How SMEs can survive the trade war

The global economic landscape is shifting again, and this time, the tremors are closer to home.

On April 7, US President Donald Trump announced new tariffs on American imports from dozens of countries, including the Philippines, which faces a 17-percent tariff on its exports.

Other tariffs were also levied on our Southeast Asian neighbors: Vietnam, 46 percent; Thailand, 36 percent; Indonesia, 32 percent; Malaysia, 24 percent; and Cambodia, 49 percent.

Despite local officials' and business groups' optimism about the tariffs, small and medium enterprises (SMEs) will undoubtedly take a hit. As other countries threaten to retaliate with countermeasures, a large-scale global trade war may be on the horizon — eroding business confidence and slowing economic development.

SMEs will likely face higher input costs, disruptions in supplier relationships and lower consumer demand. Even when certain sectors appear shielded or advantaged in the short term, long-term volatility in pricing, procurement delays and retaliatory trade policies can lead to an unpredictable and more expensive operating environment.

These are challenges that disproportionately affect SMEs, which are already dealing with elevated borrowing costs. And while some optimism remains in interest rate cuts due to easing local inflation, the prevailing tone in both the market and the business community is caution.

For SMEs, which make up 99.5 percent of all businesses in the Philippines, this caution is not just prudent — it is essential.

Historically, business success is closely associated with revenue growth, expanding footprints, scaling operations. But in an environment where global policies can shift overnight and supply chains are fragile, adaptability and financial resilience are becoming the more reliable indicators of long-term viability.

First Circle, a financing company providing credit lines to Philippine SMEs, has noticed many of its clients adapting to this shift in business priorities — likely due to persistent inflation and ongoing post-pandemic uncertainty in both domestic and global markets.

While some SMEs are still in pursuit of aggressive revenue growth and market expansion, a growing number are redefining success through the lens of resilience: consistently meeting payroll and supplier obligations; keeping operations lean and maintaining enough financial headroom to navigate disruptions.

For these businesses, stability has become the priority. It means managing risk conservatively and staying operational in turbulent conditions.

Credit line

What does it take to operate with resilience in this economic environment? For all SMEs, the baseline starts with access to fast and flexible financing. Business loans and other traditional debt products, while essential, are often rigid.

In contrast, a credit line offers preapproved access to funds that SMEs can quickly tap into only when needed — without being locked into repayments until disbursement. This kind of financing can mean the difference between surviving a temporary disruption and facing a permanent closure.

SMEs must also focus on using their capital to create buffers for uncertainty. Among the most effective strategies is diversifying revenue streams. This could mean expanding with new product lines, targeting different customer segments or developing alternate sales channels such as e-commerce.

The goal is to reduce dependence on any one market or income source — so that, if one part of the business is disrupted, others can continue to generate cash flow.

Another essential tactic is building emergency cash reserves. While many SMEs operate with tight margins, setting aside a small percentage of monthly revenues into a contingency fund can make a difference when unexpected shocks arise.

These reserves serve as a financial cushion, helping businesses cover payroll, rent or critical inventory during lean periods without relying on high-interest credit or delaying obligations.

These strategic adjustments may require discipline and trade-offs in the short term, but they are key to long-term resilience. Adaptability is no longer optional — it is a core business strategy for SMEs hoping to survive and thrive in uncertain times.

As the world changes, so, too, must our definition of success. For SMEs, it may be time to look beyond growth — and start building businesses that are truly built to last.

Source: Manila Times

Results-as-a-Service: The next evolution in business

We are entering an era where instant results are no longer a luxury but a necessity. Businesses and consumers alike demand speed, efficiency, and guaranteed outcomes, leading to a fundamental shift in how services are delivered. Where Software-as-a-service (SaaS) revolutionized software access and Infrastructure-as-a-service (IaaS) and Platform-as-a-service (PaaS) streamlined IT operations, the next evolution is here: Results-as-a-service (RaaS).

Unlike traditional service models that provide tools and infrastructure, RaaS is built entirely around delivering measurable and guaranteed outcomes. Instead of paying for subscriptions, software, or support with no guaranteed success, companies now pay only for results — whether that's qualified leads, cybersecurity protection, AI-driven insights or business growth. This shift is redefining industries, ensuring that businesses invest in performance-driven solutions rather than uncertain processes.

At its core, RaaS is outcome-based. Businesses no longer need to invest in tools, technology or expertise; instead, they partner with providers who guarantee specific results. This model creates an alignment of incentives, where service providers are as committed to success as their clients — an answer to one's skin in the game.

