekly allowance at the Ateneo was P10, and that included my jeepney fares. I have a lot of classmates who have cars and others even have their own drivers. They were lucky. Someday, I said to myself, I will reach all those. My scholarships in both San Beda and Ateneo were only my lucky charms.
In late 1965, as my own graduation was approaching, I had come home from the Ateneo one Saturday afternoon, and spoke with my dad about taking an MBA in the States. I was met with silence, which meant there wasn’t enough money for an education abroad, that if I really wanted it, I had find a way myself. Fortunately, Procter & Gamble was offering a rare scholarship to the University of Pennsylvania’s Wharton School. It was a national competition. I entered-and won. For three generations of my family, life meant coping with challenges despite modest means, relying on God-given talent, hard work and a passionate determination to succeed.

Second part of the journey: A professional manager
Let me now turn to the second part of this journey. After two years in Philadelphia, I returned home, hopeful about landing a managerial position in a large company. I struck out at first bat. My benefactor, Procter & Gamble, turned down my application. So I ended up taking the first job I was offered, as executive assistant to the president at Phinma for P1,000 a month. Without any job experience, we can’t be choosers, right? Grab the first decent job that comes your way, immerse yourself in work, and soon, you’ll find the right job, or it will find you.

After six years with Phinma, I decided to work abroad. There were the usual reasons: the glamor of being an expat in Hong Kong, the stifling staleness of my local career but, more importantly, I needed to find myself, to prove that I can stand on my own and succeed. The warmth of family ties, the comfort of an extended family system so embedded in our society were indeed beguiling, but I wanted to assert my independence.

I was recruited by Bancom International, a Philippine investment bank based in Hong Kong. It was a stimulating experience. I learned the dynamics of international finance from my Chinese colleagues, not from the Filipino executives. Thereafter, I was seconded to a joint venture investment bank with American Express. I had expected to be appointed CEO of that new bank, but wasn’t. While disappointed and even depressed, I soldiered on and, sure enough, this venture failed inside of two years. A huge dilemma confronted a young man of 30 years: return to Manila or stay with AMEX? I decided to remain a soldier of fortune in Hong Kong. Why? Because after this setback, I wanted to prove something to myself. I felt I had to prove to AMEX the Filipino can. Indeed, after four years with AMEX, I received a phone call from my boss in London. He said, “You’ve outgrown Hong Kong and are now ready for London, and to fast track your career.” After reflection, I politely said, no. I’ve proven the point to myself and to AMEX, and that had been enough. Besides, I felt Asia is my home — and so it shall be.

Third part: An entrepreneur and corporate activist
The third, and final part, starts with First Pacific. Whilst working in the region, I met some clients - foremost being Anthoni Salim - who were willing to support my idea of a regional banking and trading business. With their help, I founded First Pacific in Hong Kong in 1981. I started out with only six people, on 50 square meters of office space, and little capital. Now, the companies that constitute First Pacific have sales of $5 billion, with more than 60,000 employees across the region. But I won’t tell you about our successes at First Pacific. Instead, I’ll describe our failures - some of which indeed became total failures, but some of which we turned around and made a success.

In 1989, we were negotiating to acquire Hanimax, maker of middle to low-end cameras based in Sydney, Australia. I took the overnight flight to Sydney from Hong Kong, confident that when I arrived the following morning, a letter from an international bank approving our financing would await me. But lo and behold, it was a letter of disapproval. So there I was in Sydney, committed to purchase Hanimax, but without enough money to complete it. Providentially, there was a competing bidder who sought to take us out of the race by offering a sum of money. That practice is called “greenmail.” Our gambit won $7 million that day when we had no cards to play. But there’s a sequel to this. Buoyed by confidence - perhaps overconfidence, even hubris - we were off to the races again, and decided quickly to buy another company. This was Tech Pacific, Australia’s largest distributor of computer products. It was indeed a large company with sales in excess of a billion dollars! Well, it was a disaster. It took us three years, and enormous pain and effort, to turn its fortunes around. I fell sick from stress and anxiety and, on several occasions, contemplated resigning. But we stood to our tackle and, after those three years, Tech Pacific is now Asia’s largest distributor of computer products.
In 1998, I came home, after 22 years abroad - after what father (Roque) Ferriols often calls “the days of wasted youth.” When we invested in PLDT seven years ago, we faced the massive task of repair and renewal. Critics told us that we couldn’t change the culture of monopoly, that misdemeanors in PLDT couldn’t be eradicated, that our fixed line business had no future. But we made the tough and unpopular decisions at PLDT. Like reducing the number of employees from 14,000 to 9,000. Like changing dubious practices and encouraging honesty and transparency. Like converting the mindset of bureaucrats to that of innovators and entrepreneurs. Decisions about people are always difficult for us because First Pacific is an Asian company with Asian values. But head count reduction was critical for PLDT to survive.
Now that PLDT has recovered, and is now the most profitable company in the country, my confidence in the Filipino’s ability to succeed has been absolutely affirmed. In fact, despite the downsizing I mentioned earlier, we now have more people under our wings - about 19,000 - simply because PLDT is now a different company. And to most of you who might be familiar with Piltel or Talk N’ Text - it was a company in extremis. I’ve had to tell creditor banks that Piltel could not pay its debts - the first time I’ve done that in my life. My officemates told me to close Piltel. I didn’t agree. I believed that the cellular frequency it owns, as well as its brand, are potentially valuable, as they have become today. Also, I did not want to imperil the financial health of local banks to which Piltel owed much.

