A mountain lover scales new heights in business
By Karen Galarpe

Ever since he was a kid, Jay De Leon always loved the outdoors. He was a Boy Scout and enjoyed camping and going on expeditions.

At 17, he started climbing mountains with the San Beda Mountaineering Club. Even after finishing his Business Management course in San Beda College and working in the corporate world as sales trainer at a real estate company, he would hie off to the mountains during weekends with friends.

But the call of the outdoors was louder, and so, three years after graduation, he gave up on the corporate world, put on his climbing boots and became a full-time climbing instructor at Power Up, an indoor climbing facility. “I was earning P28 per hour and survived on Korean noodles, bread, and soup. I spent most of my earnings on new climbing gear and travel to do climbs,” he says.

Up on the mountains, he’d get so pissed off when, just as he would take a step up the trail, his shorts would rip at the crotch area. “Nawawarak ang shorts ko.” Sometimes when he would cross a river, coins and other items in his pockets would float around. And his backpack would be all wet inside out.

That’s when he thought of coming up with backpacks that are stable, waterproof and durable, and manufacturing outdoor clothes that would be practical and can be guaranteed to last a lifetime—something bombproof.

In climbing parlance, ‘bombproof protection’ means that your anchors are really strong and reliable. Jay aimed to have bombproof products that would be superior to what the market then currently offered.

And so he went to Robert Garcia, the designer of his sister Michelle. “Robert introduced me to Divisoria, and taught me how to do costing even down to the consumption of thread. He made me excited at the thought that I can be my own boss,” says Jay.

Jay’s mom Yolly dissuaded him. It was 1998 after all, and it was not a good year to start a business. “I did not have any feasibility study. I only had my handwritten computations and a gut feeling that this business will work.”

Jay saw that a neighbor of theirs had three or four sewing machines in their garage that were not needed. He talked to the owner and was able to get the machines on a lease-to-own plan. Jay made some designs and tapped out-of-work sewers to make prototypes. He then asked his friends from Power Up to test them on the mountains and give him feedback. “I was excited with the whole concept. I wanted quick dry, wash and wear type of clothes.” His friends okayed his products.

That first month, 20 pieces of pants and shorts were made with his P30,000 budget. The next month, he had about 40-60 pieces sewn and went off to Boracay with the goods to join an event of the Sports Climbers Association of the Philippines. It was a marketing gimmick, as he didn’t sell anything. “I gave them all to the top climbers. Call it guerilla marketing. When one of the sponsors arrived, he was shocked to see all these climbers wearing my stuff with the Bombproof Gear brand. He went, ‘Ano ‘to?’”

Response was good, and Jay went full blast in 1999. He registered Bombproof Gear Designs Inc. as a corporation with authorized capital stock of P500,000, of which less than P100,000 was paid up. Climbing buddies were his partners, but later on, his family, including his mother, started buying some of the partners’ shares.

“I knew my market well. They are my friends,” says Jay. What Jay would do to sell his products was to talk to his “moles”—his friends in the different mountaineering clubs, and find out when and where their next meeting was. “I’d bring my van, park nearby, then open my trunk to sell my clothes. I would bring about eight boxes full of clothes. When sales are good, I would give my friends commissions in the form of a free pair of shorts.”

Even if Bombproof Gear’s products sold at P100 to P200 higher than other products in the market, climbers bought his stuff because they were durable. The pants, for instance, are made from a mix of nylon, polyester and cotton for easy drying. There is also an extra layer of fabric in the crotch area to prevent rips. Pants also have deep big pockets so stuff like passports can be easily stored and secured. Polo sleeves can be folded up and buttoned so they won’t fall down as you cross a river.

“We also offered a guarantee that they are going to last, notwithstanding wear and tear, accident or misuse,” explains Jay. One time, he had to pull out 100 pieces of pants because the fabric snagged. “I replaced them. I want the customers to know they can count on us.”

Jay started offering his products to outdoor shops on consignment not only in Manila but even in Boracay and other places. “I offered as much as 40% discount and vouched to replace anything that would be broken.” Business was good. It helped that the top three climbers of the Philippines were wearing Bombproof Gear products.

When Jay started, his dream was to have a shop in a mall in five years. But just after a year of operations, he found himself faced with a tempting offer. One of the shops he was consigning to, High Adventure, couldn’t pay him back due to financial difficulties. The store was also in arrears in rental payments to Robinsons Galleria for their 50-square-meter shop on the third floor. The owner asked him if he would want to take over, get the rights transferred to him, and assume the balance of the debt to the mall. All stocks would be left to him on consignment. He could pay High Adventure gradually in six months for the rights. He was given a week to decide.

