David Bonifacio

I’ve spent most of the day looking at financial statements. One of the things I’m doing now is working on the turnaround of Issho Genki Interntional, the producers and distributors of the most trusted brand of Squalene (which is currently a small yet growing category). We’re not completely out of the woods yet, but this last quarter is looking very positive for Issho Genki. We have improved enough to make me a little more comfortable with writing about the lessons we have learned from our mistakes. There are actually a lot of lessons I would like to share but I’ll start with these four.

What Do You Love?
Squalene is a natural antioxidant which protects and enhances the body’s cells. I’ve been taking the thing for about 15 years now and love the stuff. So aside from the challenge and necessity, loving the product was an attraction to me. I’m not really a salesman. I can’t sell anyone anything. What I am is a highly contagious sick man. When I fall sick in love with something I’m going to infect you with it if you hang around me long enough.

Turn Around Lesson #1: Work on something you’re passionate about. Turnarounds have a lot of baggage that can distract and discourage you. Working on something you’re passionate about helps keep you motivated. While need is a great motivator, never underestimate someone who is madly in love.

Go Treasure Hunting
Issho Genki used to be a very popular supplement brand but dropped out of people’s consciousness when management was not able to transition well into retail outlets. It’s a classic case of a business that did well, overspent, didn’t change relevantly, and descended. The good part though is there was a lot to work with such as the brand recall due to its, at the time I took over, 13 year existence, historically large distributor base, high-quality manufacturing base in Japan, and existing distribution relationships with Mercury Drug, Watsons, Dyna, and other retailers and customers. The most important thing the company had though was some really trustworthy and hardworking people that made the chance of a turnaround possible.

Turn Around Lesson #2: Look for the pieces of value. These are things you’ll be able to work with and build on. What are the assets? (Of course depreciate accurately!) How much cash? (This is your blood. Even if people owe you, you run out of cash, you’re dead.) Can you use your assets to generate cash? (Either through sales or as collateral) In our case, we didn’t have any hard assets aside from a very nebulous concept of brand goodwill. We had no way of accurately measuring this so working with that was a step of faith. We also didn’t have a lot of cash. We had a third of what we needed to survive month 1. (That month was very stressful for me!) But what we did have other than the brand were good people who made the sales happen and extended payables and stretched and stretched. Good people are always a great asset.

Cut the Fat
When I walked into my corner office on the 25th floor of a nice commercial building in one of Metro Manila’s business districts I had the following thoughts in sequence:

1. Wow. This is cool.
2. This is really big. Too big.
3. This must be expensive.
4. This has to go.

One problem businesses have as they go along is that they take on too much fat. That’s actually like us humans. Hehe. We take on so much unwanted baggage that weigh and slow us down, or worse, choke our organs which kills us. We had to do a lot of cost cutting in Issho Genki, more than a third of our operating expenses. This also meant there were contracts we could not renew, people we could not hire, perks we could not enjoy, and rewards that had to be differed. Of course not everyone was happy – including me. But you have to do what you have to do.