After five years of rehab, Piltel’s return to profitability has been close to supernatural. It is now the country’s most profitable company - after PLDT and Smart. Finally, some of you have raised with me the question - is business bad? Let me respond by saying, business is not all bad. It is people - some people at least - that may make business bad. No business can prosper in the long term without the right values. The best performing companies are those that manage their businesses which meet ethical standards. Transparency, accountability, integrity, discipline - all these good governance principles - must permeate every policy, every process, of the company, as they do at First Pacific and PLDT.

Closing:
Thefore I close, I’d like to make a personal request. I’d like to ask each of you a favor. Give me bragging rights. Do something great. Sometime in the future, I want to hear some incredible thing you’ve done. And I’d like to brag that I spoke at your graduation. In return, I offer you a few more pieces of advice. Keep it real. Stay true to what’s best in yourself, to the best of your experience here at the Ateneo. Trust your instincts. Believe in yourself. Engage in sports, you’ll need it as you age. Make art, or at least, value it. Be brave. Be bold. Find something that moves you or pisses you off, but do something about it. You have a voice, speak up.

Take a stand for what’s right. Make a change. You may not always be popular, but you’ll be part of something larger and greater than yourself. Besides, making history is cool, isn’t it? But I also want to offer a warning: you will meet people who’ll entice you to compromise your principles. They’ll try to seduce you and distract you with money, power, security and perhaps, most dangerously, a sense of belonging. Don’t let them; it’s not worth it.

You can have genuine values and still get that job. You can have a conscience and still make money.
Let me send you off with one final thought. I was born poor, but poor was not born in me. And it shouldn’t be born in you either. You can make it. Whatever you may wish to do with your future, you can make it. It gets dark sometimes, but morning comes always. Suffering breeds character. Character breeds faith. In the end, faith will not disappoint. You must not disappoint.

Manny Pangilinan’s Life Success Story

Gokongwei Success Story

John Gokongwei life story is another rags to riches success story of a true Filipino Taipan entrepreneur. His business empire company known as John Gokongwei Summit Holdings, Inc. or J.G. Summit Holdings, Inc. for short has been one of the most successful conglomerate in the Philippines today competing with more solid names such as SM Malls, PAL, and Ayala.

It has business interests in branded consumer foods (Universal Robina Corp.), real estate property development (Robinson’s Land Corp.), air transportation (Cebu Pacific Air), banking and financial services (Robinson’s Bank), telecommunications (Sun Cellular and Digitel), petrochemicals (J.G. Summit Petrochemical Corp.), and United Industrial Corp. of Singapore.

John Gokongwei Story started in 1927 in the Chinese province of Fujian where he was born. Because they needed to escape the turmoil in China, they migrated to the province of Cebu here in Philippines where his grandfather Pedro Gotiaoco operated a successful chain of movie houses. Let’s view another entrepreneur story as we witness Gokongwei’s inspiring story with the various challenges that he faced delivered as part of his speech to the ad congress:

I was born to a rich Chinese-Filipino family. I spent my childhood in Cebu where my father owned a chain of movie houses, including the first air-conditioned one outside Manila. I was the eldest of six children and lived in a big house in Cebu ’s ForbesPark. A chauffeur drove me to school everyday as I went to San Carlos University, then and still one of the country’s top schools. I topped my classes and had many friends. I would bring them to watch movies for free at my father’s movie houses. When I was 13, my father died suddenly of complications due to typhoid. Everything I enjoyed vanished instantly. My father’s empire was built on credit. When he died, we lost everything-our big house, our cars, our business-to the banks. I felt angry at the world for taking away my father, and for taking away all that I enjoyed before. When the free movies disappeared, I also lost half my friends.