It was too good an offer to pass up. “We were all excited. We never had a store before, tapos sa mall pa,” says Jay. A week after, the store Bombproof Gear opened, just in time for Christmas. In addition to High Adventure’s stocks, Jay filled up the store with Bombproof Gear stuff, as well as outdoor local products like Montanara Backpacks, Mojo Sandals and Tribu Sandals. “We had a pretty good sale.”

Jay wanted to keep the manufacturing operations separate from the mall store, and so the store is run by a separate company, Stoke Inc., owned with friends and family. Initial investment was about P300,000 only. They got back their investment in two years, and in 2003, the company was worth P3 million. Annual sales in recent years reached P6 million, but Jay is targeting to hit P11 million this year. Bombproof Gear Designs, on the other hand, also gave back their investment in 2-3 years.

Aside from outdoor clothes, Bombproof Gear the store also carries accessories branded as Guerilla Wear, which is a co-production with the Agaw Agimat band. They also carry imported products such as hook sets, head lamps and camping equipment. They became the exclusive distributor of Kong climbing equipment from Italy, Lanex Rope climbing ropes from the Czech Republic, and Rock Empire harnesses also from the Czech Republic. The store also has institutional clients such as the Philippine National Police, the US Navy Regional Contracting Center, the Philippine National Red Cross, the National Disaster Coordinating Council, and the rescue teams of local government units. They get stuff like harnesses, carabiners, rapel belay devices and other climbing equipment, and even tear gas.

There have been rough times when mall sales are down, but both Bombproof Gear Designs Inc. and Stoke Inc. have weathered them. Last year, a new store was opened in Tiendesitas, and Jay is setting his sights on opening another store somewhere else.

He’s also looking at having special fabrics done for him in China. “I want to keep expanding our product lines and improving our designs and product quality. I also want to expand our distribution network,” Jay says. His ultimate goal: to be world-class and be the first Pinoy brand in the outdoor category to be known internationally.

And to think it all started with a case of ripped shorts.

Described as hampas lupa, this once struggling accountant, together with his wife, built a multi-million export handicraft business
By Doris C. Dumlao

He was a struggling accountant from Romblon who, at one point, tried working abroad to make a better living, but he was never content being a salaried employee. She, on the other hand, was a sultry Bicolana who once dreamt of marrying a seaman so that she could hoard all the dollars she wanted to splurge in sight-seeing and shopping around the world.

Neither had formal entrepreneurial training nor parental subsidy to start from but both are smart, diligent, and highly-motivated individuals who put themselves through college in Manila. All they had was each other but as it turned out, it was all they needed to build a successful enterprise from scratch.

These days, husband and wife Salvador and Loida Rapal run a medium-sized handicraft export business whose products are carried by huge multinational retailers such as U.S. store-chains Wal-Mart, MarMaxx, Target Store, TJ Max, Michael’s, Freight and Barrel, and Family Dollar Store. In retrospect, they have far exceeded their own childhood dreams.

The Rapals’ RH Excelcrafts & Gen Merchandise Enterprise, which has manufacturing hubs in Cavite and Romblon as well as sub-contractors in Bicol, Bulacan, Pampanga, Cebu, Bohol, and Quezon, now ships out 200 containers a year and employs about 300 people.

Their showroom in Las Piñas is bustling all year round, laden with handicrafts fashioned out of indigenous materials such as abaca, vines, buri, bamboo, and paper pulp.
Their business is like Boracay—there’s hardly an off-peak season. Between October and February, they are busy producing spring and Easter products while between March and August, they are in a rush to stockpile for yearend holidays like Halloween and Christmas.

Entwined
Bhuds and Loids met in a commuter bus plying the Sta. Mesa-Divisoria route when they were working students in the 1980s. He was then taking up accounting at PUP and she was a business administration student at NCBA. Most of Loids’ kin didn’t think Bhuds was good enough. One of her sisters described him as “hampas-lupa” (dirt-poor).

He supported himself through college working for a Filipino-Chinese businessman engaged in a handicraft enterprise in Quezon City, supervising all aspects of the supply delivery chain including quality control. After he passed the CPA board exams in 1987, he started accounting practice at SGV & Co.

On the other hand, Loids was working for Sto. Niño Catholic House, Inc., a retailer of religious artifacts owned by long-time family friend Fernando De Leos who would eventually be the couple’s ninong or principal wedding sponsor. She would continue working there even after college and through the initial years that she and Bhuds had tied the knot.

