Child Labor

In my search for a baker, I came across an applicant who was 16 yrs old. 

I consulted with PESO and I was told that  it'll be illegal for me to hire a minor who's 16 yrs old and below. If the applicant was 17, I can hire him if he has a written consent from his parents and provided that he will not be given dangerous tasks or be assigned to work outside the normal workin hours. 

In my case, if a 17 year old applicant came, I still can't hire him because working with an oven and other bakery equipment is considered dangerous and I need a baker/assistant to start work at 1 or 2 am. 

LPGone

Sales since we opened have been steadily increasing but are still not at the level where it's able to pay for all overhead costs. Hence, I decided to make a few changes:

1) Open at exactly 5am with freshly baked pandesal ready by then. 

2) Extend until 6pm from the usual 430pm closing. 

3) Sell cigarettes. 

I wanted to go to the bakery early to have enough time to bake. Sans any sleep, I arrived there by 130am and proceeded to prepare for baking. At around 5am, as I was waiting for the oven to be at the right temperature, the LPG ran out. I didn't have a spare and was only able make bread by 1030am when the replacement came. 

We were able to extend closing hours but  I expect that to be felt after a few days when people are accustomed to the new closing time. 

I also went and bought cigarettes to sell. Having been a smoker for 16 years, and having quit for 3 years, I know how bad smoking is. I am completely against smoking but I am also desperate in making this bakery work. If selling cigarettes for the meantime would make me meet my financial obligations for now, then I am willing to bend. I'm willing to make sacrifices to make this endeavor work. 

To Advance or not to Advance

Just a few days from when we opened, came an inevitable but rarely talked about reality of being an employer. My employee's son was hospitalized and was prescribed medicine. She did not have money to buy said medicine and asked for a P500 advance. 

Salary advances have been so normal for Filipinos that there's a word specifically for it, bale. A lot of employees live hand to mouth and there's not enough money when emergencies arise. A salary advance would seemingly solve the immediate concern when in reality, it only postpones the larger problem. It starts a vicious cycle and the scenario when there's not enough money for all needs will manifest again when some 'emergency' happens. 

Here lies the dilemma for the employer. Should the employer give an employee an advance on their salary? 

On one side, it messes with the employer's accounting. The money can be used to buy inventory to allow it to grow in the few days from now until the wage needs to be paid. There's also the chance of an employee leaving and the employer paying for the salary an employee has not earned yet. On the other hand, an employee with financial troubles may be less productive at work and it would impact productivity negatively. 

Here are my guidelines on whether I'll give employees an advance on their salary. 

~ There has to be money not earmarked for an immediate business expense.

~ The employee should have already earned the salary being advanced. They cannot ask for an advance for future day's work. 

~ The advance should automatically be deducted in full from the next pay day. 

Search for a Baker

The bakery has been open for almost 2 weeks but I have yet to find a baker. 

There were a few applicants but there hasn't been any promosing prospects. The closest one came from my post in FB but he was not allowed by his current employer. 

There's truth in what is said about having your own business; you won't be able to grow the business when you're busy running the business. My days have been occupied by baking that I don't have the energy to look for ways on how to increase sales. 

So my immediate goal is to find a baker. Last week, I have processed my application to be certified by the Public Employment Services Office (PESO). This will allow me to receive applicants from their office in case they get bakers. Although I was told that it was unlikely because they get few bakers. However, I can get in touch with Manpower Development Center which is a TESDA accredited training center and I'm hoping they have some graduates who are looking for a job. 

If this fails to bear fruit, I'll be forced to find a non-experienced baker whom I will teach. I don't want it to come to that since I'm not an expert. 

We're Open!

Today, September 17, 2015, marks our day 1 of operations. We sold 56 pandesals as well as some other items and we raked in a total of P128. We hope tomorrow's sales would be a bit better. 

This post will be short as I am very tired and sleepy. 

Fire Safety Inspection Certificate

After a month, I finally got my Fire Safety Inspection Certificate. Here's what happened from my post last August 6, 2015. 

