The Cash Flow Friendly Way to Start and Run a Business

“We developed our first product in a 28sqm condo unit in Makati. It’s not so quiet as we hear the city train pass by every 10min. It’s comfortable, but it was not that conducive for work.

Our initial budget was P100k. I was the one who opened the checking account in Metrobank and cut checks to buy our first desktop workstation and a small computer table. The 80×50 whiteboard behind us was the one we purchased at National Bookstore in Glorietta, which we had a hard time loading in the cab.

It was 2001, and I remember the fall of the twin towers were all over the news at that time while my brother and I just resigned from our employment to pursue the business. We both started with an allowance of about P5k each per month, rent and utilities financed by our uncle. We operated in very minimal monthly expenses.”

If you have a great and promising idea that you are itching to start, then here’s the most cashflow friendly way to start and run a business:

A. Do not formally register the business yet without a product and initial traction, especially if you are in a bootstrap mode. Registering the company only makes sense if you have either a financier or revenue.

B. Do the business registration yourself. You don’t need to hire a full-time admin or an accountant yet. We have guides on every public office from the SEC, or DTI, Cityhall, BIR, they have detailed instructions on how to register the business. You may need to talk to a friend who has the experience, get a list of requirements from him/her.

C. Get a virtual office. You can get a virtual office as low as P1,500 per month in Makati. All you need is to register the business with the address that you can put on your website. These virtual offices offer a conference room that you can rent on a per hour basis if you need to meet people or customers on-site, ranging from 1-2k per hour.

D. Use LinkedIn, UpWork, or other free platforms to source for people. Use virtual administrators, recruiters, creatives, SEO specialists, programmers, or even sales lead generators who can work remotely. It is essential to pool people in your online network, so you have reserves in the case of wrong hires. If possible, engage with them on per-project commissions or incentives and not on a monthly or hourly fixed compensation.

Balance the tasks to delegate. Admin tasks that are urgent but not that important are ideal to outsource while important/urgent tasks are the ones you can do yourself.

E. Invest in learning social media strategies, personal branding, SEO/SEM. It is the best time today to do FB or IG ads as they are really cheap compared to Google Ads or SEM.

Matching your revenue and expenses is the key to cash flow management. Improve collection, remove the urge to spend non-essential things, and invest back your profits to your company.

How Integrity Helps You in Creative Decision Making

Integrity came from the Latin word Integritas or Integer in English. As you know, an integer is a whole number and cannot have decimals or fractions. In life, a person with integrity is incorruptible and 100% in terms of doing the right thing. It does not mean that the person will not make a mistake. It only says the person is doing what he or she thinks is right.

I’ve been an advocate of integrity for a long time already. I have a Chinese symbol tattoo on my back and one of the core values defined in Hilsoft’s core values.

In business or any workplace, you’ll be faced with a lot of scenarios that will challenge your integrity. There’s always a question of what is the best action for a particular problem. The first thing that we do is to reason with it and use our logic. If it couldn’t be explained through logic, then we follow our gut feel and intuition. But if integrity is within your core values, then that I think is the last filter to tell yourself if you’re making a sound decision or not.

I always hear from NBA coaches to play the game the right way. And most of the champions play the right way. What stuck to my mind is the 2004 Detroit Pistons led by coach Larry Brown and with no superstar player. They played the right way by passing the ball, selflessness and team chemistry and they were able to defeat the LA Lakers with an all-star team such as Shaq, Kobe, Karl, and Gary.

This example above gives integrity a strong argument, and that’s what I firmly believe. Would you choose positivity over negativity? Half full or half empty? I will never choose negative because positivity always wins. Cynical people may win in the short term, but in the long run, positive people or positive culture still prevails and wins.

So what are the practical ways to demonstrate integrity?

  1. Keep your commitments. Don’t say yes if you want to say no. If you say you will give feedback tomorrow, then provide feedback tomorrow.
  2. Let go of your ego. Sometimes our judgment is clouded because of ego. There came a time at Hilsoft where I had to let go of my perks and allow our finance team to controls my expenses. It’s my job to be a model for my team and let go of the ego when the finance team controls my costs. I also know that I am responsible for the survival of the company, our customers, employees, and our shareholders. They should all come first before me. It was difficult at first but I let the concept of integrity guide me.
  3. Take responsibility and accountability. If you made a mistake, admit it, and correct your errors.
  4. Don’t tolerate problems. People tend to tolerate problems when they see them. They always assume that it will take care of itself. It is not. So we have to resolve every issue that we see. It will never end but at least it doesn’t pile up.
  5. Negotiations should always be a win-win. Sometimes, people are tempted to win a deal without carefully assessing the other party’s benefit. This should apply not only to customers but also with employees and suppliers.

