Great expectations: 10 lessons from Cebu’s next-gen business leaders (Part 2)

(Second of two parts)

Many of the country’s top conglomerates have roots in Cebu, but pretty much a family corporation when they started. For a family corporation, doing business is about the commercial – and the sentimental. In other words, while family members involved are professional about the business, the company is personal to the collective family.

This perhaps explains why the preferred financing method for Cebu entrepreneurs is either bank loans or additional equity infusion from the family members. Public listing is less preferred or considered but with much hesitation. From 1982 to 2015, nine Cebu-based companies have listed in the Philippine Stock Exchange (PSE), all of them at the “tycoon” levels.

It is thus noteworthy that in 2017, one non-tycoon entrepreneur from Cebu rang the PSE bells to be publicly traded for the first time. The company is Cebu Landmasters, Cebu’s new source of pride. Its CEO is Jose R. Soberano III, recognized as Entrepreneur of the Year by the Cebu Chamber of Commerce and Industry in that glamorous evening of June 30, 2017.

Working with competent family members in the business provides a number of comforts that outweigh some of its inconveniences. You can opt not to pay the salary of a family member when the business is not making money, and everyone can be on call 24/7 on “malasakit” basis.

It is also useful to understand that when the business expands and moves up the weight class, the entry point for accessing capital from the public is the SME board, where only P100 million minimum equity and three years’ management and income track record are required. (PwC provides IPO readiness services and financial advisory that can improve success of public listing.)

We need to get real, though. For a Cebuano entrepreneur, public listing is great, but is by far not the measure of success. So we continue with listening to the lessons from Cebu’s next-gen leaders, picking up from last week’s list:

7. Whatever you do, do not change the quality of the product you became known for. If there is one product that would have so much credibility behind this principle, it would be Titay’s rosquillos, baked and sold for over four generations – over 110 years. Aljew Frasco, whose great-grandmother Margaret Frasco home-baked these cookies more than a century ago, swears that he is so into experimentation. He loves baking and tries new ingredients, and crafts new products. But the rosquillos he wouldn’t touch, and he wouldn’t implement any risks to its quality.

This CEO of Titay’s Liloan Rosquillos and Native Delicacies admits that this present generation of younger family members is steaming with new ideas that can sometimes result to petty, temporary conflicts. All is set aside though as their sense of family is stronger, and making the business succeed makes them a stronger family.

8. Build your brand locally. When it becomes strong, build it nationally. One of the wisest career choice changes I have personally observed is from Steve Benitez, founder of Bo’s Coffee, which grew from a coffee kiosk in Cebu to a strong nationwide coffee shop chain that legitimately competes with top foreign coffee shop brands. From studying law to be in the legal practice, to dropping all that and setting his mind to become a dedicated entrepreneur may be wise, but it’s also a much tougher choice.

When you study law and become a lawyer, you can exist by being responsible only largely for yourself. As an entrepreneur, Steve is responsible for his people, his suppliers, and the communities he works with. But first and foremost, he is responsible for building the brand. In building Bo’s brand from local to national, Steve relied on a differentiation that foreign brands could not claim. Bo’s Coffee is a Philippine brand, and that is captured in the experience they provide to all patrons in every store, which he plans to grow to over 250 stores by 2020.

9. Do not underestimate the value of working with the local government. Melanie Ng, president of the Cebu Chamber of Commerce and Industry and top executive of the Ng Khai Development Corp., cites the value of PPP projects that created a huge positive impact on the growth and development of Cebu. She points to the development of Terminal 2 in Mactan-Cebu International Airport that is expected to be operational in 2018 and will further open the floodgates to more tourists and investments.

The Chamber that Melanie currently leads also leverages on its successful entrepreneur members to act as big brothers to starting businesses in Cebu, especially in the countryside. In its “Kapatid, Mentor Me” program, successful entrepreneurs are asked to give part of their most valuable and scarce resource, which is time – to mentor and train. The development of the small businesses may expand and deepen the value chain of the established businesses but moreso, it can increase the overall competitiveness of metro and greater Cebu.

10. Embrace failures and mistakes, keep moving forward, even if it means trial and error. Anya Lim, founder of ANTHILL, is a social entrepreneur that cares about the Philippine weaving tradition and weaving communities. To help socially, she must succeed as an entrepreneur. This lesson that she shared shows you that even successful entrepreneurs could not anticipate everything, and probably not all their decisions are genius. But they are geniuses from learning from their mistakes and adjusting, and iterating their approach.

The other lesson from Anya that can’t be missed is that you can learn from what your parents did, then have an independent mind about it. She learned entrepreneurship from her parents. But she decided her source of joy is in running a social-cultural enterprise. Traditional investors look for profit as is normal. Social enterprises, on the other hand, look for impact and sustainability, and are very considerate of communities on how they do things.

I suffer from lack of space again but will leave you with this very comforting thought. We all heard much about the big advantage of our country having a demographic sweet spot for human resource for as long as 40 years. Well, more than 50 percent of Cebu’s population is 24 years old and below. And 50 percent of those that replied to the PwC survey are first-generation entrepreneurs aged 55 years old and below. More than 25 percent of the respondents are aged 35 and below. It’s a young army of entrepreneurs and more are coming. Those growth predictions can very well be overrun. Thank God.