Published at 9:00 AM PHT,
by
Dennis Cabrera
Master Profitability Skills W/ AI for a Data-driven Business
Step 1: Build Profitability Discipline as a Core MSME Skill
Have you ever operated a microfinancing business? It is a business that requires hands-on management, real financial management discipline for decision-making, and authentic customer communications built on honesty, integrity, and trust.
Financing business models need a lot of cautionary holds and prudent CRM, since personal, family, and work-related quantitative data and information are gathered. And to make this business earn, it is important to balance a long-term systems mindset with short-term cash flow profitability controls and correct capital allocation. And the manager must not forget timely proactive measures to respect the amor propio value system in the business when the signal of default from a client appears.
How to build a profitability discipline in the age of AI?
In the "age of AI," profitability discipline also requires business operations that balance the right size of labor with high-level decision-making based on AI-driven results. Data analyzed can help decisions to offset high electricity costs and logistics. Additionally, proactive decision-making and planning can find ways to respond to intensifying climate risks, which the Philippines faces together with its ASEAN neighbors. The OECD Economic Surveys on the Philippines report it as a hindrance to profitability growth.
In response to these big challenges, both Predictive AI and Decision-making AI technologies can be used to simulate scenarios. AI can assist the MSME workforce gather data to respond to "what if" questions and provide answers for every scenario. Human MSME management, on the other hand, decides from AI analyses the "should we do this or that" question. The "should we" question is to refuse growth that has a negative cash flow result and accept growth when cash flow increases.
Financing business models need a lot of cautionary holds and prudent CRM, since personal, family, and work-related quantitative data and information are gathered. And to make this business earn, it is important to balance a long-term systems mindset with short-term cash flow profitability controls and correct capital allocation. And the manager must not forget timely proactive measures to respect the amor propio value system in the business when the signal of default from a client appears.
How to build a profitability discipline in the age of AI?
In the "age of AI," profitability discipline also requires business operations that balance the right size of labor with high-level decision-making based on AI-driven results. Data analyzed can help decisions to offset high electricity costs and logistics. Additionally, proactive decision-making and planning can find ways to respond to intensifying climate risks, which the Philippines faces together with its ASEAN neighbors. The OECD Economic Surveys on the Philippines report it as a hindrance to profitability growth.
In response to these big challenges, both Predictive AI and Decision-making AI technologies can be used to simulate scenarios. AI can assist the MSME workforce gather data to respond to "what if" questions and provide answers for every scenario. Human MSME management, on the other hand, decides from AI analyses the "should we do this or that" question. The "should we" question is to refuse growth that has a negative cash flow result and accept growth when cash flow increases.
Step 2: Shift From Income earner → Capital allocator
The MSME owner/manager must lessen its income earner mindset, which asks: How can business operations make more money this month? They must shift more to the capital allocator mindset, which asks: Where should the next Philippine Peso of the business go to earn the highest future return without depleting asset reserves for resilience?
Philippine MSME teams are often overworked, and some of their capital is under-allocated. But if the 80/20 rule were applied, they can lessen the effects of the income-earner mindset, which says: "Do more of what works," and instead apply more the capital allocator mindset, which says: "Choose to fund only what compounds." This means choosing the:
Philippine MSME teams are often overworked, and some of their capital is under-allocated. But if the 80/20 rule were applied, they can lessen the effects of the income-earner mindset, which says: "Do more of what works," and instead apply more the capital allocator mindset, which says: "Choose to fund only what compounds." This means choosing the:
- 20% of customers that generate 80% of cash
- 20% of products that carry 80% of profit margins
- 20% of operations that optimize 80% of management skills
Step 3: Reframe the Business as an Iterative System Engine
An iterative system engine in your Philippine MSME does not chase ideas or marketing noise to make your business operations only look good. It minimizes unproductive brainstorming in MSME team meetings and centers decision-making on data that produces measurable returns. Through systems thinking grounded in recorded cash flows, an MSME ought to test, select, standardize, and repeatedly scale what pays.
