essay about small business in the philippines

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Promoting SME competitiveness in the Philippines: Compete, connect and change to build resilience to crises

Increasing the competitiveness of small firms in the philippines is vital to build resilience to shocks while promoting sustainable and inclusive growth..

Companies that were more competitive before the COVID-19 crisis were less affected by it, according to ITC’s SME Competitiveness Survey. Firms with a greater capacity to change – because of their skills, innovation and financial management – were more likely to adopt resilient or agile responses. Finally, those with better connections to their business ecosystem were better able to access the information and support they needed to survive the crisis.

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How To Start a Business in the Philippines: The Complete 15-Step Guide

Here’s the cold harsh truth about employment:

It’s a rat race and even if you win it, you still end up a rat.

A rat with no control over his schedule, income, and projects to work on.

I’m not saying everyone should leave their jobs en masse. Some people consider their jobs as a vocation and can’t imagine doing anything else.

But for others who are yearning for more freedom and feel stuck at their current jobs, there’s a great alternative–entrepreneurship.

The best part is you don’t have to start big. Even with a small capital, you can open a business in the Philippines and make it profitable through smart planning. This article will teach you exactly how.

How To Start a Small Business in the Philippines With Small Capital: A Step-by-Step Guide

Great things start from small beginnings.

When they started their businesses around WWII, Max’s Restaurant and National Bookstore were deprived of advantages. But with sheer persistence and great strategies, they eventually became household names.

The same is true for almost all the famous brands we recognize today.

Therefore, whether you want to supplement your current income or become your own boss someday, the only way to go big is to start with a small business.

Small business or small-scale enterprise is one that hires few employees and has a relatively smaller asset size.

In order for a small business to qualify for government assistance and incentives, it should have capital assets amounting from Php 3 million to Php 15 million and with employees numbering from 10 to 99 workers 1 . Anything below these levels is classified as microenterprise while businesses that exceed them are known as medium- to large-scale enterprises.

However, the consensus today is that micro, small, and medium enterprises all fall under the general term “small business”.

By starting a small business in the Philippines, you as the owner will pretty much wear several hats–from marketing and finance to production and management.

Hence, it’s crucial to arm yourself with knowledge about all these fields especially at the beginning when you still don’t have the means to hire specialists.

This article will teach you how to start a business in the Philippines with a small capital, no business experience, and little or no college education.

Let’s get the ball rolling.

Step 1: Know your “Why.”

Holocaust survivor Victor Frankl wrote in his book that “those who have a ‘why’ to live can bear with almost any ‘how'” .

Starting a business may not be as tragic as a Holocaust but it is certainly not a walk in the park either.

On one side, owning a business gives you unlimited opportunities to earn money , be your own boss, explore your creativity, help others, and build a legacy.

But there’s another side to the entrepreneurial coin: the risk of failure.

In addition to that, starting a business in the Philippines where unpredictability abounds will push you to go beyond your comfort zone. Success won’t come easily. Long hours of work, missed family times, and sleepless nights will hound you especially during the early stages.

And did I mention you’ll be juggling a lot of hats so you’ll be responsible not just for the welfare of your family but also for the livelihood of your own employees?

So, before taking the plunge, test the water first.

If you only want extra income , don’t resign from your job and look for a part-time job instead. But if you want complete control of your destiny, then it’s time to plan your exit. It doesn’t matter if you take baby steps; what’s important is you carefully weigh the risks and rewards and then make a decision based on your own judgment.

If you get discouraged, look at yourself in the mirror and ask the big “Why?”

As long as you know your purpose for starting a business, you can weather any challenges that life may throw at you.

Step 2: Understand What It Takes To Succeed in Entrepreneurship

You don’t need an MBA to start a profitable business in the Philippines.

However, life-long learning is at the core of successful entrepreneurship. You learn best from your own failures and the mistakes of those who came before you.