Loids helped her ninong grow the retailing business and there learned the basics of running an enterprise. It was there that she developed a knack at people management and a nose for products that will sell like hotcakes.

After three years with SGV, Bhuds quit to work as an auditor in Saipan, wishing to provide a better life for his young family. But it wasn’t to his liking and he scrambled back home at the first chance he got. Once back in the Philippines, he had many job offers, but decided he couldn’t be a wage earner anymore.

With a start-up capital of P40,000, which Bhuds earned from working in Saipan for one year, the Rapals put up RH (which stands for Rapal’s Handicraft) in 1990.

Bhuds’ mother, a long time ago, had a cottage handicraft business in Romblon. It didn’t hit big-time nor was sustained for long but some of the artisans in the hometown still recognized Bhuds’ business as a progeny of their former employer. Some agreed to relocate to Manila to work for him.

At the start, the Rapals had only a handful of people and Bhuds himself did some manual work like weaving (their bestsellers were reindeer and sleigh) in order to lead by example. Loids, on the other hand, had become the resident product designer, discovering she had ample creative juices.

She haggled to acquire an 80-square meter property in Sta. Mesa Heights that became their first showroom, production hub, warehouse, and housing (for themselves and for their employees) rolled into one.

RH started out selling only to the domestic market, sub-contracting for other exporters. After a year, Loids felt it was time to go global. There wasn’t enough volume to sustain the business if they were to rely on domestic demand, she realized. He kept on prodding Bhuds, who didn’t even know how to use letters of credits (L/Cs) then.

Given limited resources and zero overseas connection to start from, there wasn’t room for trial and error. But they followed their instincts. Bhuds conducted market research and wrote about 500 letters to various trade embassies and Philippine commercial attachés abroad to make a pitch for their products. They had to borrow Sto. Niño’s showroom to establish credibility among visiting clients.

A buyer from New Jersey became their buena mano immediately placing a large order. Offshore market sales grew from there and pretty soon, they were running a multimillion-dollar business.

But as start-ups, without any asset to use as collateral, they relied on cash advances from buyers and their friendship with the De Leos family to bankroll their fledgling business. Aside from lending his showroom during buyers’ visits, ninong De Leos was kind enough to tap Sto. Niño’s credit line from banks to help the Rapals raise the P5 million additional capital needed when they started expanding capacity to cater to the offsore market. (But as the Rapals’ business prospered years later, the couple would eventually get the chance to return the favor to their patron in a bigger way.)

It was much easier to expand business and manage cash flows back then, as it was customary for buyers to make a down payment equivalent to 50% of the purchase order value. As volume grew, the Rapals always had to transfer to a bigger production sites. From La Loma, they moved to Parañaque, Tandang Sora, and Malinta. Finally, to avoid rising costs in Metro Manila, they put up a much bigger production complex in Trece Martires in Cavite.

To date, most of the original workers recruited from Romblon are still with the Rapals, who provide free housing facilities for their people. Bhuds attributes their success in building an enterprise to a combination of hard work and good luck.

“It was the right timing when we entered the export business,” Bhuds says. “At that time, importers from the US were looking for direct manufacturers and no longer wished to go through middlemen.” Loids adds, “This business is good because cash turnover is fast. In three to four months you can generate profits.”

Challenges
Running this mid-sized enterprise for the last 16 years is no walk in the park. These days, for instance, buyers no longer advance cash for their orders, so the manufacturers’ cash flow is sometimes tight when orders bunch up. It’s thus a must to stay liquid.

As Western buyers started to rationalize operations, they got rid of warehousing in their own countries. Thus they no longer allow staggered shipment. Suppliers like the Rapals have to stockpile and send everything straight to the buyers’ stores.

China’s emergence as a manufacturing powerhouse has also altered the rules of the game. To stay competitive, the Rapals are thus constantly coming up with new designs and diversifying input content. “You have to be innovative. There must always be an element of surprise for the buyers,” Bhuds says,

It also helps to invest in sound logistics. When the Rapals realized that they were spending so much on transportation costs, for instance, they decided to buy their own truck head so they could move out their products anytime they need to, thus putting themselves in control to meet deadline commitments.

But the most important lesson is the basic: know the market. “Before I jump into a river, I’d like to make sure that there’s no crocodile in it,” Bhuds says. “Find out what the market wants, generate the demand, and make the product. If you make the product first and the market doesn’t like it, you end up with nothing.”