On August 8, 2015 (Saturday), I called different suppliers to ask how much a 10kg fire extinguisher and a smoke detector was. One of the suppliers I called was the supplier given by the BFP Officer I was talking to two days before. Upon reviewing all of my options, I found that it would be less expensive to purchase said items from Ace Hardware. So I did.

On August 10, 2015 (Monday), I sent a text message to the BFP Officer as per his instruction. I told him that the items he requested I buy were already on site and that he can inspect them. I then received a call from the supplier he gave asking if I was going to purchase a fire extinguisher. I told the supplier that I already have one. Then I received a message from the BFP Officer, "D ka naman pala bmile ng extingser inspectionin k yan muna . Pending muna cert. M"

On August 12, 2015 (Wednesday), having not heard from BFP, I sent a text asking when the inspection was going to be. I did not receive a reply. 

On August 17, 2015 (Monday), I went to BFP to follow up. The same officer who I had been dealing with said he was going to inspect the place at that time. He arrived at the bakery, looked at the place for less than a minute, then told me that I needed to ask Ace Hardware if the Fire Code Sales Tax had been paid. He said that if it hasn't been paid, that I should pay for it myself. 

On the same day, I went to Ace and asked them about the Fire Code Sales Tax. The people at Ace couldn't confirm this as they do not pay the taxes themselves but assured me that all dues are paid. 

I sent a text message to the BFP Officer and told him that Ace has paid the Fire Code Sales Tax. I was then asked to get a copy of the receipt as proof that Ace paid this.

On September 1, 2015, I sent a text message to the same BFP Officer telling him that I could not produce the receipt he was requesting. He told me to talk to a different BFP Officer. I went to BFP and talked to the new BFP Officer. She told me that the Fire Code Sales Tax is required, but she was still going to provide me my Fire Safety Inspection Certificate. She said that the certificate had already been made, but she couldn't find it. She asked me to come back the following week. 

On September 9, 2015, I returned to BFP and my FSIC was there. 

Now I can finally move one to the other requirements. 

Kitchen Test

I have almost everything ready. Everything but the kitchen sink, literally. The sink is there but it doesn't have the faucet attached to it yet. But all other equipment is set and all ingredients are ready. So I decided to do a test run.

I baked my first batch of pandesal today. I tried to recall lessons learned from 4 months ago, and it wasn't easy. Inexperience won today and needless to say, the first batch was a flop. 

Here's a picture...

But it was expected and it has not changed my determination. I just learned that I can't do without a baker. That, or I need to practice a lot more. 

TIN Transfer

I made my way to Makati to transfer my TIN from RDO 50 (Makati) to RDO 41 (Mandaluyong). 

It was very easy. It took me longer to fill up the form than the interaction with the BIR representative. He didn't ask me any questions or anything. Which makes me wonder, why couldn't the same be done online? If all I had to do was fill up a form and submit it then there shouldn't be a reason why I had to go all the way to Makati for it. 

However, my main complaint about the whole experience was that the BIR representative did not mention that it would take 5 business days before the transfer would take effect. I had to learn about it from BIR Mandaluyong when I tried to register my business. 

BIR Registration Requirements

After securing the Mayor's Business Permit, the next step was to register with the BIR. These are the requirements for registration for a Sole Proprietor. 

Mayor's Business Permit

DTI Registration

Lease Contract (if renting) / Proof of Ownership (if owned)

While filling out BIR Forms 1901, 0605 and 2000 (if renting)

As per the BIR representative, fees will be computed based on the rent but I was told that it won't be more than P1000. 

The Sole Proprietor's TIN also need to be in te same Regional District Office (RDO) as the business. In my case, my TIN is registered in Makati and I need to have it transferred to Mandaluyong. I need to fill-up a BIR Form 1905 and submit it to the originating RDO. 

Mayor's Business Permit - Second Attempt

I called the Engineering Department as instructed yesterday to check if my application has been signed and it was. So I again went to Mandaluyong City Hall to continue with the process. 

