Professional Counselors Nurture SME Growth
by Myrna Rodriguez-Co
In 1996, MERR-C International, a maker of soft toys for export in Malolos, Bulacan was at the threshold of international market expansion. With improving markets of Philippine-made crafts, it became clear to owners Rico and Rosalinda Miguel that they had to get ready for new opportunities. But first, they had to put their house in order – to be more productive, efficient and flexible in their operations. They also felt that their quality level needed to be improved. Having targeted wastage at 2%, they were dismayed that they were wasting a lot more.
Elsewhere, in Bacolod City, Christine Sicangco, was just then weighing the chances of her company’s breaking into markets abroad. Christine Sicangco Lighting Designs, Inc. (CSLDI) designs and manufactures lighting fixtures and offers architectural lighting design and consultancy. Entering local markets was a “breeze” for the MA in fine arts graduate from the Parsons School of Design, New York City. Her products were modern, at once decorative and functional and considered a “refreshing improvement from the archaic lampshade.” In a year from startup, she had confidently built a client base of restaurants, banks and malls.
Two years later, intent to try her luck in global markets, she did not know where to begin gearing up for exports. All she knew that it meant scaling up her production. At that time, her monthly capacity averaged only 100 pieces each of lighting fixtures and shades.
MERR-C International and CLSDI have other things in common besides being export-oriented small-scale entrepreneurs. They are manufacturers that have sought outside professional assistance and as a result have become more productive and competitive in the global marketplace. Both are beneficiaries of productivity assistance programs sponsored by the Department of Science and Technology and implemented by the U.P. Institute for Small-Scale Industries and other academic institutions.
On suggestion of the professional counselors that studied its operations, MERR-C was able to trim down its production workers by nearly half. Those who were displaced were given the option to be subcontractors or homeworkers. As export orders ranged from very big to very small lots, having a pool of reliable homeworkers gave the company flexibility. The streamlining of labor resulted in P500,000 a year savings in salaries, power, and overhead and administrative expenses. It also brought down the rate of rejects dramatically. Rico and Rosalinda were amazed to find that “the less people are assigned to do a job, the harder they work to accomplish it.” On the other hand, the homeworkers became not only conscious of doing quality work but also of meeting deadlines.
The team of counselors also designed production and shipment control boards – simple changes that went a long way in facilitating the monitoring of items produced and goods shipped and delivered.
CSLDI had a similar experience when a professional team was called in. The counselors suggested a design for a new factory building that would accommodate the demands of the export market. They specified t\the materials to use and prepared a floor plan. They also advised Christine to provide individual worktables to minimize distractions and incorporate finishing operations within the factory to contain the spread of toxic fumes. A design for a spray booth was also prepared. When CSLDI moved to the new site a year later, it was ready to accept orders from abroad.
She was already working on several export job orders when one of the counselors came back at Christine’s bidding. Sensing that there is much, much more where the orders are coming from, Christine asked for help in expanding her shop floor.
Owning the problem and the solution
The stories of Christine Sycangco and Rosalinda and Rico Miguel are among the little-known cases of how professional small business counselors are helping SMEs introduce and manage change.
Counselors are known for working with rather than for small business clients. After a counseling engagement, the entrepreneurs come to “own” the problems that surface and the solutions applied. Even when the professionals are long gone, the entrepreneurs would have been left with lessons on how to diagnose their operation, recognize early warning signs of trouble and take action.
Both the Miguels and Christine feel that these lessons in operational diagnostics, analytical thinking and strategic planning are the best part of the counseling assistance. In the words of Rosalinda who happens to be a chemistry graduate, “I am no longer just a chemical analyst. I am now an analytical chemist, manager, and entrepreneur.”
Shortage of Counselors
Small entrepreneurs, more than their bigger counterparts, need counselors because they tend to be isolated. They are virtually alone in management and leadership tasks. An entrepreneur who tries to be all things to his business might find himself “seeing the trees for the forest. They need someone who will show them the difference. And as they tend to focus on everyday things, they fail to plan beyond next month’s payroll or the next job order. They need someone to give them a nudge.
Small enterprises are typically family-based – personal concerns encroach on the running of the business. Some family members can be a barrier to growth as they may insist on old ways of doing things. And who will tell them off? Will they listen to members of the family younger and less experienced? Family-based businesses need an outsider who can push for change – firmly and persuasively.
Unfortunately, small business counselors who understand the mindset of entrepreneurs, who know the dynamics of change, and understand their role in influencing people are in short supply in the country. Although field staff have been deployed by government agencies, not all are equipped with business tools and counseling, coaching and facilitation skills.
The Training and Certification Program for Small Business Counselors (TRACE) -- recently launched by U.P. Institute for Small-Scale Industries (UP ISSI) and the Small Enterprises Research and Development Foundation (SERDEF) under the APEC IBIZ network -- will seek to increase the pool of professionals who can effectively bring about change among small and medium enterprises.
(For inquiries, please e-mail info.issi@up.edu.ph.)
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