An iterative system engine focuses growth into four disciplined decisions:
An iterative system engine focuses growth into four disciplined decisions:
- What to test? Start with two to three products or services and two to three marketing channels
- What to select? Identify one or two product-channel combinations that deliver the strongest returns
- What to standardize? Pricing discipline, repeatable sales messaging, & consistent channel execution
- How to repeat what pays to scale? Increase budget on winning channels, strengthen CRM, streamline fulfillment, & expand only when cash flow is stable
Step 4: Use AI as an Accelerant to Expand Market Reach
Expanding market reach means repurposing proven product–channel combinations and testing them on adjacent marketing channels. AI is used not only to expand market reach but to continue to reduce cost, time, and risk in expansion. This means expansion must be selective of what already works.
The success criteria remain the same. The MSME workforce still measures:
1. If growth weakens profit margins, delays cash inflows, or fails to repeat, it is not success. Exit the marketing channel and test other adjacent channels.
2. Scale only with the marketing channel that strengthens profit margins, brings timely cash inflows, and consistently repeats customer purchase behavior.
This is achieved when MSMEs use professional data analytics tools to help in crucial growth decisions. Again both Predictive AI and Decision-making AI tools are used to help in these complex choices.
The success criteria remain the same. The MSME workforce still measures:
- revenue and cost per sale
- impact on profit margins
- cash flow timing (the bottom line)
- evidence of customers' repeat behavior
1. If growth weakens profit margins, delays cash inflows, or fails to repeat, it is not success. Exit the marketing channel and test other adjacent channels.
2. Scale only with the marketing channel that strengthens profit margins, brings timely cash inflows, and consistently repeats customer purchase behavior.
This is achieved when MSMEs use professional data analytics tools to help in crucial growth decisions. Again both Predictive AI and Decision-making AI tools are used to help in these complex choices.
Step 5: Lock Gains Thru Cash Flow Control and Reinvestment
In the microfinance business, a prudent principle is always to "work with holds and cautions." In this finance principle, working capital is not fully deployed at once, and expansion is paused when warning signs of default appear. This discipline protects liquidity and ensures that the growth engine being built is strengthened by good-paying clients rather than strained by clients who can negatively impact cash flow.
Applied to Philippine MSMEs operating in AI-driven e-commerce operations, locking gains means allocating a portion of profits or working capital for products and services that consistently sell well. Then, installing cash-based "holds and cautions" within AI evaluation systems will safeguard these gains. Once these safeguards are in place, management's reinvestment policies are directed only toward customer segments and marketing channels that reliably strengthen sales growth and profit margins.
Growth toward a larger business model that MSMEs aim for must earn the right to continue, but one guided by financial holds and cautions. Philippine MSMEs are fortunate to be operating in the time when AI systems begin to abound. Predictive AI systems forecast investment outcomes and Decision-making AI systems helps in decisions based on sales, profit, and investment forecasts. All these, added with human management skills in profitability, build not only bigger, but better business models.
Applied to Philippine MSMEs operating in AI-driven e-commerce operations, locking gains means allocating a portion of profits or working capital for products and services that consistently sell well. Then, installing cash-based "holds and cautions" within AI evaluation systems will safeguard these gains. Once these safeguards are in place, management's reinvestment policies are directed only toward customer segments and marketing channels that reliably strengthen sales growth and profit margins.
Growth toward a larger business model that MSMEs aim for must earn the right to continue, but one guided by financial holds and cautions. Philippine MSMEs are fortunate to be operating in the time when AI systems begin to abound. Predictive AI systems forecast investment outcomes and Decision-making AI systems helps in decisions based on sales, profit, and investment forecasts. All these, added with human management skills in profitability, build not only bigger, but better business models.
OR, Download now a Content Audit guide to easily identify gaps in your content architecture.