From the Engineering Department, I went back down to the Business Permit and Licensing Department (BPLD). They reviewed the form and I was instructed to have the form signed by the Health Department. They didn't ask me any questions, they just scanned the form and signed it. 

Then I was asked to have a blank Memorandum of Agreement, which they provided, photocopied. I went back down to BPLD where they again reviewed my form. I was then asked to pay P1,500 for insurance and P100 to have the MOA notarized. I find the insurance dubious though. It wasn't discussed what the insurance was for. There was an OR for it but I have yet to review the documents that came with it. I'll post a separate entry covering the MOA and Insurance. 

BPLD then directed me to pay all the fees all the previous departments have been writing down on the form. The fees depend on the type of business, equipment, floor area, etc. The fees for the bakery amounted to P4,394.83. 

I was told that I'm now eligible to operate as far as the BPLD is concerned. But I won't get the business plate until I'm finished getting the Fire Safety Inspection Certificate. 

I proceeded to the BFP building right next to the City Hall. There, I was asked to pay for the fee, which was P380.60. Then I was asked questions about the place for the bakery and was instructed to purchase a fire extinguisher and a smoke detector. I was told that they would inspect the bakery once I've purchased the said items. 

All in all, today's activities took around an hour and a half. Which was fairly decent.

Mayor's Business Permit - First Attempt

I finally got the notarized copy of the lease contract and was finally able to continue with applying for the permits.

I went to Mandaluyong City Hall, Business Permit and Licensing Department this morning. The Officer of the Day was pretty helpful. He reviewed all the requirements which took just about 3 minutes; he had minimal questions.
Tip: Always be ready with photocopies of all documents.

He then asked me to go to the Engineering Department. In e Engineering Department, the Officer of the Day questioned whether I'm allowed to put a bakery in the site because he thought it was a residential zone. My heart skipped a beat because I have not checked zoning before I leased the place and I didn't want to be stuck with a unit I can't use. Fortunately, he corrected himself and said zoning allows a bakery there.
Tip: Check with zoning prior to leasing.

He then asked me to have my application form signed by different engineers. Each engineer would review my application form and check the pictures of the space. They would then write an amount and sign their name.
Tip: Take enough pictures to show the entire space as well as establishments beside it. It helps them find what they're looking for faster and it there are fewer questions.

After all of the engineers finished signing, the Officer of the Day asked me to have it signed by the Boss. Who was not around at the time. I was told that the Boss had several engagements throughout the day and that I had to return.

I was done in less than an hour. Except I have to go back.

Pitfall of being a sole proprietor

Last week, I was bitten by a cat. All work related to the bakery was put on hold because I could barely walk. And so I had a lot of time to think. These are my realizations:

• If I'm sick, my business should not be affected. There has to be continuity plans so that income would not stop.
• Covering employees with a health card is probably a good idea. This is worth exploring. 
• Philhealth does not cover cat bites. 

Costing

I have canvassed most of the equipment needed. But before I purchased any of these, I had to do two things. 1) measure whether everything fits the space, and 2) check costing.

I had initially finished tallying the projected cost for the bakery. But I talked it over with my financier and the costing needed to be revised. The new costing had updated prices from the suppliers I found last week. And it also had projections on labor. Not everything is set in stone but I've found that the cost projections should always be updated because it's impossible to know all costs from the start. It's also important to overproject to make sure you don't get surprised midway through the business with a unexpected cost.

Our conservative projections showed that we need a little less than P1,000,000, to operate for 1 full year assuming that no sales are made. The next step is to check each item to see if they're necessary, not for right now, or can be removed. Then after, we can look into projections for sales and possibly assign sales goals.

The Search for Baking Equipment

Up until today, I've only checked one equipment supplier. I was set to get all my equipment from them because their store was just a ride away. Until a few days ago when I learned that the deck oven I had my eyes on was not available and that ordering it would mean I need to wait for 1-2 months.

I checked online for bakery equipment suppliers and most were in Manila (Quiapo and Binondo). So today, I set out to check them out. I'm glad I did because the shops I visited were a lot cheaper and more complete than the supplier I originally wanted to use. I can't comment on the quality but it looks like they're the go to place for bakery owners.

