STARTING A BUSINESS IN THE PHILIPPINES

1. Create a New Market or Benchmark

Be innovative! You have two choices on what business you want to
venture in.

First, offer something that is not yet in the market. How can
you make your business stand out? Think creatively and identify
an innovative product or service that can satisfy the needs or
provide a solution for your target customers.

Second, benchmark successful businesses. Observe what they’re

doing right and create something greater.

You can also apply at PhilGEPS wherein you can have government
agencies as clients. This allows your business to grow by
expanding your network.

2. Validate Your Small Business Idea

You may have something in mind that you believe will be a big
hit. But does your small business idea really have the potential
to succeed?

Conduct market research[1] before you start a small business.

Find out if the product or service you’re considering to sell is
something people need and would be willing to pay for. Check
also if other businesses in your area are offering the same
product or service and how the competition is like.

- https://www.moneymax.ph/personal-finance/articles/
dropshipping-
philippines#How_Does_Dropshipping_in_the_Philippines_Work
- https://www.moneymax.ph/personal-finance/articles/buy-and-
sell-business

3. Plan Your Business Finances

When figuring out how to start a small capital business in the
Philippines, know that while it doesn’t generally require a lot
of funds, it will involve some capital. You need money to buy
equipment, tools, supplies, and materials, as well as to cover
ongoing costs for six to 12 months before you make a profit.

Start with listing down all the required expenses for starting
your business. Group them into two categories:

 One-time startup costs: Market research, branding, licenses and

permits, initial inventory, grand opening event, etc.
 Ongoing costs: Rent, marketing, employee salaries, taxes, etc.
STARTING A BUSINESS IN THE PHILIPPINES
It’s also important to have backup funds. When you start a
business, you have to allocate backup funds (aside from your
initial capital) that will sustain your business. It will take
time for your product to be known. When you’re starting out,
it’s normal to suffer some loss. If you don’t have backup funds,
how will you sustain your business?

4. Decide on the Structure of Your Business

There are many reasons you need to decide on the structure of
your business early on. Primarily, it will influence the way
your business will operate. It will determine the kind of risks
that your personal assets will face. More importantly, it will
give you an idea of what kind of legal protection you need.

Small businesses may consider these two types of ownership:

 Sole proprietorship – In this type of ownership, everything is

under your full control. While the assets are all yours, all
losses incurred will be yours, too.
 Partnership – It happens when you decide to start a business with
other individuals. Depending on the agreement among partners or
the amount of contribution for the capital, the liability of each
member will be either limited or unlimited.

5. Choose the Right Location

When you buy a house, you need to keep this factor in mind:
location, location, location. The same principle applies to
starting a small business in the Philippines. For you to get
customers, you need to rent a place with high foot traffic. It
could be that one tiny kiosk at the mall, a shop downtown, or
that spot near the highway.

However, remember that these locations can get very expensive.

If you consider this, make sure that you have a sizable budget.
Don’t forget that the money that you will spend on this will
also depend on the floor area of the shop and its amenities.

6. Consult a Business Lawyer and a Tax Specialist

Starting a small business may mean dealing with some legal
aspects. This is why you need to consult a business attorney as
much as possible. For one, a business lawyer will help make sure
that the agreements with your partners and vendors don’t have
any loophole and will have clauses that protect your interests.

In some cases, they also give advice on choosing the right type
of business ownership or structure. They can even help you
review your leasing agreement with office and retail spaces.
More importantly, a business lawyer can help you protect your
intellectual property.
STARTING A BUSINESS IN THE PHILIPPINES
When it comes to finances, a certified public accountant (CPA)
will make sure that you stay current with the laws regarding
business taxation. They will teach you the basics of computing
and filing your business taxes, maximizing tax deductions, and
improving the way you archive your tax-related documents

7. Choose the Best Name for Your Small Business

Your business branding starts with a name. When you’re pondering
on how to start a small business in the Philippines, make sure
to pick a name that not only describes what you have to offer
but also will have an easy recall among consumers.

