Trade Secretary Ramon Lopez (right) and Presidential Adviser on Entrepreneurship Joey Concepcion are fans of the latest book on entrepreneurship.
Small and medium scale enterprises (SMEs) account for some 99 percent of all registered companies in the Philippines. And every day, more SMEs are being added to the mix.
Unfortunately, over half of these new businesses will disappear in just four years.
And those who do make it beyond four are not yet out of the woods, with some data showing that only one of these 10 will ultimately become decent money-making machines.
Based on experience and a long exposure to the corporate world, an enterprise needs to go through four “gates” to reach the “House of Prosperity.”
It is only after all the tasks behind the four “gates” are accomplished that prosperity and success can be attained.
A more detailed explanation of the four “gates” leading to the “House of Prosperity” can be found in the recently launched book “Entrepreneurship: Starting an Enterprise, Having an Innovative Mindset” (by yours truly and Chiqui Escareal-Go) available at National Book Store and Power Books nationwide.
The first gate is the preparation gate.
Here, the entrepreneur looks into money, model (business model) and mentorship.
The wealth conversion principle states that wealth is created by converting money or cash (or its equivalent) into inventory and back to cash when sold at a profit.
Having the right business model is indispensable in order to maximize revenue while pursuing cost efficiency.
Mentors can give the appropriate pieces of advice for the entrepreneurs to avoid mistakes, accelerate the learning curve or even open windows of opportunity.
The entrepreneur also needs ample knowledge/intelligence or IQ, while building an ecosystem appropriate for his/her business during the preparation stage.
The second gate is the marketing gate, composed of mind-set, market, and message.
Here, opportunity seeking, screening and seizing, are formulated.
Having an innovative mindset gives the entrepreneur an edge, as formulation of offers are purposely differentiated and distinctive, avoiding the commodity trap that may lead to costly price or promo wars.
Here, entrepreneurs identify a profitable target market as well as understand how the market makes purchase decisions.
Messages are then drafted in order to resonate with the buying goals of the target markets.
The entrepreneur needs creativity, or CQ to keep growing the business during the marketing stage.
The third gate is the execution gate, composed of machinery, methods and management skills.
Value is actually created when formulated strategies are executed.
Machinery is having an organization that can deliver its intended value.
Methods, on the other hand, are processes that institutionalize what needs to be done efficiently and effectively, while management skills entail knowledge of people handling and reward handling, and having leadership skills.
The entrepreneur needs emotional quotient, or EQ to build the right culture to get things done.
The fourth and final gate is the self-leadership gate, which includes having the tenacity to keep moving forward, having a compelling mission, and aspiring to self-mastery.
Entrepreneurs will encounter challenges in business and he or she must possess adaptability and grit in order to pivot and keep moving forward. Being clear on the firm’s mission helps unify the team as well as customers, while mastery entails knowing what the entrepreneur wants to be, with thinking and sensemaking skills, as well as mastering influencing, discovering and executing skills.
The entrepreneur needs high adversity quotient, or AQ not just to survive but make a difference with the business.
Entering all four gates allows the entrepreneur to experience the two benefits of the House of Prosperity.
The first is accomplishing five critical tasks: having 1) a good and compelling value proposition, 2) cash flow, 3) profit, 4) manageable execution and 5) vision/mission.
The second involves the five “treasures”: having 1) a beloved family standing beside you in your success, 2) a meaningful self 3) good health, 4) a network of friends as well as 5) a relationship with God.
Having tasks without treasures and vice versa is simply not enough.