On the day I had to walk two miles to school for the very first time, I cried to my mother, a widow at 32. But she said: “You should feel lucky. Some people have no shoes to walk to school. What can you do? Your father died with 10 centavos in his pocket.” So, what can I do? I worked.

My mother sent my siblings to China where living standards were lower. She and I stayed in Cebu to work, and we sent them money regularly. My mother sold her jewelry. When that ran out, we sold roasted peanuts in the backyard of our much-smaller home. When that wasn’t enough, I opened a small stall in a palengke (market). I chose one among several palengkes a few miles outside the city because there were fewer goods available for the people there. I woke up at five o’clock every morning for the long bicycle ride to the palengke with my basket of goods. There, I set up a table about three feet by two feet in size. I laid out my goods-soap, candles, and thread-and kept selling until everything was bought. Why these goods? Because these were hard times and this was a poor village, so people wanted and needed the basics: soap to keep them clean, candles to light the night, and thread to sew their clothes. I was surrounded by other vendors, all of them much older. Many of them could be my grandparents. And they knew the ways of the palengke far more than a boy of 15, especially one who had never worked before. But being young had its advantages. I did not tire as easily, and I moved more quickly. I was also more aggressive.

After each day, I would make about 20 pesos in profit! There was enough to feed my siblings and still enough to pour back into the business. The pesos I made in the palengke were the pesos that went into building the business I have today. After this experience, I told myself, “If I can compete with people so much older than me, if I can support my whole family at 15, I can do anything!” Looking back, I wonder, what would have happened if my father had not left my family with nothing? Would I have become the man I am? Who knows? The important thing to know is that life will always deal us a few bad cards. But we have to play those cards the best we can. And WE can play to win! This was one lesson I picked up when I was a teenager. It has been my guiding principle ever since. And I have had 66 years to practice self-determination. When I wanted something, the best person to depend on was myself. And so I continued to work.

In 1943, I expanded and began trading goods between Cebu and Manila. From Cebu, I would transport tires on a small boat called a “batel”. After traveling for five days to Lucena, I would load them into a truck for the six-hour trip to Manila. I would end up sitting on top of my goods so they would not be stolen! In Manila, I would then purchase other goods from the earnings I made from the tires, to sell in Cebu. Then, when World War II ended, I saw the opportunity for trading goods in post-war Philippines. I was 20 years old. With my brother Henry, I put up Amasia Trading, which imported onions, flour, used clothing, old newspapers and magazines, and fruits from the United States.

In 1948, my mother and I got my siblings back from China. I also converted a two-story building in Cebu to serve as our home, office, and warehouse all at the same time. The whole family began helping out with the business.

In 1957, at age 31, I spotted an opportunity in corn-starch manufacturing. But I was going to compete with Ludo and Luym, the richest group in Cebu and the biggest cornstarch manufacturers. I borrowed money to finance the project. The first bank I approached made me wait for two hours, only to refuse my loan. The second one, China Bank, approved a P500,000-peso clean loan for me. Years later, the banker who extended that loan, Dr. Albino Sycip said that he saw something special in me. Today, I still wonder what that was, but I still thank Dr. Sycip to this day. Upon launching our first product, Panda corn starch, a price war ensued. After the smoke cleared, Universal Corn Products was still left standing. It is the foundation upon which JG Summit Holdings now stands. Interestingly, the price war also forced the closure of a third cornstarch company, and one of their chemists was Lucio Tan, who always kids me that I caused him to lose his job. I always reply that if it were not for me, he will not be one of the richest men in the Philippines today. When my business grew, and it was time for me to bring in more people- my family, the professionals, the consultants, more employees- I knew that I had to be there to teach them what I knew. When dad died at age 34, he did not leave a succession plan. From that, I learned that one must teach people to take over a business at any time. The values of hard work that I learned from my father, I taught to my children.

They started doing jobs here and there even when they were still in high school. Six years ago, I announced my retirement and handed the reins to my youngest brother James and only son Lance. But my children tease me because I still go to the office every day and make myself useful. I just hired my first Executive Assistant and moved into a bigger and nicer office. Building a business to the size of JG Summit was not easy. Many challenges were thrown my way. I could have walked away from them, keeping the business small, but safe. Instead, I chose to fight. But this did not mean I won each time.

