The Realistic Optimist: Isagani G. Buenaflor
The Realistic Optimist: Isagani G. Buenaflor
by BERNIE CAHILES-MAGKILAT
Business Profiles of Manila Bulletin, October 11, 2006 Issue, Page B-7
Isagani G. Buenaflor has big ambitions and a distaste to work under the
supervision of a boss. So, as a young Electronics Communications Engineer, he
decided to put up his own business after a year of working as project analyst of
the National Computer Center. Starting out with a borrowed fund, Isagani and
wife Teodorica bought a second hand car to start his rent-a-car business in 1977.
That was the humble beginning of Diamond IGB Inc.
Now, Diamond is undoubtedly the country’s biggest rent-a-car company focusing on
corporate accounts.
GROWTH
In an industry with eight major players of which five are foreign franchises
plus 15 locals, Buenaflor is in for a stiff competition. Despite the rigidity of
the business, the company continued to grow.
“We are among the biggest,” he said refusing to say they are the biggest.
In 1988, Buenaflor acquired the franchise of the U.S.-based Budget Car and Truck
Rental, the world's third biggest rent-a-car firm.
Now, The Diamond Fleet Management System is the country's biggest. It is
comprised of the services of Budget Car and Truck Rental, Pronto Auto Services
and Buenaflor Insurance Agency.
The DFMS is touted to be most comprehensive fleet management solutions available
in the local market. It is focusing on fleet accounts management, which is a
growing business process outsourcing.
“We live and breathe fleet management for 29 years,” he said.
Under its services, Diamond is responsible for a centralized procurement,
preventive maintenance and repairs, insurance and vehicle replacement and
disposition of the vehicles at the appropriate time with the company having the
option to buy the units.
"These are non-core functions of companies and by outsourcing these tasks they
can save a lot and become more efficient. Doing these tasks only complicate
their core business," Buenaflor said. Should a company car breaks down, Budget
can replace the unit right away.
Companies can save a lot by outsourcing this non core business because it has tax
benefits as it is off their balance sheets. Aside from tax savings, they would
end up with a very efficient operation.
Diamond's corporate fleet management started five years ago and is now 60
percent of its total business.
In a span of 30 years Budget Philippines is now one of the largest and most
respected car rental companies in the country.
With an ever growing fleet of cars and trucks and service-dedicated employees,
Budget Philippines meets leisure and commercial car and truck rental needs
through a vast network of retail and airport locations.
Budget Philippines was the first in the car rental industry to offer an
operating lease with option to purchase with a choice of vehicles ranging from
affordable compact cars to luxury sports utility vehicles.
Its insurance business is also on the upswing. Now, the Buenaflor Insurance
Agency represents PHILAM-AIG for non-life products. Its role in DFMS is to
provide all services needed by a vehicle owner; either for a private or
corporate entity.
“We are the top insurance for PHILAM and the big discounts we get are passed on
to clients," Buenaflor said.
Another subsidiary, Pronto! Auto Services acts as the fleet maintenance provider
for all the vehicles under DFMS.
Pronto is a 3,000 square meter warehouse facility with world-class equipment and
services related to handle all maintenance requirements. Aside from vehicle
maintenance. Pronto also acts as a one-stop shop for all the
maintenance requirements of Budget.
Its facility is capable of any type of service be it mechanical repairs, quick
services, detailing and even body repairs.
AGGRESSIVE PLANS
True to his lofty ambitions, Buenaflor is not stopping as just a mere DFMS.
"The vision is to be famous for safety and service. It is a continuing concern
for the years to come," he said. "Our roadside assistance is on a 24-hour
basis," he said. Buenaflor, however, said that once a company has reached a
certain stature more efforts are needed to maintain such status.
Already, Buenaflor is developing a company culture and values whereby its people
are fiercely motivated when opportunities present themselves. It has over 200
employees including drivers, insurance agents/repairmen and auto servicemen.
"We'll continue to improve ourselves and make it even better from the present
situation that we are in," he said.
Part of the vision is to further grow the company, expanding it to other related
businesses like auto parts supply. This is a natural progression for the company
to take because its fleet vehicles are its own market.
Branching out outside of the country is another aggressive plan that would give
the Filipino firm an international presence. The plan is to expand within the
Asia Pacific countries next year, Buenaflor said.
The company is also looking at going public but since they are not in a dire
need of capital, Buenaflor said that listing in the Philippine Stock Exchange
can wait.
