From the Midwest redneck author of "The Rooster Crows at 4am!," "Lizard Poop!," and "The Philippines Expat Advisor"
Business Opportunities in the Philippines
Received a recent email from "Monty, The Ice Man" who wanted to contact a fellow contributor to PhilippinesPlus.com, Tom Ramberg. Since it deals with business opportunities in the Philippines, I thought it would be helpful to reprint them as a post. Tom has some good advice that he shares. Here are their emails that I'm posting with their permission, and thanks to both of them:
Hi Dave,
I would like to get a message to Tom Ramberg. Perhaps you could forward this for me. Thanks!
Tom, I would like to know where you get merchandise for your hardware store. I am thinking of adding hardware to our store in Nueva Ecija, but ordering wholesale from the U.S. can be difficult. Since we are at opposite ends of the Philippines, I won't be competing with you, but will understand if you don't want to share the information.
The hardware store I normally do business with near Talavera isn't very friendly and they charge too much. I think they need some "friendly" competition!
Thanks, guys!
Monty
Hi Monty,
It is 5 am here and I am freezing my butt off here in my sky kubo. I am surprised at how chilly it is this morning. I pondered your question and the best way to answer it is by telling you about my experience rather than acting like a know it all.
When I arrived back here to live I had many ideas rattling around in my head. Most of the ideas that I had became impractical or risky after held under the microscope for further analysis. The lighting must be different in the US because they looked like feasible ideas from there.
We live in a barrio about fifteen minutes away from the city. My initial instinct was to engage in a small business in the city. I was encouraged to do so by friends and family but not the wife. She knows how demanding running a business is and she saw the amount of time that I had to devote to mine in the US.
We were here for a while before we started our hardware. There is no hardware store anywhere near us. That is why I decided to start one here that caters to the needs of the local market. The local market here is mainly items like cement, roofing, nails, and native products like African panels, cow ropes, and charcoal cookers. In my market quality items would be admired but not purchased.
We purchase our items for resale through a Chinese hardware in the city that we befriended during some of our projects. Our hardware store is on property adjacent to our home so we have no rent on the structure. It also has a housewares section, motorcycle parts, general hardware like paint and adhesives, and a small Internet cafe. The Internet cafe was put there to draw foot traffic and to offset some of my 4k per month Internet cost.
The business is up and down depending on factors like the weather and holidays. Just recently we built a bakery and are working on a boarding house. The bakery is a lot of work but is kind of fun. We are working hard to increase capacity so we can distribute to the sari sari stores on consignment. We purchased a multi-cab truck to serve the hardware and bakery.
It is crucial to have your own way to transport materials because delivery costs eat into the small profit margins here. The profit margin for the hardware is about fifteen percent while the bakery is probably around fifty. I have to admit that I had it good in the US business wise since my profit margin after expenses was around eighty.
The most sound advice that I could offer is to wait until you get here before you research your business idea. We were here for a year and a half before we started a business. One business that we also started was a dedicated trucking business. We bought a ten wheel drive military truck that has a contract to haul pineapples for Dole. This gamble is about a million peso investment that I hope will provide a good return. I am curious to know about your ice business. If you would please share the details about that.
Tom
Dave,
They sound like good opportunities for business. I guess you just have to get the right niche for whereever you live. Thanks for posting the e-mails. Take care.
You have to be resourceful, Papa Duck, but Tom and Monty, along with other expats, have proven there are ways to make money in the Philippines.
Thanks for your article, Tom. On July 2 of last year, Dave put up my guest post about the ice business. If you didn’t get a chance to see it, perhaps you can rummage around in the archives and find it. There are some pictures there, too.
I will offer an update here by saying that there will be some changes made when I return to the Phils in March. I have learned, as you, that the business is very seasonal, depending upon weather, holidays, and the rice harvest. However, I need sales to be more consistent over other periods of time, too. What I hear from my Filipino family are negatives: “can not, will not, and do not”. I need to uncover new ways that we can, will and do! I tell them they act defeated before they even begin! It falls on deaf ears.
Anyhow, interesting that you buy your hardware goods from a Chinese outlet, as I have been looking into the very same thing! I will also take to heart your comment,
“In my market quality items would be admired but not purchased.”
In a sense, that might be hurting my ice business. I offer a better product that I expect people to pay up for, but I am not sure they are. That is one thing I need to investigate.
For hardware, I have my own ideas about what people want and need, but I’d better do my homework locally. I would never have considered cow ropes and charcoal cookers! I did know about cement, roofing and nails, along with their version of “plywood”. What about basic hand tools? Hammers, wrenches, pliers, screwdrivers? If profit margin is in the neighborhood of 15%, maybe I’ll go the bakery route!
Good luck with the trucking business! One thing we must all do, and that is to keep thinking! Be creative!
Ice Man, here is a link to the article you mentioned in your comment. I also have a new category, “Guest Posts” listed on my menu on the top of the page. It has your posts along with Tom’s and Paul’s in their own separate category. Might have to change that menu location to make it easier to see.
Our local hardware store back in Guimaras did a super business. They stocked the basics, but they must be doing well. The owner has just completed a third story on his home that overlooks the Strait of Guimaras. Might be something worth investigating. They’re no Ace Hardware, but we were usually able to find what we needed there without jumping into the pump boat to go to Iloilo.
You’ve got a positive attitude, Ice Man. Personally, I feel that if you think you’re beat you’re already defeated. I hope you can overcome the negativity from the relatives and press on. Tom’ story is an inspiration to those hardworking and resourceful expats wanting to open up their own business in the Philippines.
Hey, if anyone is interested, I have finalized the blueprints for a new business model in the Philippines and I will be needing distributors for the product we will be selling. I am happy to announce that we can hire any expat without work restrictions. The location for needed distributors will be Philippine wide with an initial potential customer target market of over 50,000. Although the initial investment of our product (first generation design) may seem a little steep to some, the return on a single investment through repeated and compounded cost savings to each owner can be quite substantial. Ownership of this product is designed to guarantee any Expat (regardless of country of origin) substantial monthly savings in everyday living expense outlays and will be especially helpful to those who are Pensioners. The product that we will be distributing for sale is an all weather Pinoy ATM Machine (home model). The way they work is you have one installed at the convenient location of your choice (front of house, living room, CR, or wherever family members congruate), you would then issue debit cards to all of your “qualified” extended family members and set monthly limits for each of them, say P50.00 (distribution amount is entirely up to the ATM owner as only they know their recurring monthly damages as a result of the dreaded open wallet policy). All qualified extended family card holders will sign a ATM policy agreement and disclaimer which informs them that the ATM machine is configured on a time lock system and cannot be opened and refilled until the expiration of the time lock device. They will then understand that when they use up their monthly allowance, it’s gone. No refills, no expectations, no more handouts. Until next cycle. The real benefit is the ATM owner should now be able to afford at least a half truckload of San Miguel and an additional family beach outing, w/lichon pig, every month! Seriously! BaWahaaaaa!!!!!
Great idea, Randy! I could have used one of those when we lived in Guimaras where we saw an almost daily stream of relatives that could of availed themselves of such an ATM. Not much use for it in our new subdivison outside of Iloilo where the relatives would have to pass through several layers of armed security guards.
I though about the “fortress” concept also, but with a moat and croc’s, (gate and guards) the ATM machine would be cheaper. Ha
Yeah, I think you’re right, Randy. See a lot of security guards around here napping anyway.