Lesson for the day, canvas before committing yourself to buying something. Especially if it's a major item.

Expense Tracking

Since I started with this whole process, I've been tracking all of my expenses. I haven't stated it in my previous posts but I've listed every little item that was spent. This includes fare, permits, supplies, food.

As much as possible, everything must have a receipt. This would be tagged as an expense when the time comes when I have to file for income tax. Strictly speaking, you can't declare an expense if it doesn't have a receipt. I still don't know what to do with receiptless expense but I'll deal with that when the time comes.

What now?

Since I couldn't continue with the Mayor's Business Permit, I didn't know what to do today. I knew I had to be doing something. I realized that this was the other side of being in control of everything. When you're an employee, you will always have people guiding or forcing you to do what you need to do. When you run your own business, it's all up to you. It's very easy to "call in sick" because there's no one to answer to. But I needed to prove that I have what it takes to run a business. So I decided to visit my soon to be bakery.

On my way to the site, I came across a steel manufacturing company just a few buildings away from where I would be setting up shop. They made lockers, file cabinets and steel shelves which was precisely what I had in mind. I asked for a quote but it looks like I'll be getting my shelves from them. It's surprising for me to pass through their building this whole time and not even notice their huge building. Anyway, that's one less item I need to search a supplier for.

Next, I went to the space I was renting where I measured everything. I wanted to study the space so I can plan the layout before buying anything. I didn't want to be stuck with a table or a shelf that would make my space smaller than it really is.

Then I went to a kitchen equipment warehouse. I canvassed for an oven and countertops. After that, I bought some office supplies which was also for the store.

Today's activities were pretty minor as far as the big picture goes but it's better than sitting around and doing nothing.

Business Bank Account

It was still early in the day and I still had time to go to the bank. I intended to open an new bank account solely for the bakery.

I went to BPI because all my other bank accounts are with BPI. They told me that there was a Sole Proprietor Bank Account. It functioned the same way a normal savings account did but the difference was that the account name is my name as well as the business name which was Obiwan's Bakery.

These are the requirements:
1. Application Form
2. Business Name Registration from DTI
3. Barangay Business Clearance
4. Valid ID
5. Proof of Billing
6. ID pic

Minimum Initial Deposit: P3,000
Minimum Maintaining Balance (to earn interest): P5,000
Interest rate: 0.250%

The interest rate was really low but I intended to just have a separate bank account to ease tracking money for and from the bakery. Assuming that all rquirements are complete, the whole process takes around 30 mins.

Mayor's Business Permit - Requirements

Typhoons from last week stopped me from continuing filing the permits needed. But that's done and I was now able to go to Mandaluyong City Hall.

I intended to apply for a Mayor's Business Permit but part of the requirements was the lease contract and I didn't have that yet. Here's the complete list as per the officer of the day:

1. Barangay Clearance
2. Business Name Registration from DTI
3. Lease Contract
4. Pictures of establishment in 3R format showing left and right neighbors as well as inside of the establishment.
5. Community Tax Certificate or Cedula

I already had 1 and 2. 3 was on its way. 4 can be done another day.

While I was in city hall, I applied for a Cedula. It cost P63. And I was done within 10 mins. They asked me how much I earned monthly and as I didn't have fixed income, I made it up as P6,000. I think they computed the P63 from the declared P6,000 income but I can't be sure. They took me by surprise. My suggestion, underdeclare your income when filing for a Cedula. Then comment here if your fee is lower.

Barangay Business Clearance

Next step for me was to apply for a Barangay Business Clearance. My business is located in Barangay Plainview in Mandaluyong. The whole process took just around 5 minutes, probably due to the typhoon.

The brgy representative asked for a photocopy of my DTI Certificate of Business Name Registration. He also asked if there was a lease contract but it didn't seem to matter that I didn't have the contract with me as I was still able to get the Barangay Business Clearance. No other documents was asked from me.

