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The Money Business in the Philippines

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Upon reading the title of this article, what automatically came to your mind?

A 5-6 business? For those who don’t know it yet, 5-6 refers to the art and science of lending money to someone for 30 days — plus or minus 5 days — at 20% interest. If you do the Math, that means in a span of 5 months you double your money.

Wanna try? Oh, no… not so fast. Perhaps I should warn you first that it is a very risky proposition that you better leave it up to your friendly neighborhood Bombays, who are the true masters at that business.

And oh, by the way, contrary to popular belief, 5-6 won’t get you cancer. But not getting your money back, probably would. Hmm… Don’t tell me I didn’t warn you.

How about Lotto? We’ve already shown you that it is one of the ways you can get rich here in this country. On top of that, through the PCSO, you are also helping your fellow countrymen who are in dire need of money.

Time deposit, perhaps? It offers a lousy return, but at least your money is a little safer at the bank.

If you are thinking along those lines, I guess you already know that money can be used to make money.

3 Ways You Can Make Money From Money

There are many ways to go about this, but for this article, we’ll focus on three money businesses that you can set up on your own or with your business partners. They are the following:

  1. Pawnshop
  2. Money Remittance
  3. Micro-finance institution (MFI)

“The quickest way to double your money is to fold it in half and put it in your back pocket.” –Will Rogers

Pawnshop Business

The Pawnshop Business is as old as mankind itself. And in the Philippines they are all over the place – from the remote parts of the provinces to the most crowded corners in the cities. For many Filipinos, a pawnshop is one place they can rely on as a source of quick money normally used for emergencies or immediate needs. That is, given the right collateral (something of value) the pawnbroker (the company or the individual running the pawnshop business) lends them money for a set period of time and for a given interest. The beauty of this process is that it is very fast, with no complicated document requirements like you would encounter when applying for a loan from a bank.

On the business side, there are three ways a pawnshop makes money:

  1. From service charges.
  2. From interest charges.
  3. From the sale of unredeemed items that served as collateral for the loaned money.

But remember that the real business of pawnshops is from the two items aforementioned. As Jean Henri Lhuillier (from the Cebuana Lhuillier Pawnshop Companies) said in one of this his interviews with the Inquirer, “Our business is out there as a bridge financing service. We are not into the business of buying. We are in the business of lending.”

Money Remittance Business

Money Transfer to the Philippines

Money Transfer to the Philippines

In the Global Money Transfer scene, the Philippines is the third largest country that sends money back home from abroad. The first two spots are taken by India and Mexico. Data from the Bangko Sentral Ng Pilipinas (BSP) shows that the average amount sent by an overseas Filipino to his family in the Philippines is 300 USD per month. Last year alone, the total money sent to the Philippines from abroad reached 20 Billion USD.

That’s a lot of money. And some say, they help keep the Philippine economy afloat and made the Peso Currency strong against the US Dollar. No wonder, the Overseas Filipino Workers are considered as heroes of the nation.

The Money Remittance Market in the Philippines used to be dominated by commercial banks. But thanks to the improving telecommunications technology, smaller players are now competing with the banks offering lower service charges and reaching wider areas of coverage.

(See also: Send and receive money using Paypal in the Philippines.)

If you wish to run a money transfer business, keep in mind the following:

  • You are required to register with the Bangko Sentral Ng Pilipinas (BSP), for local money transfers.
  • If you have an operation in another country, requirements differ from one country to another. Usually you will be required to place a cash bond and present your operating manual.
  • It is important that you are aware of our local Anti-Money Laundering Law or similar laws if you have branches abroad.
  • Equipping your premises with security systems, CCTV and alarms would be of help.
  • Important to setup a continuity plan in case the computerized system goes offline.

A money remittance business has two ways of earning money:

  • Service charge when someone sends money.
  • Foreign exchange when a foreign currency is converted to the local currency when money is claimed.

Microfinance Institution

The concept of microfinance is nothing new. But it became really popular with the success of Grameen Bank in Bangladesh.

For an overview of Microfinance, take a look at this inspiring short video presenting Dr Muhammad Yunus, known as the banker to the poor.

