Monthly Archives: January 2015

Sari-Sari Syndrome and Other Businesses

Now you can’t fault the Filipino for survival skills; when it comes to prospering skills, not so much. This can be said in so far as many small business ideas go at least. A classic example is the Sari-Sari store.

Now sari sari stores are the things you stumble upon every 14 seconds at walking pace. That is really the problem with them. It’s many an aspiring entrepreneurs’ idea of a sound business, but personally, I wish someone would give them a few economic facts.

When you come to terms with the lack of opportunities many have here, it’s easy to see why people dream the impossible dream and it is totally understandable. This article is meant to give a little insight to anyone out there whose perspective partner is telling them that all they need to secure their future is a sari sari store. It’s not usually an idea that has been subjected to a business study.

Now sari-sari roughly translates to anything and everything. So many people’s idea of a good little business is to turn the front of their home into a little local store and in many cases as its part of their own home, this means no rent and its profit all the way, or is it?

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I’ve witnessed so many of these stores fall down within a few years. It’s a nice thought to have one but probably not the best idea.

A typical sari-sari is little local store selling all the everyday products from cigarettes and alcohol to canned food, flour, eggs, diapers and of course, the load for the cell phone. And if they stood alone in their street, it would be a great idea. But it is likely that you have 2 or 3 stores already within a stone’s throw from you. Everybody seems to be a sari sari store.

This may be deemed as a controversial opinion by some but for me they seem to keep each other poor and it’s just down to lack of imagination and common sense. It’s not intentional, of course. It’s simply a situation like many others here in the Philippines where people make poor decisions based on hope more than sense.

If you’re in a community of say 1,000 households and there are around 150 sari-sari stores within this community, it’s not too surprising to hear that many of them struggle. They survive it would appear but only a few truly prosper. Too many dreamers per square kilometer tends to be the problem but it’s easy to know why when you see how the usual doors are not open. This is the Philippines where a dream can be an inspiration or a suicide mission.

With many here, it’s more about getting by. When westerners think of business they think of making a lot of profit. If that’s not possible then most times the plan ends there. With Filipinos it’s more about surviving, so with that in mind, although it doesn’t make too much economic sense from an entrepreneurial point of view, for them it’s all about eking out a living which makes perfect sense. Sadly though for many it does not even achieve that.

The Downside of Competition

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The sari-sari store is the ultimate example but it is not confined to that market. If somebody opens an internet café and it does well then someone else will open one over the road. Fine, a little competition is good for the consumer especially, but it doesn’t end there. Before you know it, a third one will open also, and not too long after, a fourth and so on.

In no time at all, the area will reach saturation point and nobody is making a good living as there are not enough bums to fill the seats. There would be but there are so many seats for the bums that it’s a waste of time.

The Business Plan of the Philippines

The internet café is another classic example. Many a Filipino business plan consists of opening the door, looking inside and saying to themselves, “Hmm busy” and that’s all it takes and before you know it they are acquiring a local premises and filling it with computers. It doesn’t take a genius to work out that too much of anything means numbers are filtered down to the point of bankruptcy.

In fact, in so many fields, it seems saturation is the name of the game and the result is the majority scratching out a living and some survive, some don’t but they all try it. There is no trade protection that limits how many similar businesses can operate in the same area.

I’ve often questioned why there is no protection for local traders from saturation. Nobody has any real solutions to unemployment so they leave them to try and fail without much forethought.

Unimaginative Businesses for Unimaginative People

You will see it in many areas and notice the lack originality when it comes to business. Filipinos for me do not show much ability to be an original thinker. I’m sure some will argue against that but for me at least, it’s very much a part of the cultural mindset. It’s no different within business. They follow more than they lead or innovate. Hope is the reason and lack of capital means they all try small ideas based on what others are doing.

Food is very commonly sold and many in Metro Manila rely on ready cooked food, as there may not be cooking facilities in their accommodation especially if it’s a dorm. So as you wander round the streets and side streets also, you will stumble upon countless food eateries or cantinas. Mostly little places with a few chairs and trays of food on display. But you will soon notice that the variety is just not there. They all sell exactly the same dishes.

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Again, it’s often saturation point with these establishments all selling the same food with very little variety and few customers want to try anything different which makes it an uphill struggle. They simply compete with the cantina next door and rarely think of doing anything alternative and sell virtually the same dishes all with mounds of rice as is the norm here. They have their talents but original thinkers when it comes to business, they are not.

Clients Heads Stuck In the Mud

On the other hand again, in their defense, I have noticed a tendency with Filipinos that they are not adventurous when it comes to different foods and many won’t try anything new or different. If someone started selling novel food or even a sandwich stall, I doubt they would touch the imagination of the general public. It’s a frustration for me that most Filipinos in my experience will not step out of some comfort zones. They won’t taste new food, they don’t relate to concepts. Just my opinion of course and it definitely does not apply to all, but it is a noticeable feature with many.

If it’s not served with mounds of rice, they simply don’t seem interested. Many here are simply totally narrow and won’t even try the different. Maybe among the more professional types yes, but as regards the everyday public then sadly not. I can imagine many a westerner thinking of making a business here thinking that if I do something different, they will try it. In my experience this is not so at all. Maybe within niche markets yes but as regards everyday folk, they don’t want to know.

It’s Not Novelty Land

I met an Australian once, a nice guy who was talking about opening fish and chip shops. I didn’t know how to tell him not to bother. I saw one once in Ortigas; next time I passed it was closed down. Seen the idea tried elsewhere, too and rarely does it have any success unless you’re surrounded by non-Filipinos. Many simply won’t try anything new.

Business for Survival

It does seem strange from an outsiders point of view that this situation exists and you find yourself questioning why go into a business where your best chance is to merely eke out a living only. It is my belief, and I stand to be corrected, that Filipinos don’t think so much in terms of making it rich, they think in terms of surviving only. Lower expectations bred purely from the economic climate over the last few decades.

In a country where few have known anything more than struggle to survive, I think this is fairly natural. Generation after generation has grown with a mindset of poverty in varying forms which in turn has made this thinking normal. So before we call it crazy, you have to be aware that yet again, things are different here and always have been, and it becomes simply a culture of survival and thinking in terms of making it big is a luxury they have never known.

Listen to Yourself

At the risk of being controversial, I will leave this article on a note of advice for prospering in the Philippines. Always listen to Filipinos when it comes to understanding the business climate as this will make you see how all things are possible. However, don’t always act upon it. It’s often more of a dream that is not realistic. Competition has Filipinos eating each other. Don’t fall into that trap, think carefully and observe. There are many great potential businesses here. Listening to the family of your partner may not always be the best advice. It’s a dream for them. Be realistic yourself.

 

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