By: Zhang Siyang (Rachel)
The business me and Gareth are consulting is a cloth retailer selling T-shirts and tarpaulins in San Miguel.
The business owner is a 31-year-old honest man named Tata. He has a strong Philippine accent which is difficult to understand sometimes, but he always speaks with a warm smile. He is married and is living in his mother-in-law’s family in San Miguel now. He was employed in different companies, and decided to start his own business in the year of 2015. He returned to Guimaras and rented a place at his mother-in-law’s house for his cloth retailing and printing business, named La Imprinta Fashion and Design. Tata was an ambitious young man aiming to extend the business scale, so he went further. On June 13, he just opened a second shop in the center of San Miguel, right aside the main road. He will open his third branch next to the Jordan government hall by the end of June. Right now there’re 3 employees in the business: his relative Nonah as an accountant, a printing designer and a helper.
For clothing, Tata gets the stock from a T-shirt supplier in Iloilo. The brand American Plus possesses the best quality in Guimaras, according to our competitor research. Then shop offers design and printing service on those clothes. He can sell either the plain T-shirts or the printed ones depending on customer needs. There is a variety of T-shirt types like round-neck and collar.
For tarpaulins, the shop has a machine that can provide a fast printing service, while the other shops in San Miguel have longer processing time. They record the customer’s need for size and design and charge based on these requirements. The targeted customers for T-shirts and tarpaulins are the government, the commercial organizations, the schools and households that are holding family celebrations or gathering.
Besides their original business of T-shirts and tarpaulins, they also sell school staff for the second shop and souvenirs for tourists for the third shop.
(The reception and the tarpaulin printing machine for the first shop)
The business is growing in a rapid speed, but there exit some potential problems. Some are particular for our business, and some are common ones in the developing economy of Guimaras. If the business owners hope to increase the income and standardize their business, they need to overcome these shortcomings.
First, most importantly, the business does not have a precise account of income statement. The owner buys raw materials randomly and doesn’t do stock-taking regularly, so he only has a rough idea about his cost of goods sold. Although the accountant records each sale, there’s completely no details attached, like the type and the quantity of products. Without noticing his inventory changes and net profit each month, it’s hard to have a clear understanding of the long-term performance of his business, as well as to adjust his selling strategy. Also, they have 3 computers in the shop, but they record in a traditional way with pens and notebooks, which is time-consuming to know the total amount by using calculator.
We have helped him to build an excel recording system that can automatically generate the income statement every month by inputting numbers of the sales, the cost of good sold and the expense. This system contains around 10 sheets that classify different types of inventory so that the business owner would not mix the numbers up. Details of what we did will be shown in our report.
Second, since the shop is not big enough, it is more like a family possession but not an independent business. We find the business records family expenses each month, like the allowance to family maintenance that is paid to the owner’s mother-in-law. Tata, the owner, admits that he would take the money from the business randomly for his own use without recording all the time. Also, transportation cost and tax are not included in the expense because Tata drives his family’s car to deliver and pays tax by himself. As 2 more shops are going to be put into use and there’s a great need to hire more employees to spare Tata’s work, the cash flow will become bigger and more complicated. We recommend that it is better to achieve financial independence for the enlarged business and records the transactions by the owner properly.
(In the middle is the newly opened second shop)
Third, the marketing strategy needs some small improvements. According to the Tata, his business provides the best quality T-shirts imported from Iloilo and sales at an average market price. He has the quickest tarpaulin service because of the more advanced printing machine, and he only sells at 20 Peso per square foot, which is cheaper comparing to his competitors’ price of 25 Peso. He said he takes 60% of the Jordan government tarpaulin printing order and he even accepts orders of Hong Kong customers from an agent person. There’re many advantages for the business to greatly increase its market shares in San Miguel and even expend to other markets in Guimaras or overseas in the future.
For the physical stores, we recommend to turn the first shop into a storage because the geographical position is not good enough. For the 2 new shops in the center of San Miguel, we recommend to move the reception and their main business to one of the shops and the other products like souvenirs to another one, so that the customers will be separated into 2 streams according to their needs. For the market extension, the business may consider distributing leaflets to schools and government to advertise their advantages about price and quality. If the owner is ambitious enough, they may also accept orders in places like San Lorenzo by posters and leaflets. By building an online link for placing orders and a promoting platform like a Facebook page, their targeted market will be much broader and the business will develop much faster in the future. Details of or marketing strategy recommendations will be shown in our report.