You may also want to buy Dr Yunus’ book, “Banker To The Poor: Micro-Lending and the Battle Against World Poverty”, from Amazon by clicking on the image below.

In the Philippines, no less than Bangko Sentral Ng Pilipinas has “declared microfinance as its flagship program for poverty alleviation.” The BSP defined microfinance this way:

Microfinance is the provision of a broad range of financial services such as deposits, loans, payment services, money transfers and insurance products to the poor and low-income households and their microenterprises. By definition, it is important to note that Microfinance is NOT subsidized credit, NOT a dole-out, NOT salary or consumption loans, and a cure-all for poverty.

The entrepreneurial poor

We all know them. They are the hardworking mom-and-pop (and perhaps kids, too) vendors in the local market. They are the sari-sari store owners serving the community in your subdivision. They are the small-time farmers raising poultry and other animals in their backyard in some remote countryside. Their original sin: They are deemed too risky by the banks to able to deserve a business loan.

Well, I hope you already get the picture of who I am referring to.

Essentially, microfinance is meant to help fund the entrepreneurial and business ventures of these poor entrepreneurs. According to the BSP, “If provided on a sustainable basis, microfinance can help increase income, build viable businesses, reduce vulnerability to external shocks, empower the client, and improve the quality of their lives.”

(Related article: How to fund a startup.)

How to setup a Microfinance Venture in the Philippines

Quite ironically, microfinance services are already available in some rural and thrift banks. These are smaller banks usually serving the countryside. Savings and Credit Cooperatives are also among the most active providers micro-financial services.

So, if you are planning to setup this kind of venture, you can either form a bank or a cooperative.

Fuel Your Business: Opportunities From Independent Oil Companies in the Philippines

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Is this an exciting time to be in the oil and fuel business? Petroleum, indeed, is an essential commodity that does not depend on the conditions of the economy; that is, we use and consume oil whether the economy is up or down.

In the previous article, we’ve shown you the business opportunities available from the country’s biggest oil players, known as the Big 3. Here we’ll explore the alternative opportunities offered by the independent oil companies or the so-called small players.

Anyone who is serious about becoming a distributor or retailer of petroleum products should consider the various opportunities from all parties, and weigh the advantages and disadvantages before finally embarking on this business venture.

Option #1: Seaoil Franchise

Seaoil is considered as the leader among independent oil companies in the Philippines. In 1980, it opened its first petrol depot facility in Mandaluyong serving local as well as multi-national companies. Frachising a Seaoil business means you are backed by the company’s more than 30 years of experience in the oil business.

Seaoil Franchise Investment:

  • Franchise Fee : P 500,000.00
  • Estimated Capital: P 3,000,000.00

The company also offers a customized franchise package. You can choose to franchise an existing station or start a new one. The minimum recommend lot area for the gas station is 800 sq m.

For details, please visit the Seaoil website at http://www.seaoil.com.ph.

Option #2: Phoenix Petroleum Franchise

The Phoenix Petroleum has its humble beginning as a family business in Davao in the year 2002. Originally it carried the name Davao Oil Terminal Services Corporation and in 2006 changed its name to Phoenix Petroleum Philippines, Inc. A year later, it became the first independent oil company to be listed in the Philippine Stock Exchange.

Phoenix offers franchising opportunity for those who want to become retailers of petroleum products and carry their brand. Phoenix requires from the franchisee a minimum of 800 sqm lot with at least 25 meter frontage for the site of a gas station. Aside from the usual business support common with other franchisors, what’s nice about the franchise concept of Phoenix is its flexibility. That means you can attach other businesses with your petroleum franchise provided it passed the approval of Phoenix.

The estimated capital outlay for a Phoenix station is 3M. It already includes the franchise fee, construction cost, equipment deposits and initial stock.

To know more about the company and the franchise opportunity they are offering, please visit their website at phoenixphilippines.com.

Option #3: Unioil Franchise

The company made its presence felt in 1992 when it opened its first gas station along the Ninoy Aquino Avenue in Parañaque. In 2003, it opened its door in Mindanao when they set up their first gas station outside of Manila.

Interested Unioil petroleum distributors should prepare somewhere from P 500,000 to P 1 million in capital. The company boasts of its estimated return on capital in as fast as one and a half to two years.