Imagine RaaS happening in key business areas, such as sales and marketing, cybersecurity, and AI-powered decision-making. For the first one, traditional agencies charge for campaigns regardless of performance. In contrast, RaaS marketing models focus on delivering actual sales or leads, ensuring companies only pay for tangible revenue growth.

For cybersecurity, instead of purchasing software and hiring IT teams, businesses can opt for RaaS-based cybersecurity, where they only pay if threats are prevented or resolved. Finally, companies can leverage AI-driven insights without buying expensive software. They simply pay for actionable recommendations and successful implementations. Companies are increasingly getting into this model.

Scorpion, a marketing and lead generation RaaS provider, offers digital marketing for businesses in law, health care and home services. Instead of paying for ad placements or marketing tools, businesses pay based on the actual leads and revenue generated.

DoNotPay offers AI-powered legal services that help users dispute parking tickets, cancel subscriptions and resolve small claims cases. Instead of charging for software access, users pay only when they successfully resolve a case, making it a prime example of legal RaaS. Mobavenue, an AdTech company focusing on acquiring relevant users through acquisition or retargeting, only charges per successful app download, for example.

The adoption of RaaS brings several significant benefits for businesses. One of the primary advantages is cost efficiency; by paying only for results rather than investing in tools or services upfront, organizations can allocate their resources more effectively.

This model allows companies to concentrate on their core competencies while outsourcing non-core functions to specialized providers, enhancing their overall focus. Additionally, RaaS facilitates scalability, enabling businesses to expand their operations without the burden of substantial upfront investments in technology or personnel.

Furthermore, RaaS improves decision-making by providing access to real-time data and analytics from partners, allowing organizations to make informed decisions quickly. This model also offers flexibility, as businesses can adapt their strategies based on performance metrics supplied by RaaS solutions.

However, while the benefits of RaaS are compelling, organizations must also navigate potential challenges. One concern is the dependency on external providers for critical functions, which can create vulnerabilities if those partnerships falter. Quality control is another important consideration; ensuring that service providers consistently meet agreed-upon outcomes necessitates robust oversight mechanisms. Additionally, sharing sensitive data with external partners raises significant concerns regarding privacy and security.

As industries continue to evolve toward RaaS models, both businesses and employees must embrace this transformation. The emphasis on measurable outcomes over traditional service models represents a substantial shift in how success is defined in the marketplace.

The rise of RaaS signifies a fundamental change in business operations — one that prioritizes results over processes. As organizations navigate this new landscape, they must remain agile and innovative while aligning their strategies with the principles of performance-driven success. Ultimately, the future belongs to those who can adapt to this new paradigm and leverage it for sustainable growth and competitive advantage.

As RaaS gains momentum, employees must adapt or risk obsolescence. This model shifts job roles from task execution to strategic thinking and results-driven contributions. Those who thrive in a RaaS-driven economy will adopt a performance mindset, develop versatile skill sets, and commit to lifelong learning, given the need to stay ahead of industry trends and emerging technologies.

The transition to RaaS marks a new era in business — one where success is measured not by tools or processes but by tangible, real-world impact. As industries shift toward this model, both businesses and employees must embrace the change, innovate and align themselves with the future of results-based success.

Source: Manila Times

Expanding financial access for every Filipino

Economic uncertainties have pushed more Filipinos to consider financial safety nets, yet achieving long-term security remains a challenge.

A 2024 industry report found that 43% of Filipinos are seeking passive income sources, 39% are prioritizing emergency savings, and 32% are focused on financial freedom after retirement. However, major hurdles remain, with rising healthcare costs at 82%, inflation at 81%, and concerns over economic slowdown and recession at 78% weighing heavily on financial decisions.

Despite the availability of banking services, many Filipinos still prefer keeping their savings in traditional piggy banks, bamboo containers, or old jars. A study published by PANTAO: An International Journal of the Humanities and Social Sciences noted that distrust in banks stems from fears of bankruptcy or inflation eroding their savings.

However, keeping cash at home poses greater risks, including theft, damage, or misplacement.

The study emphasized that banks serve not only as safekeeping institutions but also as tools for emergency preparedness. Experts recommend maintaining at least three to six months’ worth of living expenses in a secure, accessible account to prevent unnecessary debt during financial emergencies. When emergencies arise, those without savings often turn to quick loans, credit cards, or informal borrowing, creating a cycle where a large portion of income goes toward debt repayment rather than wealth-building.

