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Wednesday, October 3, 2018

Founding and running a family business is a tricky difficult task

Ateneo Professor on Entrepreneurship

Rizal Philippines
October 3, 2018

Today marks the birthday of my late mother.  Yesterday I had the opportunity to visit the  office of the business/es I founded 35 years ago.   All the employees are strangers to me, and clearly marked on the wall was my mother as the founder.  At the wall of the  lounge were the picture of two of my siblings and two outsider as the brains behind the  company.

No wonder the family business group of Ateneo Loyola is raking in not to mention Prof Ricky Mercado of Red Ribbon group who pioneered on this venture:   managing family business

Some facts to be straightened.

1.  It was my vision to put up this group:  banking real estate empire to make the family, my parents and
     my brothers and sister stand out in the community in terms of assets, role in community development, and
     achievement.

2.  So I executed the founding and running of a savings and loan association, having the SLA invest
     in real estate company to take on development of 7 hectare property right at the heart of our town,
    and eventually putting up a commercial complex.

3.  I masterminded the development and execution of 11 subdivision projects, 11 memorial parks,  1 water company, a memorial foundation, 2 financing companies.  At our height of operation, we made 80 million in net in a year, and had assets of over half a billion.  We were nearly sequestered because my mother a lavandera before and high school graduate, and my father a humble govt employee, could not  have established all of these, without being associated with the dictator and the First Lady (we were not)

    Just a typical hard working hard driving, vision driven entrepreneur

4.  During those times while I was doing this founding of business, my siblings were not even in college yet
They were carefree kids, and the two others were abroad.  My father who is a govt employee, did not participate in the business.  My mother hardly went to the office.  I did all the work.

She was mostly in the casino enjoying her wealth and /or was in the US visiting my sister

5.  But to build her name, I made sure she was recognized as the matriarch (wrong humility)

6.  When my father died in 1985, I continued building the business and the group continued to prosper.
     Other heirs lost it when the guidance of the father was lost.

7. 10 years ago, when my mother died and the heirs got their share (as directed by my parents in their will)
    they promptly got me out of the  corporation:  sequestered my money in the financing company, did not pay my separation pay,  and got all the fruits of the  crematorium of which I was the principal stockholder . I did not have FS reports and most especially share of the net income (dividends)

Jollibee I heard pays P200,000+ on rental of  the building, the chapels over P800,000 on rentals alone

And now I see all things that dishonor my accomplishments.   Ok na rin.  At least di tricycle drivers ang mga kapatid ko at may ipagmamalaki

Ano palagay ninyo, mga parents ko nagpamana ng mga kabuhayang tinatamasa ng kapatid ko.
Ang kabuhayan ng magulang ko nang simulan kong palaguin kabuhayan nila ang 400 sm na lupa at 200 sm na bahay sa Capt  Blas St.

Lahat ng ibang property na nabili nila galing sa katas ng mga negosyong itinayo ko.  My parents could not have thought of the business I founded.  

Monday, March 19, 2018

Was Ray Kroc a real founder, an Entrepreneur?

Ateneo Professor on Entrepreneurship



Ray Kroc


Ray Kroc biography

Last Saturday, this post had the opportunity to watch the movie The Founder which was about the life story of Ray Kroc, the legendary founder of McDonald's

He was  considered a founder but did not actually start anything. He was a milkshake salesman who saw the speedy and efficient operations of MacDonald operated by the brothers with same surname:  Dick and Mac.   But we attributed him to be a founder because:

1. He got the burger chain across USA by franchising.  But he did not earn money on this idea.  He mortgaged his house and got measly $100 per establishment because the  franchise fee was only 1%

2. Somebody a CPA or finance man Harry Sonneborn, who later became the first President who overheard him at the bank suggested that he was in the wrong business. The real business is in real estate:   ie that he buys the land finance the building where the McDo would rise.  and leases this to the franchisee. On day one even while the business has not started, he  earns

In No. 1, he earns only when the store opens.   In this new business model, his venture becomes bankable because he will have real properties to mortgage to the bank to finance his expansion, which when acquired piles up his landholdings which increases his networth. The business is a real estate play.

3. The McDonald brothers did not progress because:

      1.  They were afraid to take risks.  By force of habit, and complacency, they wanted to conduct business the way it was, until now and in the future.  They did not want to take risk.  While Ray wanted to use the powdered milk to save on costs, the McDo brothers disagreed.

     2.  Ray Kroc took the initiative to change the business model eventually buying out the  brothers

4.  Ray Kroc succeeded and eventually became a billionaire (in $) because:

     1.  He had a vision;  he saw great potential in the McDo burger;  He talked about the Golden Arches -
          the golden opportunity.

     2.  He  took risks and  even mortgaging his house to finance his franchise dream

    3.   He had an eye for great talents:   the bible salesman, the other guys he meet at various meeting

    4.  He  was willing to listen to new ideas and was humble enough to listen to advice

   5. H e understood the value of brand.  "You know the secret of McDonald?"  he asked one of the McDo
       brothers after he  paid them say $3M-  and the latter said no.  "You do not know?  The name.  The first
       time he visited the store, he knew it would be a success because of the name.  It was very American.

       Kroc is not.   It sounds like European or Czech  (He was Czech native)

       He even told them of their backwardness.

  6.  He  took the lead and quarreled with the  McDo brothers even cutting short a telephone conversation.

      He was not afraid to let the other guy know what he wanted.  and say No.  One of the secrets of success

One last thing:  He  believed in the  value persistence and  determination

He maintained close relationship with Walt Disney and Ernest Hemingway.   He died at age of 81 of heart attack.  They had 7,500 stores valued at $8 billion.   and was worth $500 million.

They have 37,000 stores in 100 countries worldwide

Lessons learned:
1.  The quotes we learn, the  self improvement lessons we take are more important than PHP.   Armed with only Calvin Coolidge admonition on determination, Kroc put up  the McDo empire.

2. Practice leadership which should come from #1.

3.  Surround yourself with skilled and professional staff;

4.  Know what you want and have a vision.

5.  Learn salesmanship and be a great one.

6.  Innovate and learn. Continue learning
















Friday, January 12, 2018

For want of a nail, a kingdom was lost - Benjamin Franklin

Ateneo Professor on Entrepreneurship

Rizal Philippines
January 12, 2018

Image result for for want of a horseshoe, a horse was lost


What is the reflection learned from this saying?

While we say that  God is in the details, we cant afford to micromanage and stall the progress of the companies. We cant continue admiring the daisies while uprooting the roots

While others may interpret it the other way, sin of omission can have grave consequences, over thriftiness, over detail can have the same consequences.

I have seen some "leaders"  managers over manage and over control stifling initiative and resourcefulness among its people. There was this retail and food establishment whose top  management (its board) was literally the CEO, dictating the accounting policies and inventory system which were not practical and not in accordance with existing practices. They belong to another profession and try to pretend they know-it-all.   Without investing in a POS system and without considering that there is batch production involved, they want every item counted and the poor staff does nothing but count and no longer gives service to the  customer. For want of counting, the business could be lost.

Are you running business this way?  Be aware

Are you micromanaging?   Are you acting your position in the organization.  Are you the chairman, and act as if the CFO?  Are you over managing (enemy of lean system) and counter productive in cost reduction