By Lynda C. Corpuz

Amway, a direct-selling company founded in 1959 by Rich DeVos and Jay Van Andel, proved to be a good proposition to those who want a business of their own. But no matter how established, what with its presence around the globe and the success stories it chronicles throughout its 50-year existence, it also took a beating from the pyramiding scams in the 90s that hounded the Philippine direct-selling and legitimate multilevel marketing (MLM) industry.

To fight this, Amway partnered with the Department of Trade and Industry (DTI) in producing a brochure warning the public about pyramiding – those illegal schemes that generate income mainly from recruiting members or agents rather than from selling products or services.

And if you intend to join any direct-selling or MLM group and be like Amway IBOs Mar and Babes Tero, here’s a quick guide to differentiating a legal MLM versus a pyramiding scam:

•    It may be an illegal pyramid if it proposes commissions for recruiting additional distributors.
•    A MLM may be fake if you are asked to purchase expensive inventory.
•    Continuing to grow your down line (the commissions on sales made by new distributors you recruit) is not the way to earn in a MLM. True MLM plans make money out of sales you made yourself.
•    Ask for hard evidence for any plan which claims to sell miracle products or promise big income in an instant.
•    Take note of decoy references paid by a plan’s promoter to make people believe about their fictional success.
•    Do not sign any contract in an opportunity meeting or any high-pressure situation staged by a MLM. Rather, insist that you will carefully think first about joining.
•    It pays to do your homework so check with the Securities and Exchange Commission and the DTI about any MLM you are considering.

They were first skeptical about network marketing but this Cagayan De Oro couple is now one of the Amway’s top distributors.
By Lynda C. Corpuz

Exhausted from the Worldwide Marriage Encounter Movement enrichment seminar they attended earlier that day, Mario “Mar” and Evelyn “Babes” Tero just fell asleep and woke up in the latter part of the Amway presentation they were invited to.

Mario recalls they hardly understood anything from the presentation of the global direct-selling company and all they remembered was they could earn big income in just two to three hours a day of doing the business for a year. The Tero couple, however, was not totally lured of the promise since they were busy as medical and drug distributors. “We joined Amway out of respect for our friends,” Mar recalls of the Amway presentation in 1997.

Doubtful
Coming from humble backgrounds, all the couple wanted was to succeed in life. Mar, a Commerce Accountancy graduate from the University of Mindanao, and Babes, who finished a degree in Commerce Marketing and Management from the University of Visayas, always worked hard for their five children. But tests came their way.

Although they joined Amway, Babes remained doubtful about their prospects for eight months. Their friends turned down their invitation to join them since they had misimpressions about it, mistaking Amway as a pyramiding ploy. Worse, their medical distribution business almost went bankrupt in 2000 due to the Asian financial crisis. They had to downsize and found it hard to settle their payables. Mar had to always pick up Babes from the hospital since the latter got sickly due to their situation.

Selling their dream house, which they had built in 1995, was the only solution they had to get out of their financial troubles. Mar then worked at a construction and real estate business in Manila, leaving his family in Cagayan De Oro, believing that it would augment their income. “But life in Manila became more miserable that I ended up with nothing,” Mar says.

In September 2003, Babes asked Mario to return home because the latter’s father was suffering from osteoporosis. His wife also asked him to help in the Amway business. “I obliged, realizing I had made many wrong decisions,” Mar says.

Finding success
Their friends, who invited them to join Amway (which started its Philippine operations in 1997), told them that full attention is required for them to succeed as independent business owners (IBOs). “My friends became our Amway mentors and their advice had been a big help,” Mario shares.

So Mario became truly devoted with the Amway business, not only to grow it for his family’s benefits, but also to help their distributors be successful as well, realizing that there are also other IBOs who were troubled like them but found Amway helpful. “After seven years of doing medical distribution, I prayed for a business that required less capital and stress and Amway was the answer,” Mario says.

Income augmentation was one of the benefits they got, Mario says, although it was not obvious in the first few months. From September 2003 to August 2006, the couple’s income rose, earning around P40,000 monthly, enabling them to pay their debts. For echoing the company’s vision of “helping people live better lives,” Mar and Babes bagged the Diamond Honor, the highest recognition Amway awards to its IBOs.

Doug DeVos, president of Alticor Inc., (Amway’s parent company), visited the Philippines in October 2006 and lauded Amway Philippines’ 79% sales growth as of August last year in the agriculture, beauty, and wellness markets, thanks to IBOs like Mar and Babes. “The results of the past fiscal year showed that more and more Filipinos have begun to appreciate the value of setting up their own businesses. They have shown faith in Amway as their trusted and supportive business partner,” DeVos says in a statement.

