Wednesday, September 22, 2021
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Transfer of Wealth

IN my previous column I noted that wealth is not destroyed, only transferred. Specifically, wealth lost by companies in America and Europe could be transferred to Asia, including the Philippines. For lack of scientific basis to support such assertion, I used the game of monopoly to illustrate how wealth is transferred from one hand to another.

Billions of dollars transferred hands many times over from Lehman Brothers to many individuals, companies and institutions. These billions did not just disappear into thin air, they are in some hands now. The same can be said of another ailing company, AIG, which claimed most of its funds were invested with Lehman Brothers.

In the midst of the crisis of confidence in America and Europe, and the cost to rebuild economies, where could these holders of billions of dollars bring their funds? China is a good prospect considering its low cost of doing business and high investment returns. However, I feel many will think ten times before going to China because of its potential economic and military threat. They could look at other Asian countries, including the Philippines. The upper hand could go to countries that speak their language, are hungry for jobs and, more importantly, allow 100% income repatriation. The repatriated incomes could be what they will use to help rebuild America and Europe.

In this score, the Philippines could benefit. Holders of funds from America and Europe could come in a big way, investing in existing companies and creating more jobs for Filipinos. Down the line, the stock market could once again register record highs with firms going for initial public offerings to take advantage of foreign funds.

The big question is — are we prepared? Those who are will benefit most from this transfer. Those who are not still have time to prepare.

Those already in business need to sharpen their pencils and heed business book author Murray Smith: Do a gap analysis, a revenue plan and a sales process map.

A gap analysis is simply making a chart of where you are today and where you want to be in terms of income. Suppose your business has realized P300,000 in net income last year but you want to make it to P1,000,000 this year, your gap is P700,000.

After identifying the gap, you will have to come up with a revenue plan to project the amount of revenues you need to generate to realize a net income of P1,000,000, taking into consideration such items as cash flow, assets, expenses, payables, debt, credit and revenue sources.

A revenue plan is a description of how much you have to sell (including what you will have to sell) to close the gap. Simply list all your products and services and multiply each by the market price you set. If the number of goods and services seem too many to be sold, you might want to increase your prices and create a road map for reaching your target.

According to Smith, once your revenue plan in place, your sales process map is the key tool to realize your revenue target.

The sales process map will identify your target market, the channels you will use to reach your target market and the right marketing strategies and tactics, including the right message you will use to communicate with your target market.

It is important to identify your target market. Demographic information like age, income, job description, marital status, etc, will help you craft the right marketing message. Connecting to a twenty-five-year-old single woman will require a different marketing message than if you were reaching out to a fifty-year-old married woman.

It is also important to know their psychographics because demographic information alone will not tell you why they buy your product. The “why” provided by psychographics can spell the difference and can make or break your business.

If you are prepared in all these areas, holders of funds from America and Europe could find your company worth investing in, so be ready!

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