Another way to hone your knowledge is to take free or paid training courses designed for beginners. For example, the Philippine Trade Training Center (PTTC) and the U.P. Institute for Small-Scale Industries offer “start your own business” programs that will teach you basic principles of running a business.

We also recommend the following training centers/courses:

• Businessmaker Academy (1503A West Tower, Philippine Stock Exchange Building, Exchange Road, Ortigas Center, Pasig City).
• TESDA Online Entrepreneurship Training Program .
• Ultima EntrePinoy Center for meat processing, baking, and other food business courses (Nutrition Foundation of the Philippines Building, 107 E. Rodriguez Sr. Ave., Quezon City).
• Department of Trade and Industry Negosyo Center – Seminars and Workshops .

Entrepreneurial success takes more than just technical knowledge. Your business can only grow to the extent that you do . Hence, it’s important to also invest in personal development if you want your small enterprise to prosper.

According to Management Systems International 2 , there are attributes common among successful entrepreneurs that led them to the success they have today. These characteristics can be grouped into three clusters–Achievement, Planning, and Power.

Achievement cluster

• Opportunity-seeking – the ability to see opportunities and seize them as they come. For example, when people from your hometown are craving for donuts and there’s no single donut store that has been put up yet, will you be quick to act on this opportunity? An opportunity-seeking business person certainly would.
• Persistence – a trait that will allow you to stick to your vision even in the face of criticisms and failures.
• Commitment to contract – which means getting the job done on time and honoring your promises without any excuses.
• Risk-taking – or more specifically, taking calculated risks to minimize potential losses. A good business person doesn’t just invest in any venture without carefully studying the market and identifying flaws in the business model.
• Demand for quality and efficiency – a characteristic of great entrepreneurs who uphold excellence in everything they do and don’t just settle in a “puwede na ‘yan” attitude.

Planning cluster

• Goal-setting – a skill that enables you to clearly define your goals and withstand the pressures and struggles of today in the name of achieving these goals.
• Information-seeking – a quality you need in order to come up with informed decisions and calculated risks. When the future of your business is at stake, you gather only the best information from all the best sources–suppliers, experts, competitors, banks, and even government agencies.
• Systematic planning and monitoring – while planning gives you the opportunity to choose the right supplies, manpower, and materials to achieve your goals, monitoring allows you to fine-tune your plan to bring you closer to achieving your goals.

Power cluster

• Persuasion and networking – if you know how to leverage the power of persuasion, you can literally make everything you want to go in your favor: from persuading the bank to give you a loan to convincing your buyers that your product is worth a try.
• Self-confidence – if you don’t believe in yourself and your ideas, then no one else will. You can’t succeed in any undertaking if you have a deflated ego. Believe in your dreams and everything else will follow.

Step 3: Come Up With a Business Idea

Every successful business starts with one idea.

The problem, however, is many people think that a million-peso idea only shows up in a select few; it’s either you have it or you don’t.

While it’s true that some successful entrepreneurs got their ideas by accident, they are exceptions rather than the rule. For most of us, a winning business idea won’t magically fall into our laps so we have to look for it ourselves.

To start generating a list of business ideas, ask yourself the following questions:

What are the things you’re interested in?

Running a business can be tedious in the long run so you might as well choose a business that is in line with your interests.

Don’t worry if the idea has already been taken. Your goal, after all, is not to be original but to explore an already existing idea you’re interested in, turn it on its head, and make it better than what’s already out there.

Instead of trying too hard to be original, find ways to dominate an already existing market by offering better, cheaper, or faster products or solutions.

Do you have pain points in your life or problems that bother you that you wish could be solved?

Famous entrepreneur and Internet personality Gary Vaynerchuk believes that the best way to find the next great business idea is to stop looking 3 .

Instead, go through the daily grind of life with an open mind so that you can zero in on things that bother you when you encounter them. Chances are, you’re not the only one experiencing the same problem so if you figure out how to fix it, then you have a potential business idea.

The key here is to always have a problem-first approach; after all, the world doesn’t need more products but more solutions to their everyday problems .

