A common trait among entrepreneurs is that they are usually risk takers. Most quit or turn their backs from promising corporate careers or risk significant amounts on a novel idea. In starting up their businesses, entrepreneurs are often challenged to react to ever-changing situations.
At times, the very factors that led to the entrepreneur’s success can also become a liability.
Faced with such a situation, some entrepreneurs lose heart and quit, while others push on and eventually turn the situation around. Here are the stories of three entrepreneurs, the mistakes they made early on, and how they emerged stronger because of them:
Bonnie’s BBQ is a barbecue grill that proved to be a hit when it opened shop at the Tiendesitas shopping complex in Pasig City. According to owner Myra Salvosa, the business was doing very well, and soon she got offers to locate in other places. In particular, Salvosa was offered a 100 square meter space at the G Strip of Greenhills Shopping Complex along Ortigas Avenue in San Juan City. This space was very large for her, as her original store at Tiendesitas was only 50 square meters. Despite this, she pushed on upon the insistence of the administration of the shopping complex, and spent a substantial amount to furnish and prepare the Greenhills site.
When Salvosa opened this second store, she was dismayed to find that there were very few customers to fill up the larger space, she was forced to consider shuttering the place. Later, however, she decided to take a smaller space at the lower level of G Strip. The experience, she says, taught her that sometimes one must say no to expansion offers, especially if there is a chance of overextending one’s resources.
Marian Sycip, owner of Tsoko.nut Batirol, a shop that specializes in native hot chocolate, learned the pitfalls of not undertaking a market study when she was just starting out the business in 2004. The idea for it came from Sycip’s desire to bring back the tradition of serving hot chocolate in tablea (tablet) form, and she conceived the idea for the venture with her husband James, whose family also owned the Japanese restaurant Kitaro.
To start Tsoko.nut, the Sycips pitched the idea to the SM malls, and were granted an audience with SM founder Henry Sy. Sy liked the novel concept, and offered to place the store in the native Filipino section Kultura of SM’s department stores. Eager to please Sy, Marian Sycip took two store spaces at SM Makati and SM Manila. In her haste, however, she wasn’t able to do a full marketing study.
The store at SM Makati proved to be very popular, and to this day is one of Tsoko.nut’s top branches. However, the store at SM Manila had very poor sales and was losing money, and eventually closed down after just four months. “In malls, if you close [your shop] in less than a year, you forfeit your security deposit, which is very big,” Sycip says. “But we were losing around P70,000 a week, so we had to close; we couldn’t bleed [monetarily] especially since we are in the food industry.”
Sycip attributes the failure of the SM Manila store to the fact that she didn’t do a market study—and thus missed the fact that SM Manila had a radically different crowd than that of SM Makati. “In SM Makati, our customers are primarily office workers, but in SM Manila most of the people going there are students,” she says. “So even if the foot traffic there was great, very few people were buying anything.”
Oftentimes, entrepreneurs tend to overreach themselves and enter into fields they aren’t ready to compete in, usually with serious consequences. This was what Paulo Tibig, owner of the logistics company Vintel Logistics Inc. or VCargo, discovered when he tried to venture into the courier business. When it started, VCargo primarily did marketing logistics support for company promotions. In its second year, the company decided to offer courier services.
The move was ill-advised, as the fledgling company had neither the resources nor the competency to offer the service. “We didn’t have the volume and the network coverage,” Tibig says. “We were charging clients an average of P75 [a transaction] but it actually cost us P500 to send the package, so we were really losing a lot of money.”
Eventually, VCargo retained the courier service, but only in locations such as Metro Manila and select areas in Visayas and Mindanao.
This article was originally published in the August 2009 issue of Entrepreneur Philippines.