A direct selling family business
“People said we might get sick, because we were doing accounts and checking inventory amid piles of stocks,” recalls Gloria (not her real name), 70, who runs a direct-selling business, with retailers and suppliers all over the country. “But those were the happy times!”
In the mid-1990s, Gloria and her children started a retail business in a mall. “We had a steep learning curve. Customers came daily, even mothers nursing babies, but then, there would be diapers all over the place. Sometimes the computer broke down and customers had to wait. When they got impatient, we would feed them. The mall food court was booming because of us!”
“Despite the growing pains, we had great fun,” Gloria says.
However, because stocks had to constantly be replenished, deliveries were made at night, compromising mall security. So despite their flourishing business, by the end of the millennium, Gloria and her family decided to leave the mall and focus on what close-knit Filipino communities do best: direct selling, by catalog and word of mouth, through networks of friends and family.
Change mindset
Gloria describes their role primarily as a retailer, but she and her family go beyond the norm. Most retailers only act as middlemen between suppliers and customers, buying products from the former to sell to the latter, making a profit in the process.
But Gloria takes the time and effort to encourage suppliers to be the best they can be. The business started out with shoes, and Gloria wanted to inspire suppliers to innovate.
Gloria, who teaches management at the state university, has a PhD in business, not fashion. But to hone her skills, Gloria read fashion magazines and visited luxury stores. Her son, then in Europe, took photos of the latest fads in store displays.
Gloria encouraged her suppliers to find ways to update themselves to make shoes that sell, and to improve their lives and those of their children. She feels vindicated today when suppliers report that their children are doing well in premier schools.
Gloria segues to a topic she is most passionate about: education. “Education should never be compromised.” She finds time to teach business administration to college students, and urges them not just to market their products, but also to give back to the community in some way.
At the end of the semester, Gloria is happiest when her students feel passionate about what business really entails—and fulfilled when they discover that it can better the lives of others.
Respect and care
With skilled education comes the know-how on how to professionalize, and here, as in many aspects of family businesses, the younger generations may have an edge.
“Our manager, a graduate from a top university, says that it is often easier to deal with the younger generation of suppliers, who are more innovative.”
Suppliers are the backbone of the business, and they have a great working relationship with Gloria and her family, because the latter truly respect and care for them. Suppliers are paid every Friday, on the dot. At the start, they had been paid by check. But some suppliers would fall victim to usury in the community of one form or the other, and since checks take time to clear, in the meantime, during the weekend, they would be charged exorbitant interest rates.
Therefore, Gloria and her family started paying their suppliers through the ATM, rather than by check. Funds are available for withdrawal every Friday afternoon, to which suppliers would have access over the weekend. They would no longer be at anyone’s mercy.
Next generation
Gloria’s three children have been involved in the family business since the start. Sibling rivalry is not a problem.
“My husband died when my children were young. I was extremely busy, and I managed them rather than mothered them. I told the children what their roles were, and what was expected of them. I am blessed with good kids. They all studied in the state university; they are level-headed.”
Gloria advises founders to know when to let go. Today she is still dynamic, and she is still involved in major decisions. But she has trained her children to run operations, and most importantly, she trusts their judgment. “When I asked my children to be in charge of everyday matters, they thanked me.”
Today, the direct selling family business is going strong, with gorgeous thick catalogs showcasing all sorts of products, from shoes and clothes to bags and appliances, catering to practically all market segments.
Queena N. Lee-Chua is on the Board of Directors of Ateneo de Manila University’s Family Business Development Center. Get her book “Successful Family Businesses” at the University Press (e-mail [email protected].) E-mail the author at [email protected].