What are your core skills or the skills you’ve developed?

You’re more likely to succeed in a business if you have the experience, knowledge, and skills that it demands.

Look back at your employment history and note the skills you’ve developed over the years that you’re both naturally good at and you enjoy doing. These can provide clues on what kind of business to pursue.

And we’re not just talking about skills that you’ve developed in your previous jobs; those that you’ve learned outside work are equally important and perhaps more reliable in helping you figure out what business to try. Since you enjoy doing them without any incentive to motivate you, then you can potentially turn it into a business you’ll never get bored doing.

What businesses are currently booming/trending?

First of all, there’s a difference between a business fad and a business trend. Whereas a business fad enjoys initial hype but proves to be short-lived, a business trend lasts longer as the consumers don’t easily lose interest in the product/service.

Apparently, your focus should be on the trending businesses because more people doing it means the idea is very profitable. In the Philippines, trending business ideas fall in any of these three categories: Food, online, or service.

Food businesses either focus on food manufacturing (i.e., creating your own products from scratch like what Eng Bee Tin did and other big names with humble beginnings in their founders’ own kitchens) or food trading which involves selling ready-made or frozen products like siomai, shawarma, etc.

Online home-based businesses are mostly done by professionals who sell their services instead of tangible products. These include virtual assistants, freelance writers, social media managers, bloggers, bookkeepers, graphic artists, and many more.

Last on the list are businesses in the service industry that are now thriving as more and more people become busier. Some of the best examples are laundry businesses , transportation/delivery services, pet grooming businesses, photography businesses, and wedding and events coordination businesses, among others.

In addition to asking yourself the above questions, you can further increase the number of business ideas you generate by reading this article: 100+ Best Small Business Ideas in the Philippine with High Profit.

Step 4: Conduct Market Research

Starting a business without doing market research is akin to entering an unfamiliar territory without any map to guide you.

But what exactly can you achieve with market research? The answer is knowledge. A wealth of information and insights about who and where your customers and buyers are; when they’re most likely to buy or use your product/service; who your competitors are; and how big is the potential market demand for the product/service you’re currently developing.

In other words, everything that can help your business start off on the right foot.

This step has three components:

• Market segmentation;
• Market research;
• Competitor analysis.

To begin your research, you have to know first that your business doesn’t necessarily need to appeal to everyone . It’s easier to focus on one segment of the market first and then expand later on.

In order to find this target market, you need to divide the general market into smaller subgroups. Also known as market segmentation, this process involves grouping the market according to location, demographics, behavior, or other variables that make sense for your business.

Let’s say you’re planning to develop and sell a mobile phone. You can find your market either at shopping malls or online shopping sites where mobile phones are being sold.

Through market segmentation, you can divide this market into different groups according to their motivations in buying a mobile phone. There are the housewives who only need phones with the most basic features since they’re only using them to call their loved ones; the students who look for phones with cameras and other features that will help them with their studies; the yuppies who prefer phones with a flashy look and more features to meet their professional needs; and so on and so forth.

Another example would be a business that will manufacture its own soap. There’s a huge market for soap but what type of soap exactly?

With the use of market segmentation, you’ll be able to identify different segments of the market with varying demands for a specific type of soap. There are the buyers who want to achieve whiter skin; people with sensitive skin who want to get rid of their pimples; people who just want a skin-friendly moisturizing soap; those who want scented soaps; people who prefer herbal soaps; etc.

After segmenting the market, it will be easier for you to figure out which specific group or type of buyers will be the target of your marketing efforts.

Once you’ve identified your target market, it’s time to put it under the microscope and get to know your prospective customers a little bit better.

This is when the market research comes into the picture. You employ tools and techniques to reach out to your target market and discover what makes them tick.

And if the sound of “market research” intimidates you, don’t worry. Although big companies require an equally big budget to recruit a huge number of respondents for their market research, small entrepreneurs can also gain access to a wealth of valuable information about their target markets without breaking the bank.

