How do you use other people’s money to start a business, or even expand your business? Contrary to what majority have thought, that you can’t start a business without enough money to start with, I started my tricycle business at my hometown from P500.00 only in 1989. I used that money to buy an old, dilapidated tricycle sidecar which I attached to my five-year old motorcycle. The brand new sidecar that year was at P7000.00 to P15,000.00. While a brand new motorcycle then was from P40,000.00 to P50,000.00 for 100cc models. By November 1991, before I left, to migrate to US the value of my 14 tricycles was worth P1.1 millions.
When my tricycle driving started to give me additional income, I started saving my extra money at our Gubat St. Anthony Credit Cooperative. From my saved share capital of P1500.00, I was able to borrow twice that amount and used it to open a small sari-sari store. The place that I rented to start a sari-sari store business was a big grocery story that was left by the owners when they moved to Mindanao. Our neighbors would laugh at my store, because it was really so huge, but I didn’t have enough display or products to sell from the meager capital of P3000.00. I could still remember, that to have varieties of display, I would only buy (for example) three pieces of instant noodles, instead of one dozen for a particular flavor. In order to make it grow, I had to roll my tricycle driving income to buy more items for sale, until that huge grocery story looked like a real grocery store when sales trucks from popular products started coming to our store and leave their products to be paid on a certain period like after 30 days, 60 days, or even longer. Two years later, my small sari-sari store that started from a small capital of P3000.00, grew and expanded into three grocery stores, and a restaurant.
So, from these businesses how did I use the strategy of using other people’s money to start and grow a business? As I have already mentioned in my sari-sari store business, my initial investment in our credit union was only P1500.00, but I was able to borrow P3,000.00 – the other P1500.00 of which was from the money of the other members of the credit cooperative.
As I expanded my sari-sari store into the level of grocery store, I started accepting offers of sales agents coming to our store with their truckloads of products to leave their products, and I’ll pay them after 30 days, 60 days, or beyond. I never let the sales from these products sitting on my drawers. I see to it that whatever sales I would get from these products left to me, I will roll them for buying fast-selling products.
When Beer na Beer was introduced in the market, the sales agent of this beverage would leave me several cases of beer. But since it was a new product in the market, drinkers shy away from buying it and preferred the popular San Miguel Beer. From this situation, however, I’ve thought of selling Beer na Beer at manufacturer’s price in our store – with no profit. But after selling all those beers, I would actually use the sales of Beer na Beer in buying rice, sugar, charcoal, and other fast-selling products. By the time the Beer na Beer sales agent gets back to my store, I’ve made hundreds of profits already from rolling their money to other fast-selling products.
How did I build a tricycle business from one old tricycle unit to a fleet of 14 units? – the biggest number of tricycles owned by one person in our town. Instead of getting one brand new motorcycle, and pay it full, I would go to the dealer’s manager instead and tell him that I wanted to get three motorcycles payable in one year, with down payments from that amount for one single motorcycle. Now, which one is better, having one brand new motorcycle, or three brand new motorcycles?
Once the three motorcycles were converted into tricycles, I started paying back the motorcycles twice or double their regular monthly amortizations, from the income that I get from these three units. So, in less than six months, I have three fully paid motorcycles already for my tricycle business. By the seventh month, I would do the same strategy, adding three more fully-owned units before the year ends. To shorten the story, using this kind of strategy, I was able to build a tricycle business with 14 units in less than two years. Portions of the money I used to build this business were from the motorcycle manufacturers and dealers, when they loaned me their motorcycles to be paid in one year.
They’re not hard strategies, if you’re going to analyse them, right? You’ll never find them in the book, only in this blog. So, if you’re interested in starting and growing a business the “street-smart” way, please regularly read my articles here. My next article would be “How to use other people to make money for you?”
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