To know more about Unioil and their business opportunities, visit them at http://www.unioil.com.

Option #4: Eastern Petroleum Franchise

Finally, one other oil company that we want you to take notice of is the Eastern Petroleum. It was founded in 1996 by Fernando L. Martinez. The following year, it opened its first petrol station in Pasig City. In 2004, it already reached the Mindanao area by having their gas stations in Gen San and Davao.

Prospective franchisees can avail one of the following setups with their respective estimate investment requirements:

  • Basic Station (1 or 2 Islands and 2 pumps) — Investment starts at P2 Million
  • Regular Station (2 Islands and 3 to 4 pumps) — Investment starts at P5 Million
  • Large Station (3 Islands and at least 5 pumps) — Investment starts at P8 Million

Eastern Petroleum is very strict when selecting their sites. At bare minimum, your site should be at least 400 sqm in area with a frontage of 25 meters. Site must be in rectangular, square or L-shape. Furthermore, it must be at least 10 meters away from any creek.

Get to know more about the company by visiting their website at http://www.easternpetroleum.com.ph.

How To Start An Oil Business in the Philippines (Opportunities from the Big 3)

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As a developing country, the Philippines is known as a major consumer of energy-related products such as gasoline and diesel and yet we only produce a fraction of our own, which is really not enough for domestic consumption. That is why we rely so much on imported petroleum products to help us power our growing industries and population. And like food, fuel is one commodity that man (his machines, to be precise) can’t live without — or so it seems.

For a long period of the Oil Business in the Philippines was dominated (some say monopolized) by companies collectively known as the Big 3 — Caltex, Petron and The Pilipinas Shell. Thanks to the Oil Deregulation Law ( Republic Act No. 8479 of 1998 ), some smaller and independent players have emerged bringing benefits to the consumers, serving farther locations in the countryside and more opportunities for those who want to be in business.

Do you want to know how you can take advantage of the various business opportunities in our local Fuel Industry? You have come to the right place. More specifically, we’ll show you how you can become a distributor of well-known brands of the country’s three biggest oil companies.

What’s In Store For You, The Businessman

For smaller businesses, running their own petroleum business basically means becoming a franchisee of a known company or becoming a retailer. Either way, you will be carrying the trade name of the mother company, you will be sourcing majority of the products from them and you will have their support, too. Different companies will also have their respective business opportunities which you can choose from, but basically they fall under the following categories:

  • Gas Station (includes gasoline, diesel, motor oils, lubes and lubricants, etc )
  • Gas Station plus Convenience Store
  • Gas Station plus Automotive Shop (plus, maybe, a car wash)

Obviously, petroleum is your main product.

Opportunity #1: A Caltex Gas Station

The Caltex brand is backed by Chevron Corporation, which one of the global leaders in the energy industry.

For a minimum investment of P 5M for facilities and equipment, you can become an oil retailer of Caltex. Of course, you will need to set aside an amount for your initial operations.

Running a your own Caltex Gas Station as a retailer of Caltex Products means you are in partnership with a trusted and highly recognized brand.

Here are some of the advantages of being a Caltex Retailer:

  • Caltex will appoint a Business Consultant who will help and support your venture.
  • Chevron Engineers will be available for consultation of your initial site design and construction
  • Trainings are available to help you enhance your business skills as a retailer.
  • Marketing and other support services.
  • Business Signages will be provided by the company.

How To Become A Caltex Retailer

You need to submit an application with your site and the company will contact your for their initial evaluation.

Here are the steps to take:

How To Become A Caltex Retailer

For more information, visit their website at http://www.caltexforinvestors.com.

Opportunity #2: A Petron Service Station

The Petron Corporation is the country’s big daddy in the energy sector. It supplies nearly 40% of our nationwide fuel consumption. And it also owns an oil refinery plant which processes crude oil and turn it into various petroleum products which can be distributed to the service stations and used by the end consumers.

On the business side, Petron offers the following opportunities that you can tap:

  • Run a gas station.
  • Distribute LPG. In some cases you can also carry this product line in your gas station.
  • Own an Automotive Service Shop under the Petron Car Care Center brand.

Let’s focus on the first one.

