BUSINESS BITS

Life in the fast lane
Nichole L. Torres and Paul Icamina

Are you dreaming of explosive growth during your first year of business? Be careful what you wish for. You want you business to be success from a day one – with customers beating down your door and the media reporting on your explosive popularity. Or do you?

While a growth explosion in your first year of business can be an ego boost, it can also be huge challenge. Jerry White, director of the Caruth Institute for Entrepreneurship at Southern Methodist University in Dallas, suggests that entrepreneurs take inventory of their own business before deciding on a growth plan. “You can do in five years what it normally takes fifteen years to do,” he says. “But don’t sign up for that if you don’t know what you’re getting into.”

Growing fast can be extraordinary lucrative, though, and that’s one of the biggest pros. But according to White, your growth plan should largely depend on your personal goals. Do you want to revolutionize the industry? Perhaps quick growth on a grand scale is for you. Do you want a lifestyle business with flexibility in hours? Then you should probably plan for a more steady growth pattern.

For Professional Sports Tours/Big Blue Travel, a New York City company that plans tours for sports fans and sends them to big games and sporting events around the country, a first-year growth explosion was in the cards. Founder Michael R. Martocci knew he wanted his business to be in high demand – but even he was taken aback by the $3 million his company grossed in its first year of business back in 1995.

His first tour was a package for a big game between the New York Giants and the San Francisco Forty-Niners. One radio spot later, he had 600 customers clamoring to sign up. “Initially, we didn’t have the staffing to handle everybody,” he recalls. “So each day, each hour, we were hiring new people.”

That’s one of the biggest challenges for fast-growth companies – outgrowing staffing and systems just as you’re getting them into place, says White. “And growth consumes cash fast,” he says. Overestimating the amount of capital you’ll need to accommodate rising orders is important.

It was a bit easier for Martocci, 42, because he partnered with a travel agency he had previously worked with and was able to use a lot of its resources. “I got a little bit of a break. To be able to get the clout of their purchasing power helped me get the best deal out to my customers,” he explains. And the rapid growth hasn’t fazed Martocci’s company at all as annual sales exceed $15 million.

If, on the other hand, you’d prefer a slow and steady growth plan, you can model yourself after Michael Rose of Omega Plastics LLC in Erie, Pennsylvania. When he founded the custom plastic injection molding company in 1998, he planned to grow slowly. “We chose it because it’s a safer route for the business,” says Rose, 33. “We also feel we can [better serve] our customers.”

Rose was concerned about not outgrowing his staff of capabilities before the company was ready. He’s even turned down business opportunities to keep growth on a more even keel – and his customers appreciate his honesty.

With the sales at about $700,000 annually, Rose sees growth on the horizon but is steadily planning for it. “You’ll probably be represented with the opportunity to grow rapidly, but there’s an engineering and labor crunch that goes with that,” he says. “And if you don’t execute properly on a large project, you can endanger your business.”

There isn’t one right way that will work for every business. “Now yourself, know your goals, know your ambition,” says White. “Let that influence your vision. Don’t let an article or some high-powered success story cause you to embark on a growth rate that is not [compatible with] who and what you really are.”


A new twist in vinegar making
A husband-and-wife business, with a little help from Tatang.

BAYOMBONG, Nueva Vizcaya – Here’s a new twist to vinegar – made of mango, pineapple and banana extracts fermented with coconut water.

And 100 percent natural that ages to perfection virtually for as long as one stores it on the shelf.

The ratio is one part mango to one part pineapple to one part banana, mixed with a base of coconut water.

It all started with grandfather Tatang who, in turn, was taught by his father how to make vinegar. Today, LLM Food Products markets its first-rate vinegar in modern packaging complete with coconut fiber woven around the container.

Tatang is Rodolgo G. Laygo, 79, who encouraged his daughter to shift from ready-to-wear manufacture to food products “that are used by all households every day.” He wanted it to be a legacy to his grandchildren.