These are just a few examples. The takeaway here is to learn to always be in check on your decisions before making actions. Would you rather win but will bug you in your sleep forever or win with a peace of mind. An integrity-based decision to me is always a peace of mind. If you do this, then you have nothing to hide, and you won’t take criticisms seriously.

Solving Business Problems With Inversion Technique

Typically, what we do when we encounter any business problem is to point a finger, understand the cause, think of options, then decide what to do. If we fail, then we do plan B.

I came across with inversion or retrograde analysis with some articles I found online, and I wonder how can this concept apply to real-life business problems.

I’d love to share some sample scenarios based on my experience hoping this could help you as well.

Case #1 – Sales Problem: Leads generation.
Inversion Analysis: How can I prevent the company from generating leads?
Some Answers: Don’t do telemarketing and online marketing, don’t ask for referrals from friends and existing customers ( i just thought about this now), don’t analyze what the customers want, don’t do promotions.

Action plan: Ask for referrals, analyze the market, start an online marketing campaign.

Case #2 – Operational Problem: Team Performance
Inversion Analysis: How can I prevent the team from delivering on time, and with quality?
Some Answers: Keep unprofessional people, don’t strengthen recruitment screening, don’t lead the team, don’t provide training.
Action plan: Strengthen HR rules, policies and recruitment. Establish a good training program. Lead by example, coaching, and motivation.

Case #3 – Financial problem: Cash flow
Inversion Analysis: How can I make the company run short in cash?
Some Answers: Don’t force collection, don’t control expenses, don’t match revenue and expenses, invest on an asset without a careful assessment.
Action plan: Strengthen collection and maintain a “funded” budget.

Case $4 – Product development problem: Marketability
Inversion Analysis: How can I make the product not sellable and marketable?
Some Answers: Develop fancy features that customers do not need, don’t analyze customer benefits, don’t invest time to enhance the user experience.
Action plan: Realize customer benefits and invest time in enhancing the user experience.

In summary, I think the main benefit of this technique is to make us look at things and problems on a different perspective. Examples above are sort of like high-level, but you can go down to a more detailed problem to solve using inversion.

Ego is the Enemy of Creativity: How to Drop Ego to Ensure A High-Performance Team

I have this habit to wonder if there’s something wrong with me. Perhaps I’ve spent too much time alone in running the business in its first few years. As a young entrepreneur, my ego was fed with the idea of having a business of my own. The unwelcome, small voice of my subconscious whispers that I am the man and I made it but in reality, I have not.

Back then when I was managing the company in full speed and full control, I set my perks and spent things that benefit my needs and not the company. I was doing it without carefully assessing the performance of the business.

I wonder, maybe this ego was one of the major reasons why I failed several times. That ego blocked my creativity. I was too full of myself and the know-it-all. I don’t show it though but deep inside I know.

But the failures showed me the way. They shook my head so I gathered my wits. The thing is, these are impulses. You have to have a strong sense of being emotionally mindful with massive actions to stay humble and be creative.

It was 2011 when I welcomed the idea that for me to be able to grow, I need a high-performing team.

I need to let go of the big ego so I can perform and be creative.

I have to go back as a student and be willing to learn.

I then welcomed a partner to help me out in sales. A met a guy in his 60s, a little aggressive and big-headed but he makes sense. I learned a lot from him, especially in a sales negotiation.

With him, we were able to grow our revenue by 100% year-on-year. We were the A-Team in sales. But I had to allow myself to be in his wing, follow his calendar, be his driver and enable him to dictate the pace in sales. I even titled him as the Managing Director of the company. I forget entitlement.

By 2015 when I allowed the company to try one more notch of a challenge. I met a foreign angel investor that I have always been grateful for. I used the investment to grow further in sales and product. But one of the major moves that I made was to hire a CFO.

I had to let go of a big chunk of ego again by allowing an outsider to manage and control the expenses. I had to place the company’s mission above me. I let go of the perks as I was questioned with almost every business decision that I make. I knew I have to empower them and be professional.

It’s not about me anymore, it is about the company, its clients and its employees.

The growth momentum becomes inevitable that eventually, we hired a COO, department managers, and groomed team leaders. I even gave up my own office at one time to accommodate them.

