Published at 8:11 AM PHT,
by
Dennis Cabrera
How to Merge Financial Stability W/ AI Expansion Strategies
Introduction
To effectively build, grow, and sustain your PH MSME from the bottom line to long-term profitability, there are three main elements to consider and practice consistently:
- financial competence and prudence,
- digital pivoting for AI-powered productivity, and
- long-term resilience based on business resilience models
The journey from the bottom line to profit is a discipline of competent financial practice, regular digital pivots to better income opportunities, and a long-term resilience built on vision, goals, and a business resilience model that answers the customer's questions of the MSME's product or service.
MSME Roadmap: 5 Steps to Move from Bottom Line to Profit
1. How to build from the bottom line? Master cash flow and working capital management.
Business can be innovative, durable, and stable ("tibay at katatagan") with financial discipline and consistent practice. This groundwork includes following best practices in finance, consistency in applied financial management practice, and proactive cash flow and working capital management strategies (which can be automated with AI).
Key points and source support
- An article by Leslie A. Deligero and Ma. Teresa B. Ballados, in their work entitled "Financial Management Practices and Business Performance of Micro and Small Enterprises in the Food Retail Industry", based their findings on data from 136 business owners and managers in their specific practices for costing, budgeting, and financing.
- The article emphasizes the key point that applying financial literacy with consistent application and practical implementation ensures MSME profitability and long-term stability. This consistent practice is supported by investing in training programs for the regular application of financial best practices in management and control.
- A practical tool for achieving this, from the source "Towards resilience: A practical guide for MSMEs", by PwC Philippines, is meticulously tracking the cash position of a business using a short-term cash forecast (such as a 13-week forecast, preferably using the Direct Method) to ensure clear visibility into the sources and uses of cash.
- Cash can be conserved by improving working capital management through efficiencies in the billing/collection process, accurately tracking inventory to prevent unnecessary purchases, and strategically negotiating more favorable terms with key suppliers.
2. How to pivot to profit? Strategically shift from ad spend to AI-powered organic content.
The effects of geopolitical tensions on rising costs for MSMEs (like ad-spends and inflation) can be hurdled and beaten with digital strategies that are scalable, and sustain growth for the long-term.
Key points and source support:
- The current global and local market situation can cause continuous paid ad spending to drain Filipino MSME budgets. With this market situation online, mistimed ad spending can yield short-term visibility and immediate results with uncertain ROI
- A crucial strategic pivot for Filipino MSMEs is shifting from ads with a specific timeframe that commit your funds, to a more affordable, as-needed basis, AI-powered organic content strategy that has a customer-first mission to boost your MSME's longer-term online visibility while building financial reserves.
- This strategy focuses on "owning" one's visibility online rather than "renting" it through paid ads. It prioritizes a customer-first direction that delights readers when they see your business content online. To be customer-first and at the same time earn income streams, content can be optimized according to Google's E-E-A-T standards.
- If the MSME were to invest in this long-term SEO strategy for long-term SERP stability, then the shift from paid ads to organic content strategies is worth it. Even when Google updates their search algorithms, MSMEs can keep their long-term SERP stability and just upgrade with new content strategies for minimal changes in rankings [1].
3. How to drive digital conversion? Optimize content for AI search and sales
To transform organic visibility into actual sales (profit), a focus on technical content optimization and clear conversion pathways is vital. Conversion-focused content is ensuring it directly responds to the user's motivation behind his search query, particularly his transactional intent and commercial investigation intent [2].
Key points and source support
- To ensure content ranks high and is chosen for AI Overviews, production of comprehensive copy balanced with digestibility (using HTML tags to format in an easy-to-read style) is competitive and is proven to be advantageous. It is a customer-first attitude that delights the readers. It also signals and attracts valuable backlinks. Backlinks help content to profit since they increase a website's domain authority and rankings.
- For commercial investigation, a content strategy can produce comparison articles, product reviews, or case studies (which naturally increases the E-E-A-T of the MSME's niche expertise).
- For transactional intent, keywords can be used for compelling product descriptions, clear calls to action (CTAs), and seamless checkout processes that delight customers who are naturally averse to buyer-friction.
- The copy can also emphasize optimized high-intent keywords to signal to the user who is ready to buy. These keywords that are valuable to include in your user-intent copy should include phrases like "purchase," "pricing," "deals," or "order online" [3].
4. How to sustain growth? Diversify revenue and prioritize stability
MSMEs can always move past survival mode and secure sustained profitability by implementing resilient business models and income diversification strategies.
Key points and source support
- The key elements of every resilient business model include: diversified revenue streams, a flexible and adaptable supply chain, a strong financial foundation, customer focus, the embrace of technology and innovation, and robust risk management [4].
- Tapping new sources and diversifying for new income streams is essential for financial stability; these provide a safety net against volatile market fluctuations.
- Examples of diversification include monetizing blog platforms by selling digital products (like e-books or templates) that catalog the MSME's products or services. These digital products offer high profit margins and minimal overhead. All that is needed is a domain, a blog hosting platform, and AI content-editing tools.
- Also, an MSME's blog can serve as an online portfolio to attract freelance services linked to their niche expertise.
- Other profitable options include affiliate marketing (leveraging local platforms like Shopee and Lazada) and securing sponsored posts or brand collaborations.
5. How to future-proof through financial awareness and community resilience? Long-term sustainability involves a required shift in mindset and strategic investment.
Key points and source support
- For MSMEs to future-proof their business, they must integrate financial literacy with AI adoption. This includes continually updating literacy in digital financial management and training employees in AI collaboration.
- Long-term sustainability can also be attained through an SEO Moat mindset. When an MSME pivots from paid ads to "owning" their visibility, they can establish an SEO Moat, which asserts dominance in Search Engine Results Pages (SERPs) by heavily utilizing niche keywords of their niche expertise. This competitive positioning helps preserve the MSME's market share and profits, akin to Warren Buffett's competitive moat philosophy [5].
- The competitive moat strategy is like the image of a beaver building a dam to create its own space (ecosystem) where its food is secured and it is protected from predators. A competitive SEO Moat is like a very well-established ecosystem of an MSME's business content.
- A communal spirit can also be leveraged in the AI era by investing in and building shared digital hubs and social media networks. It is connecting and linking with other PH MSMEs to pool resources and collectively navigate challenges.