Once you’ve come up with at least three potential names for your
business, verify if it’s trademarked or another business is
already using it. If there’s none, register your business name
with the Department of Trade and Industry (DTI) if you’re a sole
proprietor.

8. Create Your Brand Identity

Familiarity builds affinity. So, aside from a catchy business
name, you have to make sure that your brand’s identity resonates
with your target audience. Are you going to be a fun brand like
Jollibee or a chic and stylish icon like Sunnies? This is the
type of question that you need to ask yourself.

Nevertheless, here are the elements that will help you forge
your brand identity.

 Logo – It’s the face of your business, so it must be easily

recognizable. It can be a logotype (e.g. Coca-Cola, CNN,
Disney, and Google) or a logomark (e.g. Apple’s bitten
apple icon, Nike’s swoosh, or Starbucks’ two-tailed
mermaid).
 Language – Your choice of words is a giveaway of your
brand’s personality, mood, and tone. Going full English may
mean that your brand has aspirational or premium values.
Taglish, on the other hand, may mean that your business has
a relaxed tone. Most of the time, pure Tagalog and a few
colloquialisms may show that your brand is grounded and in
touch with the common people.
 Colors – Customers are heavily dependent on visuals. Colors
are good visual aids, as they convey feelings and emotions
and strengthen brand associations.
 Typeface – Your choice of typeface also determines the
personality of your brand. Serif fonts, such as Garamond
and Times New Roman, may show that your brand is formal,
regal, or premium. Sans serif fonts, which include
Helvetica and Arial, are safe choices for businesses with
straightforward offerings (think IKEA). On the other hand,
STARTING A BUSINESS IN THE PHILIPPINES
rounded and curly fonts may mean that your business is
chill, light, and fun.

Once you have decided on the elements of your brand identity,

create a brand bible that your graphic designers will follow
when creating your promotional materials. A brand bible ensures
that your branding elements look consistent across different
materials.

9. Apply for Licenses and Permits

In the Philippines, small capital business owners still need to
acquire documents to prove that they’re running a legitimate
enterprise. This is one rule you shouldn’t ignore before
starting your business, lest you’ll get into trouble with the
law later on.

After your DTI business registration, you need to get the

permits. Here are the permits needed to start a business in the
Philippines. This should be accomplished from the local
government where you plan to build your business:

 Barangay clearance issued by the barangay hall

 Mayor’s permit/Business permit issued by the municipal or
city hall
 Tax Identification Number and BIR registration documents
 SSS, PhilHealth, and Pag-IBIG registration as an employer
and for new employees
 Special permits depending on the nature of your business,
such as registration with the Food and Drug Administration
for food businesses and with the Bangko Sentral ng
Pilipinas for pawnshops, remittance centers, and other
financial institutions.

10. Pick the Right People

You need a pool of talented, hardworking, and trustworthy people
driven to grow your business. They are your greatest asset, so
you have to also take care and grow them. With the right people,
you can serve your customers better.

Identify the positions to fill and the core skills,

competencies, and responsibilities for each. These will guide
you through screening applicants and hiring the right ones.

If you’ll run your small business alone without any employee or

contractor, you still need people you can run to for support.
These could include your family and friends, a trusted mentor,
or a fellow entrepreneur who can provide you with advice and
motivation during the highs and lows of managing your startup.
STARTING A BUSINESS IN THE PHILIPPINES
11. The heart of the business is your product or service, so you
have to make sure that what you’ll offer is nothing but the
best. This is why you need to create prototypes until you create
the perfect item. If you’re an owner of a restaurant, this means
trying out different recipes and experimenting with various
ingredients to create a unique dish. In case you’re a shoemaker,
it means coming up with various footwear designs that embody
both form and function.