By 1976, at age 50, we had built significant businesses in food products anchored by a branded coffee called Blend 45, and agro- industrial products under the Robina Farms brand. That year, I faced one of my biggest challenges, and lost. And my loss was highly publicized, too. But I still believe that this was one of my defining moments. In that decade, not many business opportunities were available due to the political and economic environment. Many Filipinos were already sending their money out of the country. As a Filipino, I felt that our money must be invested here. I decided to purchase shares in San Miguel, then one of the Philippines’ biggest corporations. By 1976, I had acquired enough shares to sit on its board. The media called me an upstart. “Who is Gokongwei and why is he doing all those terrible things to San Miguel?” ran one headline of the day. In another article, I was described as a pygmy going up against the powers-that- be. The San Miguel board of directors itself even aid for an ad in all the country’s top newspapers telling the public why I should not be on the board. On the day of reckoning, shareholders quickly filled up the auditorium to witness the battle. My brother James and I had prepared for many hours for this debate. We were nervous and excited at the same time. In the end, I did not get the board seat because of the Supreme Court Ruling. But I was able to prove to others-and to myself-that I was willing to put up a fight. I succeeded because I overcame my fear, and tried. I believe this battle helped define who I am today. In a twist to this story, I was invited to sit on the board of Anscor and San Miguel Hong Kong 5 years later. Lose some, win some. Since then, I’ve become known as a serious player in the business world, but the challenges haven’t stopped coming. Let me tell you about the three most recent challenges. In all three, conventional wisdom bet against us. See, we set up businesses against market Goliaths in very high-capital industries: airline, telecoms, and beverage.

Challenge No. 1: In 1996, we decided to start an airline. At the time, the dominant airline in the country was PAL, and if you wanted to travel cheaply, you did not fly. You went by sea or by land. However, my son Lance and I had a vision for Cebu Pacific: We wanted every Filipino to fly. Inspired by the low-cost carrier models in the United States, we believed that an airline based on the no-frills concept would work here. No hot meals. No newspaper. Mono-class seating. Operating with a single aircraft type. Faster turn around time. It all worked, thus enabling Cebu Pacific to pass on savings to the consumer. How did we do this? By sticking to our philosophy of “low cost, great value.” And we stick to that philosophy to this day. Cebu Pacific offers incentives. Customers can avail themselves of a tiered pricing scheme, with promotional seats for as low a P1. The earlier you book, the cheaper your ticket. Cebu Pacific also made it convenient for passengers by making online booking available. When we started 11 years ago, Cebu Pacific flew only 360,000 passengers, with 24 daily flights to 3 destinations. This year, we expect to fly more than five million passengers, with over 120 daily flights to 20 local destinations and 12 Asian cities. Today, we are the largest in terms of domestic flights, routes and destinations. We also have the youngest fleet in the region after acquiring new Airbus 319s and 320s. In January, new ATR planes will arrive. These are smaller planes that can land on smaller air strips like those in Palawan and Caticlan. Now you don’t have to take a two-hour ride by mini-bus to get to the beach. Largely because of Cebu Pacific, the average Filipino can now afford to fly. In 2005, 1 out of 12 Filipinos flew within a year. In 2012, by continuing to offer low fares, we hope to reduce that ratio to 1 out of 6. We want to see more and more Filipinos see their country and the world!

Challenge No. 2: In 2003, we established Digitel Mobile Philippines, Inc. and developed a brand for the mobile phone business called Sun Cellular. Prior to the launch of the brand, we were actually involved in a transaction to purchase PLDT shares of the majority shareholder. The question in everyone’s mind was how we could measure up to the two telecom giants. They were entrenched and we were late by eight years! PLDT held the landline monopoly for quite a while, and was first in the mobile phone industry. Globe was a younger company, but it launched digital mobile technology here. But being a late player had its advantages. We could now build our platform from a broader perspective. We worked with more advanced technologies and intelligent systems not available ten years ago. We chose our suppliers based on the most cost-efficient hardware and software. Being a Johnny-come- lately allowed us to create and launch more innovative products, more quickly. All these provided us with the opportunity to give the consumers a choice that would rock their world. The concept was simple. We would offer Filipinos to call and text as much as they want for a fixed monthly fee. For P250 a month, they could get in touch with anyone within the Sun network at any time. This means great savings of as much as 2/3 of their regular phone bill! Suddenly, we gained traction. Within one year of its introduction, Sun hit one million customers. Once again, the paradigm shifts - this time in the telecom industry. Sun’s 24/7 Call and Text unlimited changed the landscape of mobile- phone usage. Today, we have over 4 million subscribers and 2000 cell sites around the archipelago. In a country where 97% of the market is pre-paid, we believe we have hit on the right strategy. Sun Cellular is a Johnny-come- lately, but it’s doing all right. It is a third player, but a significant one, in an industry where Cassandras believed a third player would perish. And as we have done in the realm of air travel, so have we done in the telecom world: We have changed the marketplace. In the end, it is all about making life better for the consumer by giving them choices.