Here's the breakdown of how much it cost me there:

Barangay Business Clearance - P500
Barangay Business Plate - P250
Notary - P60 (no official receipt)

Total - P810

———

I realized during this part of the process that it's adviseable to start a business where one lives. It's not a requisite but it's very convenient.

Lease Contract

I won't go into details on my arrangement with my lessor as each property manager is different and have different terms.

In my case, the lessor needed to finish repairs on the unit before I could sign the contract. But I was able to pay the advance and the deposit which secured me the unit. Up until today, there was always the threat of someone else taking the unit and all the time I spent waiting would've been for nought.

Business Name Registration

The property manager required me to provide the business name for the lease contract. I have not registered the business yet. I thought that I would need the lease contract before I could apply for a business name. But I was wrong.

So I registered my business name with DTI. We decided to create a sole proprietorship business for simplicity. It was very difficult to find an available name. It's suggested that a list is prepared beforehand. My business ended up being named Obiwan's Bakery. I wanted it to be Obiwan Bread Company but as per DTI, I needed to use bakery.

The whole process took around 30 minutes. There were 4 types of scope, Barangay, City, Regional, National and it costs P200, P500, P1000, P2000 respectively.

Obtaining Necessary Skills

The other problem I was faced with was that I do not know how to bake. I have never used an oven. I don't even like eating bread. But I figured this little road block shouldn't stop me from starting a bakery. This is contrary to the saying that you should start a business based on your passion. Let me try to disprove it.

I figured I had to start small. If there was one thing I needed to learn how to make, it was to make a pandesal. I've seen bakeries that make only pandesal and they look like they're striving. It would be a great starting point.

So I searched for organizations that offered training and found Negoskwela. They conducted seminars on various topics including Native and Malunggay Pandesal Making. It was perfect. It costs P1980 and there was a discount if you paid 4 days before the seminar.

The seminar had it's flaws. I would've wanted more hands-on exercises and it would be ideal if there was an overview of what each ingredient was for. But I think it did the job. I'm not sure about this as I've yet to apply what I learned in the real world. For now, I'm still not sure whether the seminar was worth P1980.

Finding Capital

Between the two problems I was faced with, finding capital for the business was more immediate. Everything depends on having money to start the business.

I could save money on my own since I have existing endeavors. But it would take time and it might mean that the space wouldn't be available anymore. As mentioned in the previous post, it has been a habit to inquire about spaces for rent and I know how rare a space that fits my needs comes along.

I didn't want to borrow from the bank. I have an existing loan and I didn't want to borrow again until the existing loan has been paid in full.

The other option was to find a financier/partner. And it just so happened that my mother was looking for a new business venture. She had always wanted to have a business but office work prevented her from having one. I proposed to her that we start a bakery and she liked the idea. I gave her a rough estimate of how much it would cost to set up based on some assumptions on rent, utilities, equipment, ingredients, etc. and she was ok with the amount.

One problem down, on to the next...

How to Start a New Business - Take 2

The business we started from the previous post is still running. I just wasn't able to continue documenting how we started the business. 

Now, I'm starting a new business. This time, I'll try to document all the steps for the benefit of other newbies who want to be an entrepreneur. Note that I am by no means an expert at starting a business so follow my instructions and recommendations with a grain of salt.

Since we started our first business, I've been on a constant lookout for new business opportunities. When I roam around, I'd take note of commercial spaces for rent and I would think what business would fit that space. Then I'd check if it's something I want to pursue. I would contact lessors and inquire about rates so that I would be more informed on commercial space rates.

Sometime last April of this year, I saw a commercial space for rent along Boni Ave in Mandaluyong. And as my practice, I inquired to get the details. From the start I knew I was not going to rent the space because it was way above budget but had I not inquired, I would not have known of another space that would be available. The property manager informed me that their other unit would be available soon. The other unit is in a residential part of Mandaluyong and the price was more reasonable. It's perfect for a bakery.

I was now faced with 2 new problems; 1) I have no capital, and 2) I don't know how to bake bread.