For those interested in distributing Petron products, there are basically three types of Petron Gas Service Stations available:

  1. Company-Owned Service Station
  2. Dealer-Owned Service Station
  3. Micro Filling Stations aka Petron Bulilit Station (perfect for micro-entrepreneurs)

Petron Bulilit Gas Station

A Petron Bulilit Gas Station. This one is perfect for micro-entrepreneurs in the Philippines. It is best to set this up in the under-served areas in the countryside.

They are all basically the same, but they differ on the size of the station, the investment requirements and the number of pumps (maximum of three pumps for the Petron Bulilit Station).

The capital requirement ranges from P 1M to P 9M depending on the size of the service station. To become a dealer, you have to undergo a three-phase selection process which consists of: Screening, then Training, and finally Project Implementation Phase.

For more information, please visit the Petron Corporation’s website at petron.com.

Opportunity #3: Pilipinas Shell Retailer (A Franchise Business)

Pilipinas Shell Petroleum Corporation “refines, blends, transports and sells a wide range of high quality fuels, lubricants, bitumen and other specialty oil-based products.”

As a Shell Retailer, you will be operating under the trade name of Shell. This gives you the opportunity to use the company’s logos, trademarks, signages and other Shell-related symbols that are easily recognized worldwide.

Well, actually Shell offers a franchise opportunity with a twist: there is no franchise fee. However, just like any franchise operation, you will have to pay a royalty fee and retailer’s fee every month. The initial investment at the time of this writing ranges from P 3M to P 5M and covers the fuel supplies, station equipment and other things related to the operation of the business.

(See also: 5 Factors to consider when buying a franchise.)

How about the convenience store and other business opportunities from Shell?

Good question. If you happen to notice, some Shell Petrol Stations have a Convenience Store (under the Select brand), or Automotive Service Shop. As a Shell Station Franchisees you will have to apply for those separately.

Furthermore, Pilipinas Shell is proud to declare that dealers can expect an average Return On Investment of 30% to 40% with an average pay back period of 2 to 3 years.

For more details on the Shell Franchise Opportunity, please visit their website at www.shell.com.ph.

Other Business Opportunities From Small Players

Up next, we’ll be showing you the other dealership and franchise opportunities from smaller oil companies like SeaOil, Phoenix Petroleum, FlyingV. You may be amazed to discover that it really doesn’t take that much capital to put up a gas station carrying the brands, products and services from these companies.

5 PR Techniques for Small Businesses

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PR For Small Business

Cultivate A Good Public Image

Getting publicity is one of the most effective marketing tools you can take advantage to get the word out about your business. However, not all entrepreneurs have the talent or the knowledge of how to use it properly.

Think of this article as PR 101 for Small Businesses. Here are some practical ideas you can use right away — even cheaply – and make the most out of publicity stints.

1. Sweet Talk Your Way To Your Costumers. Media tools are often read or heard of and they are effective that way. Words and “sweet talk” can still set you apart from your competitors. Keep everything light and polite while not sacrificing quality of content. Hire a good creative writer or team for this.

2. Develop A Positive Press Network. For a small business entrepreneur, the idea that “bad publicity is still publicity” does not apply. It instead causes the consumers to get away from the business as far as possible. One way to gain good publicity instead of bad ones is to have positive relations with the press people. They have gained the trust of the customers and are often asked for advices on what products to choose. Better get on their side to earn a few recommendations here and there.

With the rise of social media and social media influencers, you’re lucky this part doesn’t need to be very costly; more on that later.

3. Your Own Press Release. Get someone who can write and distribute this efficiently. This step makes a great way for any small business to get noticed immediately. A virtual assistant who can write the press release articles and at the same time handle the distribution is very helpful with this PR task. Hire one that knows where it is best to submit your press releases and observe how it can help in gaining more clients and better sales.

4. Social Media Is In. It’s not just a fad, it’s here to stay and you can learn it in no time. Learn the ins and outs of online social media marketing. Nowadays, more people hang out on social networking sites rather than get together for real. This makes it easier to focus on creating catchy adverts intended to be posted on those sites for the people to get noticed. Know what’s trending and focus on the interest of the people to keep their eyes glued to your posts.