Amway’s business model enables the likes of Mar and Babes to become active income earners and have an opportunity to retire early and enjoy life to the fullest, Mar points out. From financially troubled, the couple now has better options in life. They share that the education of their children is already guaranteed. They can continue their annual dental and medical missions, provide assistance to their church and extended families, and travel in style for free through Amway trips, the most recent of which included Vancouver, Canada, Prague, Czechoslovakia, and a Mediterranean cruise.

Being financially literate is the lesson they learned from Amway and Mar and Babes now apply best-selling Rich Dad, Poor Dad author Robert Kiyosaki’s financial advice. They invested part of their Amway income to real estate and mutual funds. “We strongly use Kiyosaki’s great idea that we believe we now have a sound financial management,” Mar says.

Now, Mar and Babes cling to another Amway promise: to reach the Founders Diamond and Executive Club honors. “We promise to continue helping our Amway teams to achieve their dreams because in doing so, we will also be rewarded,” Mar ends.

By Lynda C. Corpuz

When Jonathan Jay “Jay” Aldeguer, 36, president and founder of Islands Souvenirs, finished his AB Interdisciplinary Studies degree from the Ateneo De Manila University, his parents rewarded him with a European vacation. On this trip, Jay found himself stuffed with books and figurines, which were too inconvenient for him to carry around. So he shifted to t-shirts as souvenirs, which also served as a good change of clothes, he funnily recalls.

That experience, and as a typical Filipino who loves collecting souvenirs and buying pasalubong or take home items, made Jay translate his hobby into a business venture in the then underdeveloped Philippine souvenir industry.

By putting up Islands Souvenirs in March 1992 and packaging souvenirs that deviate from the usual, ethnic-inspired motifs to usable mementos that reflect the country’s sunny and tropical character, Jay not only made money, earned recognitions and awards (the latest is the 2005 Ernst and Young Small Business Entrepreneur honor), above all, he proves that passion and interest are essentials for an entrepreneur to get into a business. “Turning a hobby or an interest into a business venture would be a perfect foundation for any enterprise,” Jay says.

If you are now thinking turning whatever hobby or interest you have into a moneymaking endeavor like what Jay did, check out the following tips collated from various sources:

Contemplate first. No need actually to go to a secluded place to meditate and ask for any divine intervention (though it helps), but simply ask yourself if you are really decided on turning your hobby or interest into a business.

When Jay established Islands Souvenirs, it was clear with him that as a souvenir collector himself, he wanted value for money. And getting value from his money means offering both local and foreign tourists items that best capture the true spirit of the locality they are visiting. With this vision, Islands Souvenirs churned out 300% sales in just a year of operations.

Be ready for the competition. If you truly feel that your passion has the potential as a business, check out for any competition so you can fully identity and serve your target audiences.

When Jay rolled out his first kiosk in a Cebu mall, he immediately found himself up against two competitors who were hawking a similar concept as of Islands Souvenirs. But luck was on his side that the department store granted him additional space to expand, and by this time, the competition had vanished.

Act like a business. Failing to make a complete transition from amateur to professional is considered one of the biggest pitfalls of taking the hobbyist route to business ownership.
To avoid this, start by taking care of the following such as opening a separate checking account for the business; getting a credit card; maintaining complete and accurate records; documenting your equipment purchases, among related matters.

Being unique matters. From kiosk to mall outlet; expanding from Cebu to key Philippine business districts, to selling overseas, Jay proves that creativity, innovation, and quality spell out the difference, evident with the fact that Islands Souvenirs sends out its team abroad to scout for designs, in an effort to always offer something new for the customers.

Keep up with the technology. Selling to friends and relatives or putting a shop or joining a bazaar are immediate possibilities for anyone starting out a business, but Jay notes that the Internet should also be harnessed as the new marketplace. “Using the Internet would immediately expand your market from a handful of friends to a worldwide market by the millions.  The auction site eBay, for instance, is a great marketplace to start a hobby. Start up cost is negligible and overhead is minimal. I’ve used it and made some decent profit,” Jay shares.

Have “the customer is always right” as your new mantra. With a hobby, you do things when you feel like it – and if you don’t feel like working, there are no repercussions. Now, customers now depend on you so you better deliver, and deliver well.

Above all, have fun. Hobbies evolve from passions, but a business requires work and responsibility. So before turning your hobby or interest into business, be certain you have planned it out so the fun does not get lost.