Accountability as a leader becomes higher that I need to keep my own KPI and find myself responsible for transferring my knowledge to the team.

To this day, I keep myself in check of my ego on my actions and every communication that I do to our team and our clients. Because if not, then the ego narrows vision, makes us vulnerable and corrupts our behavior.

Strengthen your self-esteem and stay humble.

Integrity: A Positive Model to Solve Problems

“ca. 2004, while most of our prospective clients are in the pre-sales stage, my brother was becoming impatient about the nature of our business. The sales conversion process was really long. A typical cycle takes 3-6 months. Because of that, our team was already shaking. I got frustrated, we all are.

One of our few and critical programmers, on the other hand, was changing career. He was destined to take over their family business in Lucena. A mom and pop but famous auto-supply retail shop. During his last days in the company, he enrolled at Don Bosco for a mechanical course. Then suddenly, his dad died from a sporadic disease. That forced him to resign early. Then he left.

Dann and I have decided to dissolve the company. We agreed to talk to our uncle Manny about our departure. The night before our mtg, for some reason, I took a book from the office shelf that had been sitting there for years, it was a book given to us by Manny. The title of the book was Built to Last by Jim Collins. I started reading when I got home. I read overnight for hours. I knew my purpose. I knew I have to be resilient. I knew that more than profits, the company has to do a mission.

Next morning, we sat down at Starbucks near the office. The awkwardness was galling, making me fidget. Dann had no idea that I won’t be leaving the company. I cleared my throat and said, “I am staying.” He was disappointed to know that I changed my mind. It was the first time I felt independence from under his wing. I took that courage to stand alone and try to turn things by myself.

I went to the office right after the meeting. It was gloomy. I knew I had to take over Dann’s engagements with the prospective clients, Unionbank and its clients, Summersault Outsourcing to name a few. I knew I had to do presentations with corporate executives. Just by the thought of it was so nerve-racking.

I sat down and gaze around the office thinking about the weight on my shoulders. But deep inside, it was fulfilling. I survived.”

Integrity, as defined, is the quality of being honest and having strong moral principles; moral uprightness. It presents as a positive model within morality and legality. When a person is faced by problems, integrity is a tool for solutions, increased performance and quality of life. Though commonly ignored, I firmly believe of its significant role in productivity and performance.

Here are practical ways to exercise integrity in solving problems:

  1. Determine your core values. We all see this in offices and corporations but do you know what’s this for? These core values guide organizations in decision making. When faced by circumstances where we have to choose between path A or path B, one of the criteria for the decision is, it is aligned with our core values?
  2. Keep your word. Many of us can relate to when friends or colleagues who commit to call back, reply back, promising this and that but always fail to deliver. It has become an acceptable norm for many of us. Please don’t say yes if you wanna say no because if you do, then expect that the solution to the problem you agreed upon will not happen.
  3. Keep an open mind. Listening to and respecting the opinions of others is one of the keys to problem-solving. A leader will never know everything. Don’t assume that you know everything especially when solving problems. It is essential to gather thoughts of the people around you and analyze what they have to say.
  4. Do the basics. Solving the problem by doing the unethical and illegal is a big NO.

In my story above, I came up with the decision of continuing the company because I kept my word to the stakeholders, partners, and customers. I solved the problem in sales by determining my mission, which is to help them solve their business process problems through software automation.

Solving Problems By Entrepreneurial Thinking

Our team of about 25 people is mostly sitting at the conference table. Some are standing up while their smiles fade about the agenda I am about to discuss. It was a Friday, March 30, 2007, about 6 p.m. It is a payroll day, and I am announcing that I am giving them all up together with the office and all company expenses because the cash flow cannot justify them anymore.

I went home, and inside my bedroom, I leave it dark, I lean against the wall and put my head in my hands. What should I do? I sink to the ground, and I want to make myself as small as possible.

I have never been in this kind of situation. My co-founders and all the staff were all gone. Several clients, a couple of desktop computers and my coding skills were left. Get it together, Dennis.

What is the principle behind entrepreneurial thinking? I read research written by Dr. Saras Saravathy at the University of Washington entitled “What Makes Entrepreneurs Entrepreneurial?” In 1997, she traveled across 17 states in the United States over several months, and she met with 30 founders of companies, ranging in value from $200 million to $6.5 billion and spanning a variety of industries including steel, railroad, teddy bears, semiconductors and biotech.

She coined the term “effectual reasoning” and “causal reasoning.”