Challenge No. 3: In 2004, we launched C2, the green tea drink that would change the face of the local beverage industry — then, a playground of cola companies. Iced tea was just a sugary brown drink served bottomless in restaurants. For many years, hardly was there any significant product innovation in the beverage business. Admittedly, we had little experience in this area. Universal Robina Corporation is the leader in snack foods but our only background in beverage was instant coffee. Moreover, we would be entering the playground of huge multinationals. We decided to play anyway. It all began when I was in China in 2003 and noticed the immense popularity of bottled iced tea. I thought that this product would have huge potential here. We knew that the Philippines was not a traditional tea-drinking country since more familiar to consumers were colas in returnable glass bottles. But precisely, this made the market ready for a different kind of beverage. One that refreshes yet gives the health benefits of green tea. We positioned it as a “spa” in a bottle. A drink that cools and cleans- thus, C2 was born. C2 immediately caught on with consumers. When we launched C2 in 2004, we sold 100,000 bottles in the first month. Three years later, Filipinos drink around 30 million bottles of C2 per month. Indeed, C2 is in a good place. With Cebu Pacific, Sun Cellular, and C2, the JG Summit team took control of its destiny. And we did so in industries where old giants had set the rules of the game. It’s not that we did not fear the giants. We knew we could have been crushed at the word go. So we just made sure we came prepared with great products and great strategies. We ended up changing the rules of the game instead.

There goes the principle of self-determination, again. I tell you, it works for individuals as it does for companies. And as I firmly believe, it works for nations. I have always wondered, like many of us, why we Filipinos have not lived up to our potential. To be a truly great nation, we must also excel as entrepreneurs before the world. We must create Filipino brands for the global market place.

When we started our own foray outside the Philippines 30 years ago, it wasn’t a walk in the park. We set up a small factory in Hong Kong to manufacture Jack and Jill potato chips there. Today, we are all over Asia. We have the number-one-potato- chips brand in Malaysia and Singapore. We are the leading biscuit manufacturer in Thailand, and a significant player in the candy market in Indonesia. Our Aces cereal brand is a market leader in many parts of China. C2 is now doing very well in Vietnam, selling over 3 million bottles a month there, after only 6 months in the market. Soon, we will launch C2 in other South East Asian markets. I am 81 today. But I do not forget the little boy that I was in the palengke in Cebu. I still believe in family. I still want to make good. I still don’t mind going up against those older and better than me. I still believe hard work will not fail me. And I still believe in people willing to think the same way. Through the years, the market place has expanded: between cities, between countries, between continents. I want to urge you all here to think bigger. Why serve 86 million when you can sell to four billion Asians? And that’s just to start you off. Because there is still the world beyond Asia. When you go back to your offices, think of ways to sell and market your products and services to the world. Create world-class brands. You can if you really tried. I did.

As a boy, I sold peanuts from my backyard. Today, I sell snacks to the world. I want to see other Filipinos do the same.

Hortaleza Success Story

Dr. Rolando Hortaleza, the owner of the local Splash Corporation competing and knocking down multinational brands, Unilever and Procter and Gamble Philippines, is the featured entrepreneur success story today.

In an interview with The Philippine Star last August 2005, Dr. Hortaleza tells about the “bitter taste” of success after carefully assessing that he could not support his wife and their daughter with his income if he practiced Medicine - he dared his fate to become an entrepreneur.