When you create a prototype, you’re also figuring out which

aspects of the product need improvement. You have to see to it
that the product or service is flawless before it gets mass-
produced or launched. If you skip this, you’ll lose money due to
product recalls and customer complaints.

12. Choose the Right Suppliers and Partners

Your products or services are made up of different components or
processes, a lot of which are usually being sourced from third-party
suppliers. With that, always select the vendor or partner that
understands the nature of your business. The right supplier will help
you make sure that you will be able to deliver your products on time
and minimize production costs.

13. Take Advantage of Social Media and Free Website

Builders
You can cut down on your marketing costs by tapping social
networks and free website builders such as Wix and Shopify to
promote your small business. This rule is especially important
if you’ll start an online business. You have to be where your
target clients are. So if they’re frequently on a particular
social networking site, you have to build your presence there.

If you can’t afford your own website, becoming a social media

wizard is the next big thing. You can find various social media
tips[2] to help spread the word about your business. Sometimes,
you don’t even have to spend a dime to go viral.

14. Be Resilient
As a beginning entrepreneur trying to propel your business
forward, expect several bumps along the way. There will always
be setbacks to deal with. But these should not discourage you.

Instead, have the resilience needed to get back on your feet

after any challenge that comes your way. The COVID-19 is a
tangible example of this. The pandemic may have devastated most
businesses both big and small, but it doesn’t mean no one should
try and start a business anymore. There are lots of pandemic-
proof business to choose from.
STARTING A BUSINESS IN THE PHILIPPINES
The ability to survive any type of setbacks is what separate
great businesses from the others. Start a business that will
surely stand the test of time, fate, and nature itself.

15. Have a Contingency Plan

Sometimes, you can only afford resiliency when you’re prepared
for the rainy days and unexpected problems. Having a contingency
plan will help ensure that your business will endure any
unanticipated events in the future. Include the following items
in your plan:

 Insurance – This is to compensate for any losses or cover

expenses in case of disasters, customer complaints, among others
 Data back-up – Data is an integral part of your operation. So
make sure that everything, from customer details to financial
records and even social media analytics reports, is being backed
up from time to time (via cloud or a separate hard drive). Data
loss makes business continuity more than challenging.
 Back-up source of income – The pandemic has taught businesses to
have an alternative source of income on standby in case worse
comes to worst.
 Comprehensive exit plan – If you and your partners decide to
dissolve the business, the procedure in your contract should be
specific and foolproof. That way, all of you’ll be able to avoid
misunderstandings and conflict.

16. Be Data-Driven When Making Decisions

What’s great about starting a business in the 21st century is
the availability of various types of data that will help you
with decision-making. You can make precise predictions on
customer behavior and trends, which ultimately shape your
operations. Data also helps streamline your business processes,
which in turn allow you to reduce wastage on resources, such as
money and time.

Data never lies, but don’t be too consumed by it that you

experience analysis paralysis. Sometimes, an abundance of data
may impede critical decision-making.[3]

17. Learn to Delegate

You don’t want to do all the tasks by yourself. That would be a
wasting your precious time!

Multiply yourself by teaching other people some of your skills

that they should master. It means more time from you doing more
important things for the business.
STARTING A BUSINESS IN THE PHILIPPINES
For example, you can teach someone accounting processes, so you
can focus on generating sales. Make sure you only teach your
skills to people you trust.

18. Be Ready to Make Sacrifices

Since you need to give a big chunk of your time to grow your
business, you’re going to miss Friday Zoom nights with friends,
bonding time with family, regular sleep and a possibility of
losing your life savings. This also goes with balancing your
needs and wants so that you can follow through with your
financial goals.

Final Thoughts

A lot of Filipinos nowadays want to start a small capital

business of their own. However, many disregard the importance of
the science of business. Instead, we rely solely on intuition.
Before you tackle the problem of how to start a small business
in the Philippines, you need to carefully study and forecast a
lot of factors to ensure that your business will succeed.