Updated , Published at 8:11 AM PHT,
by
Dennis Cabrera
How to Merge Financial Stability W/ AI Expansion Strategies
Introduction
To effectively build, develop, and sustain your Philippine MSME from the bottom line to long-term profitability, there are three main elements to consider and practice consistently:
- financial competence and prudence,
- digital pivots 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 shifts to better income opportunities with AI as tools, and a resilience built on vision, long-term goals, and business resilience models to satisfy the customer's need for your MSME's product/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 and stable ("mayroong tibay at katatagan") with financial discipline and consistent fund management practice. This groundwork includes following best practices in finance, consistency in updating knowledge through AI research, and applied financial management practice through proactive cash flow management strategies.
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 Philippine MSME 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 (PwC), 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 (an accounting practice).
- 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 operational costs for MSMEs (like ad-spends and inflation) can be hurdled and won with digital strategies that are scalable, and can sustain growth for the long-term.
Key points and source support:
- The current global and local market situation can cause MSMEs with continuous ad spending to drain their own business budgets. With this market situation online, mistimed ad spending can yield only short-term visibility and immediate results with uncertain ROI for the long-term
- An important strategic pivot for Philippine MSMEs is to shift from buying ads that commit their funds within a specific timeframe, to one that is affordable - an AI-powered organic content strategy on an as-needed basis. This marketing strategy will build both long-term content asset visibility and financial reserves for a more timely and affordable ad spend.
- Focusing on "owning" one's visibility online rather than "renting" it through paid ads, prioritizes a customer-first direction that delights readers who can detect the site's authenticity and trustworthiness. When content is "owned" with E-E-A-T, the content becomes more valuable for the long-term and increases higher income stream accessibility.
- This long-term SEO strategy for long-term AI SERPs (Search Engine Results Pages) stability will make investing in organic content optimization and production worth all the energy, time, and resources spent. Even when Google launches a Core Update of their search algorithms, Philippine MSMEs can keep this long-term SERP stability and simply upgrade to better content strategies when the algorithm update effects minimal drops to their rankings [1].
3. How to drive digital conversion? Optimize content for AI citations and Sales
To transform organic visibility into actual sales, a focus on technical content optimization and clear conversion pathways is vital and crucial. Conversion-focused content that "satisfies" and directly answers the user's commercial intent (obtains a good evaluation of your product over others) and transactional intent (decides and takes action to buy), will drive better digital conversions [2].
Key points and source support
- To ensure content ranks high and is chosen for AI Overviews, production of comprehensive copy balanced with the reader's ease of reading (use of HTML ul or ol tags to format with more white space and fewer blocks of text) is proven to be advantageous. Adopting a customer-first attitude in producing content delights the readers. It also signals and attracts valuable backlinks. Backlinks help content rank higher since they increase a website's domain authority in the SERPs.
- For commercial investigation, a content strategy can produce comparison articles, product reviews, or case studies (which naturally increases the E-E-A-T of a Philippine MSME's niche expertise) to attract actual buyers.
- For transactional intent, keywords can be used to produce compelling product descriptions, clear calls to action (CTAs), and seamless checkout processes that delight and surprise customers who are naturally averse to any hassles in transacting online.
- The copy can also emphasize high-intent keywords to signal to the user who is ready to buy. These valuable keywords 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
Philippine 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-first focus, the embrace of AI technology and innovation, and robust risk management [4].
- Tapping new sources and diversifying for additional 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/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 Philippine MSMEs to future-proof their business operations, an upgrade in financial literacy is crucial with new AI tools. This also means training employees in AI systems.
- 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 online, which asserts dominance in Search Engine Results Pages (SERPs) by heavily utilizing niche keywords in the context of their niche expertise, experience, authority, and trustworthiness. 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, therefore, is like a very well-established ecosystem where an MSME's business content secures long-term visibility and ranking through E-SEO and other relevant content strategies.
- The moat strategy is actualized when a user's search leads directly to the point of conversion, where a link to a checkout page is clicked, and a sales transaction is completed.
- A communal spirit can also be leveraged in the AI era by investing in and building shared digital hubs and social media networks where visitors feel secure and satisfied. It is connecting and linking online that can produce a pool of shared resources. These niche expertise communities can collectively navigate the challenges of a new entrepreneurial, business, knowledge, and innovation ecosystem, built on people using AI technologies as tools.