Hortaleza says that success is just a matter of dreaming. In reality, however, dreaming only constitutes 50% of the total picture of success. Aspiration is one thing and materialization of the ambition is another. Let us view another rags to riches entrepreneur as we witness the life story of success of Hortaleza’s Splash Corporation:

In 1985, with a paltry capital of P12,000 (the total cash gifts he and his wife received as their wedding presents), he ventured into repacking acetone and cuticle remover after he paid P5,000 to his cousin in exchange for a special formula for these “chemicals.” Sans sophisticated technology, Hortaleza, his wife Rosalinda Ang-Hortaleza (also a doctor) and an all-around assistant transferred those substances from drums to small. amber bottles using tabo (water dipper) to make their very first cosmetic products under the company name RBH Cosmetics. Inside their two-storey, 500-square-meter house in Valenzuela, their very first products were manufactured.

“Many times, I would siphon acetone and cuticle remover to small bottles. And many times, too, I would accidentally ingest them,” Hortaleza said adding that their first year of business venture earned for them a little over P100,000.

Like all entrepreneurs, Hortaleza was itching to hit it big. Seeing a crown of opportunity in making hair spray in 1987 - because big hair style was the fad then - his company offered a high-quality, low-price alternative to the imported hair spray products. As many a woman used his hair spray, Hortaleza stumbled upon a spray of luck as he earned his first P1 million in sales that year.

It was only in 1993 that their technology became sophisticated. By that time, too, their company name had metamorphosed into other names - from Hortaleza Cosmetics in 1986, it was renamed Splash Cosmetics in 1987, Splash Manufacturing Corp. in 1991, until it became Splash Corp. in 2001.

To date, Hortaleza’s company is worth billions courtesy of its three arms - local distribution and international distribution of Splash and retailing (HBC). From acetone, cuticle remover and hair spray, his company now processes and distributes soap, lotion and exfoliating products like Extraderm, Skin White, Maxipeel and Biolink. From three people working f or Hortaleza Cosmetics in 1985, the company has 1,600 employees now with the inclusion of 40 Indonesians who are employed in his factory in Jakarta, Indonesia.

More than a success story, Hortaleza would like to believe that theirs is a story of hope, a story of humble beginnings. There were times, he said, that instant capital was hard to come by so he resorted to informal channels like borrowing from the Chinese community. At one point, he borrowed from loan sharks just to see his business through.

“I always believe that at the end of the day it will always be people issue. As long as you’re surrounded by passionate people, you can make sure that your endeavor will take off,” he said, adding that their faith in God is the tie that binds all actions of their company.
You can buy technology. You can buy or build structures. But you can’t buy passion and loyalty. Hortaleza is very thankful he didn’t have to buy determination and dedication from his people. For he practices what he preaches, Hortaleza’s people are all wired up to think and act that what they’re doing is for the betterment not only of themselves but of their country.
“The pursuit to succeed should not be taken as an end but rather as a means to the end. We run after profit to sustain life. We bought equipment and nourished ourselves. It’s about time we contributed to the society,” he philosophized.

Relating well with people is one of Hortaleza’s unwavering armor to feel the pulse of the masa. This trait of his is the reason there’s no labor union in his company. What’s the need for one when, in fact, Hortaleza is within arm’s reach of his employees? He is also very concerned about his suppliers, he put up World Partners Bank so accredited clienteles of Splash can enjoy “partnership of equals” when they do their financing transaction with the bank.

“I’m jologs. I play basketball with them. I sit down and eat with my employees in the factory and we tell each other stories about anything under the sun. I listen to their problems,” he said. Most of his employees call him Kuya, a term that does not alienate them from him. He and his wife also stood as principal sponsors in the weddings of their employees. Even his children - two boys and two girls who go to Ateneo and Poveda - are so grounded they spend time with their employees very often.

Even as a young kid, Hortaleza recalled, he has always been maka-masa. “For one thing, I grew up in a below-middle class community in Sampaloc.” At the age of 10, he would bring lunch to the employees of his parents in their small retailing business called Hortaleza Vaciador where, after school, he would help by sharpening nippers, pushers, scissors and cutters.

Now that Hortaleza’s company has grown big and has weathered the storm posed by competing against multinational skin care brands (Splash is the No. 1 skin care product in the Philippines and No. 6 in the international market, the only local company in a pool of international brand names), many companies want to buy them out especially now that they recently launched “neutraceutical” products like flavored virgin coconut oil and ampalaya tablets.
But Hortaleza said he’s not selling his company because it is the flagship of the Philippines when it comes to skin care products, a domain dominated by North America and Europe.

Truly, Dr. Rolando Hortaleza is another epitome of a rags to riches entrepreneur story. He has proved that with the right goals and actions towards those goals, competing with bigger companies is definitely possible.
Salute towards more success Dr. Hortaleza!

