Profits In Summer

(This is a repost from March 2007)

It’s summertime finally as the kids stay home away from school and I get to have some extra time for myself; like watching wide-winged birds navigate the sky—which at times can be muddled these recent days—-while sipping coffee near our front porch. I don’t know if it’s climate change that should be blamed for this queer weather behavior but even others I have spoken to had wondered why despite the onset of what is supposed to be a season of warm sunny days and windy afternoons, the rain and cloudy skies have found its way into our part of town.

Yet to think, our area hasn’t had experienced any sizable rainfall for a number of months already and it is so ironic that it would be at this particular time that they’d have to come. Maybe we’ll need the rain now more than the expected summer days since the farmlands in our vicinity need them for ideal food productivity; otherwise prices of vegetables and fruits in the market would go haywire soon. Perhaps now, we need to do away for the meantime the innate joys that can be had when flying kites on wide grassy area or playing ball under a rainless sky—-on supposedly warm sunny days.

My mom came visiting the other day and had brought a basketful of goodies to the kids. In the afternoon, I asked my eldest son Sef-Sef what had happened to the candies their grandmother had brought them since I didn’t noticed any traces of them while warning them about their teeth and how it will rot for eating too much sugary food. He told me that he had put it in a jar and tried to sell them to the kids outside. Well, I said that was a good idea and asked him eventually about how much he had profited so far. He didn’t answer that and with a sly smile on his face, he just went by with what he was doing outside together with his brothers and sister, along with a couple of kids from the other apartment unit in our compound.

The following day, Sef-Sef asked me to accompany him to buy the goodies they need to sell. I asked if he had the money, the ones he had gained selling the candies his Lola Dol had brought them. He said that he had it in his hands but he wanted me to buy the new inventory using my own money. Now I said, that’s a very cunning way to enter the business of selling; you keep all the money while your Papa buys the goods. I said I’ll buy the stocks this time but the next time, he had to show some money from the sales he had made or otherwise it’s just a thoughtless activity. I demanded that he make a profit this time around. He promised but the sly smile is still stuck in his face.

The next day, Sef-Sef wanted to buy more goods since he told me that the kids playing outside have already consumed most of the stocks I’ve bought the night before. I asked him about the revenues he had made so far and he showed me that, holding a jar full of coins and some orange-colored bills. I got to have them I said so that we can buy new stocks for his makeshift store but he fretted demanding once again that I use my own money once again. I told him that in business, one got to use his own capital and recycle them and that his idea of a business enterprise is not sound at all and it is not the way it is in real stores. But he really had wanted to keep all his earnings. I said to him that his Mom will buy the new stocks this time and she will have to explain how this thing really works. He just smiled and walked away.

My seven year-old eldest son knows how to sell alright but there’s just one thing he needs to learn and that’s accountability and financial forthrightness; like not spending his revenues in a way that he had bought more than what he had sold for the day and that he must be ultimately be aware of establishing trends for profits as against the cost of goods sold. It is clear that for now he—together with his siblings and friends—-are just doing it for amusement but I see in him a natural entrepreneurial skill that could be inherent in most successful enterprisers. He would sit there near our front gate for just a couple of hours and I can see how the goods are consumed so easily. The last stock I bought him was worth approximately 85 pesos all in all and he told me that he already had about 115 pesos in hand while there are still some candies left on his tray. I calculated in my mind that his business is earning at more-or-less twenty percent (20%) profit margin, which is not already bad at all.

In my college days, I’ve learned from my accounting subjects that the usual profit margin goes around 25% and anything less than that could mean an unsound business practice since a lot of supplemental expenses goes with the basic cost of goods, like fares going to the grocery store to buy the stocks and in real business, there would also entail other cost like those for plastic packaging and in big businesses, that would mean overhead expenses for salaries of storekeepers, electricity, fuel for delivery, water, rent of stalls or business area, and so on and so forth.

In my last business endeavor, that is buying dried fish products from farther down south and selling them to volume buyers here in the city and as well as in cities up north, the profit margin did go as high as 100% where we can get the much sought after product at 45 pesos per kilo and if we were lucky, at 40 pesos at that and then we can sell them at 90 pesos per kilo in this city and possibly about 115 pesos if we sell it on credit to individual buyers. A friend in Davao had informed me that it could even get to 120 pesos in there in their area only if we can find a way to ship him the goods.

At that profit margin, we have overhead expenses like 5 pesos for each kilo transported by ship and about 3 pesos more for each kilo for laborers and carters who would transfer them from ship to dock and towards a waiting transportation. The dried fish business was so viable in hindsight but it was so short-lived since in business, I have learned that it was not merely as convenient as buying them from one station and selling them to another. It was more intricate than that and even problematic than what could initially be expected. Apparently, we were in competition with big players from capitalists from cities like Pagadian up north and even from Davao and they can afford to release huge advances to fishermen who processes the dried fish products, that what those fishermen produces becomes exclusively set aside for those buyers up north and new players like us couldn’t gain the much needed volume in order to profit handsomely per trip made and even if we have to cajole the fishermen there to sell us their products, they would decline the offer, even at a much higher price than the usual. At that time, we just couldn’t match what those big players were advancing the fishermen there, which did go as high as 200,000 pesos each.

My uncle had advised me that in order to make good in the dried fish business, I might need to stay about a month in the islands at a time but I found that to be extremely not ideal considering the responsibilities I have here in the city and besides, I just couldn’t see myself living without regular electricity and water for that stretch of time.

But the dried fish business was to me a very viable enterprise if only one has enough patience and persistence. Now that I was able to size it up and learn about its intricacies and idiosyncrasies, I might make another attempt at it and make a reasonable fortune and then consider myself not to be always unlucky in every endeavor I find myself in.

But for now, I try to see how my son Sef-Sef do with his candy store business and see if it becomes viable in the long run.