“In general, In MBA programs, students are taught causal in every functional area of business. Causal rationality is the traditional approach where you predetermine goals and a given set of means, and then identify the optimal, fastest, cheapest, alternative to achieve the goal. This is also synonymous with strategic thinking.

Effectual reasoning, however, does not begin with a specific goal. Instead with a given set of means and allows goals to emerge contingently over time from the varied imagination, diverse aspirations of the entrepreneur and the people they interact with.”

Causal thinkers are like generals while effectual thinkers are the explorers, setting out on voyages into uncharted waters.

To summarize her study, entrepreneurs are entrepreneurial, as differentiated from managerial or strategic, because they think effectually; they believe in yet-to-be-made future that can substantially be shaped by human action; they realize that to the extent that this human action can control the future. It is important to point out, though, that the same person can use both causal and effectual reasoning at different times depending on what the circumstances call for. In fact, the best entrepreneurs are capable of both.

In my story above, unconsciously, using the principle of effectual reasoning, I have to work with readily available resources. I began with some questions like who am I, what are my traits and abilities, what do I know and whom do I know.

Instead of revalidating our products by doing market research and business planning, I started by setting up a workstation at home while working on projects by myself. When I realized I needed extra hands, I sourced for interns from several universities and asked one of my existing customers who is also a good friend/mentor to accommodate me in his office in Makati. I used desktops from the old office and hired the interns. By word of mouth, I started booking new customers again, got a new office and hired regular employees and then eventually changing our name to Hilsoft, Inc by 2012.

In summary, in relation to my experience and the study above, below are some keys to solve problems by entrepreneurial thinking:

  1. Solve problems using existing resources and means.
  2. Execute solutions focusing on affordable loss and not on expected return. It means for example not to exert too much effort on market research and to choose the target market, but instead do the actual selling and adjust products accordingly.
  3. Solve problems by trial and error, leverage on contingencies and be open to surprises.
  4. Take advantage of opportunities while solving problems through human action.

As I say all the time, we can solve anything as long as we do not tolerate problems. By adding this concept, I wish that each of us can find what we are looking for.

The Innovative Employee

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Being an innovative employee is a little tricky. It depends on your overall career objective. Are you working for your employer because you love what you do? Or are you working because you want to help your family, help customers, save for the future or gain experience?

When I was working for a Japanese company back in the day, I used to play around with tools to make our product, a banking application, useable. My motivation was the self-gratification of solving real-life programming challenges. I was competitive and enjoy the experience of finishing early on my commitment. Until I left the company and worked for my own.

So the innovation that I had done was to find ways to estimate tasks creatively, execute coding with finesse and release early. I break tasks into 2-hour chunks, use a notepad to log them thru our intranet time accounting app.

As the youngest member of the 12-man team, I love the attention I get when I solve challenging problems by myself.

Here’s my take on how to be an innovative employee and routines that will get you on your way to peak performance:

Proper Mindset

Having a positive mindset and attitude is the top most important thing that you should do. Stay away from work gossip and toxic people who feed you nothing but negativity & complaints.  Establish a productive routine from making your bed by the time you wake up, visualization, exercise, and focus.

Implement the latest technology and methodology.

Look up the technique called “Pomodoro”. It’s about breaking your tasks into 25-minute chunks and 5-minute break. It’s one of the trending methodologies these days. With this, plus an app such as TickTick can be an innovative tool for productivity.

Balance stress and rest.

Did you know that the most important part of toning your body is rest? After breaking your muscles during a workout, rest is the part where it builds back the muscles that you teared up. It’s no different with work, rest is where you sometimes achieve the eureka moment and get solutions to your problems. It allows your brain to step out of the linear thought process. It is where your subconscious mind kicks-in.

Do not multi-task.

Compartmentalize your tasks into categories and block your time for each category. Turn off your phone during time-blocking.

Concretize your purpose.

Is it really about just gaining experience or just getting your salary every 15th and 30th? Align your purpose with the company’s purpose to get motivated and contribute to society.

Set your own scorecard and engage for impact.

Try to gamify your scores. When I heard the term “gamify” for the first time, I couldn’t help but be curious and be excited about it. Being creative on your targets and your KPIs make it more exciting and fun to work with.

Engaging for impact means, just adequate follow through and you’re working harmoniously with your team especially when your tasks are inter-linked with each other.

There’s nothing more satisfying than seeing progress, whether it is about your own growth, the company’s, your team or your customer’s.  And being an innovative member of your team gives you true pleasure at work and in life.