Risk management is another overlooked aspect of personal finance. Many Filipinos see insurance as an unnecessary expense rather than a safeguard against life’s uncertainties. Life insurance, for example, is often dismissed as a luxury for the wealthy, while non-life insurance is viewed as an added cost rather than protection for assets.

While the country’s insurance penetration improved by 0.06 percentage points in the fourth quarter of 2024 to 1.67%, it remains relatively low compared to the global average of 2.9% and 2.2% in emerging Asia.

According to a JP Morgan report, life insurance with cash value can be a valuable financial tool for asset diversification. Permanent life insurance policies, for instance, include savings components that can grow over time, offering additional financial security.

Investment as wealth-building tool

According to the Bangko Sentral ng Pilipinas (BSP), saving is essential for financial security as it provides readily available funds for emergencies and short-term needs. However, these accounts offer minimal returns and often fail to keep pace with inflation.

Investing, on the other hand, involves purchasing assets that can appreciate over time, with the potential to generate higher returns. The BSP stated that income is a person’s most powerful wealth-building tool. Without strategic investing, hard-earned money may not reach its full potential.

While investments carry risks, they also provide opportunities for financial growth, helping Filipinos move beyond mere survival toward true financial independence. Middle-income Filipinos are exploring investment opportunities to grow their wealth, including stocks, mutual funds, real estate, and digital assets.

Such investors are typically investing to prioritize specific life objectives such as homeownership, education funding, or retirement planning. For them, the goal is not just wealth accumulation but securing a future that can withstand economic uncertainties.

Beyond financial gains, focusing on long-term objectives means investors are less likely to make impulsive decisions driven by short-term market fluctuations. This method helps to break away from the traditional approach of a one-size-fits-all investment solution.

However, 75% of Filipinos still do not invest, according to the BSP Financial Inclusion Survey. Many hesitate to enter the investment space due to a lack of knowledge, fear of risk, or unfamiliarity with financial products. The central bank also reported that the lack of financial literacy discourages people from considering investments, as many view them as risky or exclusive to the wealthy.

Journey towards financial inclusion

The BSP said that many Filipinos remain outside the formal financial system, unable to maximize opportunities that could improve their financial standing.

While women in the Philippines have higher financial inclusion rates than men, large segments of the population still struggle to access financial services. Those most affected include low-income earners, senior citizens, migrant workers and their families, persons with disabilities, indigenous peoples, and forcibly displaced persons.

Micro, small, and medium enterprises (MSMEs), along with agriculture-based businesses, also remain largely underserved. These sectors contribute significantly to employment and economic activity yet receive only a small fraction of total bank loans.

Smallholder farmers, fisherfolk, and informal workers, in particular, face limited access to financing that constrain their ability to expand and improve their livelihoods.

The transition to digital transactions has also introduced new challenges, especially in rural areas where internet connectivity is inconsistent and financial literacy is lower. Many Filipinos remain hesitant to fully embrace digital banking due to concerns about affordability, security, and fraud risks.

In response, the central bank is intensifying efforts to educate Filipinos on key financial concepts through its Economic and Financial Learning Office. The Economic and Financial Learning Program regularly holds activities designed to improve public understanding of essential financial matters.

Recognizing the challenges MSMEs and the agriculture sector face in securing financing, the BSP is promoting alternative lending solutions through Agricultural Value Chain Financing model, which connects agribusiness players with banks to facilitate lending opportunities. Through Circular No. 908, the central bank encourages banks to explore value chain financing as a sustainable way to support the agriculture industry.

In addition, the BSP continues to promote the Credit Surety Fund, which provides collateral substitutes to MSMEs, enabling them to access bank loans. Under the Credit Surety Fund (CSF) Cooperative Act, the central bank works closely with cooperatives and the Cooperative Development Authority to strengthen CSFs in various communities.

Meanwhile, the Department of Finance (DoF) has called on the insurance industry to expand market penetration and position insurance as a mainstream financial instrument and basic necessity for Filipinos.

In a statement, Finance Secretary Ralph G. Recto emphasized that insurance is a powerful tool for poverty reduction and long-term financial security, more than just a safety net.

“Risk is a significant driver of poverty, and adequate insurance coverage is among the powerful tools for mitigating this challenge. Therefore, the life insurance industry [must] hold key positions in winning our battle against poverty,” said Mr. Recto.

The Finance secretary also urged industry players to embrace digital innovation, simplify policies, and develop customer-centric, cost-effective solutions. That way, insurance serves as a comprehensive financial product that integrates protection, savings, and investment benefits tailored to different life stages.

Source: Business World