Tony Tan Caktiong and Jollibee Success Story

Tony Tan Caktiong’s Jollibee has been one of the most admired, most copied, most innovative and most professionally-run company here in the Philippines. It has been the number one fastfood chain overtaking giants such as Mc Donalds and Kentucky Fried Chicken or KFC.

How did a local jolly red bee knocked down a multinational red-haired clown named Ronald? Let’s see another inspiring story of the founder of one of my ideal businesses. With its success, a Jollibee franchise has now a tag price of P25+ Million (US$ 500,000+). Wow!


Tony Tan Caktiong’s Life and his Jollibee company is another rags to riches story of an entrepreneur that truly inspires everyone. Tony was the third of seven siblings born to poor parents who migrated from the Fujian province in China to look for a better life here in the Philippines. His father began as a chef in a Chinese Temple. Not later on his father was invited to open a restaurant business in Davao so the whole family moved south. All together, they helped one another in managing the restaurant business which in turn became profitable. This allowed young Tony to return back to Manila and pursue his course Chemical Engineering at the University of Santo Tomas (UST).

In 1975, Tony and his colleagues went on a visit to a Magnolia Ice Cream plant located in Quezon City and learned that it was offering franchise when he saw a poster for it. By the month of May, with his family savings, he took P350,000 to grab the franchise opportunity and opened two Magnolia ice cream parlors named Cubao Ice Cream House located near the Coronet Theater, and Quiapo Ice Cream House located beside the bridge – the one going to ilalim – near a Mercury Drug outlet. They all worked hands-on but as the business propels, they noticed they could not do it all so they started to set up an organization hired store managers, and trained people.

Tony started with just two ice cream. Then after two years, he offered chicken and hamburger sandwiches, because customers were telling them they didn’t want to be eating ice cream all the time. They prepared the food in the back kitchen, and soon noticed that people were lining up more for hamburgers than for ice cream. Then in 1978, when they already had six ice cream parlors, they asked themselves: “Why don’t we change into a hamburger house?”

That was also the time they decided to incorporate and realized thet they needed a brand name. They were looking for a symbol that would represent the group, and because Tony was very impressed with Disneyland characters, they decided on a bee. The bee is a busy creature that produces honey – one of life’s sweetest things. They thought it would be a very good symbol to represent everybody. They decided they would all be very busy and happy at the same time, because if they were busy but not happy, it wouldn’t be worth it. That’s why they put the word jolly and just changed the “y” into “i” to form a brand name - JOLLIBEE.
“It wasn’t long before we heard that the multinationals were coming in – including McDonald’s. Friends started asking us if we were going to get a McDonald’s franchise but I remember saying, if you franchise, you can’t grow outside the Philippines”, says Tony.

McDonald’s came in 1982, but they didn’t feel threatened because they were a little naïve and Jollibee was doing very well. They found McDonald’s to be very good at everything, but it didn’t know the local culture. They knew the Filipino’s taste buds and what he liked in food, so they offered him flavorful and good-tasting products. He likes pasta, so they started offering spaghetti. He likes chicken, so they came up with good fried chicken by mixing different flavors. They also knew something important all along: Filipino taste is sweet. This is very Filipino – very Asian. He said: “If we eat anything sweet; we don’t really think it’s sweet; but try giving it to a foreigner and they’d be surprised.”





Tony narrates: “Filipinos also like to smell their food before they eat it. They want to be sure it smells delicious before they take a bite. Sometimes they would open a kettle and say, what’s this? It smells good! This was proved by the Langhap-Sarap advertising campaign by Basic [Footcone and Belding]. They did it for us initially for the hamburger, and when it became successful, we started using it as a campaign slogan for the other products.”

It didn’t take them long to introduce new products when they were starting out. The family members would discuss what new products customers would like, and without much marketing they’d bring something out – like spaghetti. Tony’s sister is also a good cook, so she would come up with a new recipe, they would comment on it, and then she’d fix the recipe before they started offering it. “Before, it was simple. Now, there’s a formal structure. There’s a big Research and Development (R&D) department and a marketing department. The marketing department gets inputs from customers and the products they like, and then communicate that to R&D. R&D then develops it. We have an internal taste panel that taste the food and comment on it, and when a formulation is needed they do it. The next step is a consumer panel test. We have the product taste-tested by consumers, and if it’s okay, we test the product in a few stores. Before it was easy, but now it takes three to six months to roll out a new product. Another time-consuming process is training our people on how to prepare and serve the new product.” says Tony.