“At first it was a hit-or-miss operation,” recalls Luningning L. Malabanan, the better half of the husband-and-wife business. “Until the Department of Science and Technology came into the picture.”

“DOST was very accommodating,” says Luningning. “Wala kaming hindi itinanong. Makulit kami at gusto naming lumaki. Kami mismo ang lumapit sa kanila at nakita naman ng DOST ang enthusiasm namin.”

At first, the project was conceptualized to only support the chicharon business of the Malabanans. With the high prospects in vinegar production, they decided to go full time, hence, they asked assistance from DOST.

They never regretted the move they made in 2002, turning LLM Food Products from a backyard cottage industry to a medium-scale enterprise that produces an average of 100 120-milliliter bottle of vinegar to 300 bottles today.

Not much, by any standard, but enough for the couple’s current market which has expanded from the town of Solano to just about the whole of the Cagayan Valley . Plant personnel has increased, from six to about 15 today, and its outlet from their home to four major supermarkets and four family-owned outlets in Nueva Vizcaya.

More important, the Malabanans – through DOST – were able to transform erratic traditional processing that improved shelf life from six months to one year or longer. This led to increased sales from P60,000 to P130,000 a month.

All because of DOST and the P300,000 SET-UP assistance for the purchase of production equipment. The fermentation process was shortened from one month to two weeks.

This December, the technology acquisition assistance (with a monthly amortization of P8,333) will be fully paid. “Wala kaming palya sa pagbabayad,” says Luningning, “impressed din ang DOST.”

In between, the DOST provided – for free – technology training in fruit processing, vinegar production, good manufacturing processes and strict quality control. Technical assistance included the lay-out of the processing plant, installation of an acetator, label design and product analysis.

Processing became scientific, from precise measurement of the sugar content of the fruit vinegar to strict quality control of fermentation and pasteurization. “With the scientific interventions of DOST, standardized na ang lahat, the taste is consistent,” says Luningning.

“Malaki ang tulong ng DOST,” Angel stresses. “We didn’t even expect the P300,000 SET-UP assistance. Equipment upgrading really contributed a lot in increasing our production”.

In fact, he adds, it is DOST that tested products to be 100% natural.

“It’s not easy. When we first joined a trade fair in 2003 at the Festival Mall in Alabang, Metro Manila, only three out of 500 bottles that we brought were sold,” says Luningning. “The next year, we were invited again, this time to a technology fair through the encouragement of Dr. Jaye A. Tejada, regional director of DOST.

“It was then that our vinegar was sold out. The 10 gallons we brought for free taste were gone in just one week and we had to rush extra orders from Bayombong.”

The 120-ml bottle (bilog) sells for P12 and the 750-ml version (cuatro canto) for P22. The premium versions are more expensive (P60-P100, respectively) because they are fermented for not less than three years (traditional vinegar is usually fermented for just one year, max).
“The fruit vinegar tastes different. It has a delicious aftertaste. With the natural fruit vinegar, the asim that comes right after ingestion is gone after a while, hindi gumuguhit, sarap na lang ang natitira.

“Ang aroma iba, lalo sa pagluto kagaya ng adobo at kahit anong ulam. Ito na break namin with the natural vinegar, up to the last higop,” says Angel. “Ang lasa nasa taste bud hindi sa dila which is what you get with common, chemical-based vinegar.”

“Malaking tulong namin sa mga farmers when they cannot sell their produce. Pag malaki na kami, kami na rin ang market nila,” Angel points out. “We wanted a product that uses local raw materials. This way, we help our own people.”

This commitment continues, with their dream of expanding to pickled santol, rattan and mango. All because of the ready availability of their own vinegar line. The development process started late last year – again with the help of the DOST – but it is still too early to market them.

“We will continue to improve and upgrade our technology,” Luningning points out. “Eventually, we plan to produce fruit-based ketchup. Our largest market would be the masa, the ordinary household.

“Marami pa kaming gustong matutunan,” Angel adds. “We hope DOST will always be on our side.”