5. Interact with customers often. Nothing makes a customer want to come back for more than having a unique personal experience during the business transaction. Making customers feel that they are special — not just another number — will have them looking only for you whenever they need your services.

This PR 101 for Small Business guide intends to help any small- scale entrepreneur gain a share of the limelight. It does not matter how small a business is, as long as it is well advertised and get positive feedback from the media and the consumers, it will have a good chance of succeeding.

Buying A Franchise Business? Look Before You Leap

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In a nutshell, franchising is a business model that allows the franchisee to sell the products or services of the franchisor (the parent company). It is an easy doorway to entrepreneurship for anyone who wants to take a short-cut and minimize the risks involved in creating and running a business from scratch.

The following are some of the attractive aspects of operating a franchise business:

  • The use of company trademark, trade name or any other similar company identification.
  • Training Programs
  • Marketing and Advertising Assistance

Sounds good enough for you?

Well, as with everything else in business, franchising is not without its problems. There are a lot of jerks in the world of franchising. You may have already heard of “success stories” of franchise companies that started small and have grown by leaps and bounds in a matter of two years! On the surface, that’s indeed very impressive especially if the story is masterfully crafted by the media whose main job is to attract as much attention from a lot of viewers as possible. But, did you ever wonder where the money came from? Was it a result of offering a set profitable products and services? Or, was the “success money” extracted from franchise fees? As a potential franchisee, it’s important that you have to know the real score. Otherwise, you might just become their rich source of cash.

The rest of the article provides practical tips you can use before you buy a franchise business.

1. Check The Company’s Background and Track Record

Tips In Buying A Franchise

Buying A Franchise?

First, it would be good if like the company, its management and the way they conduct their business operations. Ideally, you should have patronized their products and services for a long time already.

Avoid buying franchise from a company that is relatively new in the market — less than five years. You may seem to like their products and the services they offer, but you can’t tell if they are really profitable or they are losing if they just launched their business.

There are only two reasons why businesses survive: (a) they are profitable, or (b) the owners have deep pockets. Common sense dictates that the former is your best bet. You have to be convinced of their track record of success in the marketplace. Otherwise, you might just become their cash cow.

2. Know The Money Involved

At the very least, you need to determine the following:

  • Franchise Fee / Renewal Fee
  • Estimated Capital Outlay
  • Royalty Fees
  • Advertising Fees
  • Estimated Operating Expenses

Beware of the hidden costs and fees that are not clearly spelled out such as the Renewal Fee. You can never find such information from the company’s marketing and promotional materials. You have to be creative in figuring this one out.

Furthermore, there is no point in buying a franchise you can’t afford. And speaking of affordability, you have to check if financing is available. Can you obtain a business loan? Will they extend help in getting a loan?

(See also: How To Fund A Start-up.)

3. Look At Their Earnings Claim

Is it too good to be true? Do you know the average industry standard? If you can have a copy of their audited Financial Statements, that’s good. It’s one way to verify their claims. But I doubt it if they will share such information. This is where your personal research comes in. You have to compare them from the competition, whether those are franchised operations or independent businesses.

Naturally, you want to avoid dealing with outright liars, cheaters and scammers.

4. Talk To Other Franchisees

Remember we talked about hidden fees and avoiding scammers? This is one of the ways to uncover them.

The franchisor should be able to give you list of company owned outlets and as well as franchisees. One of the smartest moves you can take is to personally visit the stores and possibly talk with the franchisees.

5. Obtain A Written Proposal, Sample Contract, Franchise Agreement

Read it carefully. This simple document speaks a lot about the company you are dealing with. Can you spot typos and grammatical errors? Does the proposal even make sense to you?

And most importantly, can you terminate the franchise agreement? In what instances and how much will it cost?

It helps if you consider the help of a lawyer or accountant who is familiar with our local Business or Franchise Laws. But you can do that later when you are already convinced about the business.

Deal Or No Deal?

When it comes to franchise opportunities in the Philippines, you have a lot to choose from. But you have to watch out for the bad apples that could be lurking somewhere and ready to take you for a ride.

There is nothing to rush. You must be in a position to say “No Deal” if you smell something fishy. Always read the fine print and use your common sense.