Jollibee group has also become bigger. Now they have Chowking, Greenwich, Delifrance, and the recently acquired Red Ribbon. Greenwich pizza started as an over-the-counter pizza store at the Greenhills Shopping Center in San Juan, Metro Manila, in 1971. One time, the founder approached Tony to ask if they were interested – at that time she has 50 kiosks and having difficulty managing the business – when she asked them if they were interested, Tony said, “why not? Let’s form a joint venture.” They took over the management in 1994, but they retained the taste of her products because it suits the local market. On the other hand, they took over Chowking in 2000 because Chinese food is also very popular among Filipinos, but there was no good company serving the market. So they took over and worked on it.

“Delifrance is doing so-so. And the reason is because we’re still not used to eating bread as a meal – therefore, the market is limited to the AB classes. It can’t grow into a mass-market type. Our latest acquisition was Red Ribbon Bakeshop last 2005 to include cakes, rolls, breads and pastries in their line of products. For us to sustain a good growth rate on a long-term basis, we have to continue acquiring businesses”, Tony relates.

They had to let go of Binggo. They found that the convenience store was in a totally different industry. At one time, they had around 20 stores, but they found it hard supplying them because the volume they were buying for them was just too small to attract good suppliers. They had to let it go.

They’re also bullish on China because they’ve acquired Yonghe King and its 91 stores. “It’s making money. So there’s no pressure to turn it around; the challenge is how to expand the brand. China is huge; it’s like having several countries in one country. If we do well, we can have several thousand stores there. If Jollibee has more than 500 stores for 80 million Filipinos, how many stores can you put up for 1.3 Billion Chinese? Kentucky Fried Chicken alone is opening 200 stores a year in China. It’s doing very well”, says Tony.
“Many countries share our taste in food, and the opportunity is in going to China, India and Indonesia- countries with large populations. We usually do a very broad 10-year horizon but it’s not detailed. We have a five-year plan, a three-year plan, and a one-year plan. We have plans for China and India, but if we want to go to India, we’ll need a long-term plan. We might have to start putting Indian people into the organization and it would probably take at least three years before we sent them back. In China, we had an opportunity to break into the market with Yonghe, but because our people didn’t speak the language, we had to hire translators to help us out. We still send our people there, but they have to work with translators. We also need good people here. We’re lucky to be the leader, but it’s still a competitive market. You can’t afford mistakes because customers will leave if they’re not happy with you. The food business is still very basic. It’s still about taste. It’s still about How did you serve me? Is your place nice? Am I treated well? Do I get value? If you think about it, if we’re going out to eat, these are the basic things we look out for, but the execution is the difficult part. It’s not like other businesses where it’s the concept or the knowledge that’s difficult. Here, there’s no secret; it’s very easy, but it’s the execution that’s hard. If you ask a lot of restaurant, they know all these things. Executing day by day is what’s hard.”, Tony continues.

When asked what’s the secret of Jollibee’s success, Tony says: “If you have to ask, the secret of Jollibee’s success is sharing. We share our success with people; we give good compensation; we share any honor that comes our way. Actually, this idea of sharing didn’t come from me. It came from a friend. He said: You know why you’re successful? You know how to share. A lot of people do not share, but in Jollibee you share a lot with your people.”

Truly, Tony Tan Caktiong is another exemplar example of an inspiring entrepreneur. He had all the achievements from Management Man of the Year in 2002 to an Agora Award for Outstanding Marketing Achievement, from a Triple A Alumni Award from the Asian Institute of Management to a Ten Outstanding Young Men Award for Entrepreneurship. And to cap it all, he also won the World Entrepreneur of The Year 2004 by Ernst & Young besting other 31 world entrepreneur competitors.

On July 25, 2007, Jollibee Group launched Tio Pepe’s Karinderia in EDSA Central in Mandaluyong, it’s pilot restaurant to professionalize Filipino’s “Carinderia” Industry.

As of 2007, Jollibee had under its wing 1,385 stores in the country: Jollibee (583); Chowking (367); Greenwich (237); Red Ribbon (163); and Delifrance (35)

Overseas, Jollibee Group has 174 stores: Yonghe King in China (102); Jollibee in US (12); Red Ribbon in US (19); Chowking in US (12); Chowking in Dubai (7); Chowking in Indonesia (5); Jollibee in Other Countries (16) and one Chun Shui Tang, a teahouse in Taiwan.

Source: Excerpts from Go Negosyo and Entrepreneur Magazine.