" Going public is a big possibility," he said.
The company expects sales to grow between 15 to 20 percent this year over last
year and when the economy becomes stronger he expects to maintain the same growth
next year.
REINVENTING HIMSELF
But it does not stop there, these expansion binge require a lot of management
skills, partnerships and alliances with clients, suppliers and people.
To equip him with the tasks he has set for himself, Buenaflor is reinventing
himself. He is going back to school but no less than the Harvard Business
School.
Buenaflor is enrolled in the Harvard Business School's 28th session for its
company owners and presidents for 2007-2009.
This management program is a special course at Harvard Business School that is
attended only by at least 160 company owners, presidents and chief executive
officers from all over the world.
The special program runs for three weeks in a year for three consecutive years.
At least 40 percent of the program participants are from the U.S., 20 percent
from Europe and the rest from Asia.
Buenaflor refuses to be compared with the status of his classmates distancing
himself from the wealth and the capability of his CEO classmates.
But it is easy to measure Buenaflor. Participants in this special course of
Harvard must hurdle the minimum capitalization or sales to be admitted into the
program. Definitely, those admitted cannot be medium-sized companies in terms of
assets or sales.
Buenaflor has one thing in mind only why he enrolled in this special business
program: to have a glimpse of the lives of these business gurus. Perhaps, trying
to gauge how he fares with the big shots.
“I want to know what they are thinking, how they decide and I want to meet them
in person,” he said.
The ever optimist humbly said that it would take longer before he could match or
reach the status of his classmates.
“This is just the beginning,” he said.
THE OPTIMIST
“I have big ambitions and I am not afraid to fail,' was Buenaflor's asset as a
businessman. He looks at crisis not as obstacles but part of the business
landscape.
“1 am always an optimistic person,” he said. He proved this when during the
Asian financial crisis, Diamond was the only one in the industry to invest in
new units.
Crisis or no crisis, Diamond does an annual reflecting. The 1.3 to 1.6 liter-cars
have to be disposed after three years while the high-end cars are retired five
years after.
He has an encouraging projection for the economy too.
"The domestic economic outlook is also good because the economy is getting
stronger," he said. He noted the good economic fundamentals.
"The more foreign investments come into the country, the more opportunities we
have for local businesses," he said.
The increased arrivals of tourists are also expected to augment immensely to its
rent-a-car business although this division accounts for only 10 percent of its
total business.
Again, Buenaflor refuses to divulge the number of vehicles the company has. But
he said that his idol is Mr.Vie Vickson, a poor man from Hawaii who was able to
put up a rent-a-car business starting out with 15 cars only.
Now, at the age of 52, Mr.Vickson has over 15,000 cars and is the biggest Budget
unit worldwide. That could very well be his own target.
BUSINESS PHILOSOPHY
As a businessman, Buenaflor has put premium on his employees. As far as Buenaflor
is concerned his employees are the best assets of the company not the buildings,
not the cars.
"Some of my employees have been with us for the past 27 years. They like staying
with me and I also like working with them," he said.
But while he is very much people-oriented, he also demands results from his
people. Not a day passes by without him and his staff discussing about goals and
comparing with actual performance.
"It is a challenge for every Diamond employee that every person who walks into
our office does not leave walking but driving a car," he said.
Diamond has enough clientele now that what its priority now is to maintain its
clientele base.
Buenaflor is also preparing his three kids to one day succeed in managing the
growing business portfolio. His youngest. Ruby Ann, is now working with Pronto
while the second, Quincy, is with Budget and the eldest, Oliver, is with the
insurance business. His wife Teody serves as treasurer.
Buenaflor even brought his entire family, five of them, to enroll in the Ateneo
Family Business Center to
learn more about succession in a family-owned business.
This is necessary because the success rate of the second-generation in a
family-owned corporation is only 20 percent. In the Philippines, 70 percent of
companies are family-owned. The rate is getting dimmer at 5 percent success for
the third generation.
So, he is making sure that his three kids would be able to make the company
surpassed what he has attained during his lifetime.
"It is a very structured program that consists of 6 to 8 sessions but it is really
worth it," he said.
During the course, the family is asked to make a Family Constitution that will
address the present and future concerns of the company's operations.
"The course is not an insurance against failure but it helps a lot," he said.
Buenaflor is not leaving a single stone unturned to ensure a sustainable
business because he cannot trust his business to just mere optimism.