The following are the most common techniques you can use to conduct low-cost market research:

1. Survey – is the old-school way of collecting data from a sample group that is assumed to be the representative of the whole. You can use this method to learn what people think about the products currently available in the market and how you can create a better one in terms of quality and price.

Just make sure the survey participants are neither your friends nor relatives because of the biased opinions they tend to provide.

The questions in the survey should explore the factors the respondents consider when buying; what they like or dislike about the current products in the market; the kind of improvements they would like to see; and the price of the product that is reasonable for them.

2. Observation – is probably the crudest form of market research but one that remains effective nonetheless.

It can be in the form of contextual observation where the entrepreneur pays close attention to a sample of the target market as they use or experience a certain product or service. Other entrepreneurs take matters into their own hands and do a mock journey where they put themselves in the consumers’ shoes by buying and using the product/service themselves.

3. Prototyping – known in layman’s terms as simply “taste test” or “sampling”, this method allows the entrepreneurs to put their minimum viable product (or the early version of their product, warts and all) out there and use the customers’ feedback to further improve the said product as they go along.

Market research is a critical part of your initial entrepreneurial journey as it will help you realize whether there’s a demand for your product or not and if there is, who is most likely to buy it, how many they are, where they’re located, and how you can promote your business to them.

It will also identify both your direct (i.e., businesses selling the same product/service) and indirect competitors (i.e., businesses selling different products/services but are in the same category as you).

Speaking of competitors, the competitor analysis is just as, if not more, important than the market research itself.

Not finding time to learn more about your competitors, what they offer, and how much they cost will put your business on the losing end. This is because competitive analysis helps you discover ways to give your business a competitive advantage which will effectively prevent your target market from choosing others over yours.

Aside from collecting and analyzing available data about your competition, you can also go the extra mile and buy your competitor’s products to test them yourself. This way, you can once again put yourself in the customer’s shoes and gain ideas on how you can improve their experience through a product that only your business can provide.

Step 5: Decide Who Will Run the Business

Most starting entrepreneurs build their businesses on their own as a single proprietorship. However, entrepreneurship can be a lonely endeavor so there’s nothing wrong with starting a business with a partner or a group of people.

The following are the different types of business according to ownership and the pros and cons of each to help you decide which path to take:

• Single proprietorship – is the most basic type of business wherein you basically run the whole show. While it’s easier to set up and you’re free from outside interference, this type of business is also the most demanding and puts you at high risk for burnout. The growth of your company is also limited by your financial means.
• Partnership – a business owned by at least two parties, this is also relatively easier to set up than a corporation and has the advantage of having the check and balance maintained by the co-owners. Businesses under a partnership tend to grow faster than sole proprietorship since there is more than one investor. However, more owners mean more chances of having a conflict.
• Corporation – is a business run by at least five people. Like a partnership, a corporation can also grow faster because of the number of shareholders and is also highly flexible because all the owners can share the responsibilities. The downside is corporations are taxed more than sole proprietors, more difficult to set up, and have a tendency to institutionalize a bureaucracy.

To help you further in deciding which type of business structure to pursue, I recommend reading this section in our business registration guide . It contains crucial information on how to choose the right business structure based on your intention, risk appetite, capacity to raise capital, and other factors.

Step 6: Write a Business Plan

Ever heard of the saying “if you’re failing to plan, you’re planning to fail?” Nothing can prove this better than starting a business where your own (or your investors’) hard-earned money is on the line.

This is why writing a business plan is crucial regardless of the size of the business you’re planning to start.

A business plan is a document that will show how your business will evolve from start to finish . It offers a closer look into your business model and helps identify any loopholes in its profitability, thereby giving you a clearer picture of whether the business is worth pursuing or not.

Specifically, a business plan will help you accomplish the following:

• Prevent or eliminate the risk of losing money invested in businesses that are proven to be lacking in demand.
• Reduce total expenses that would not have been possible without a business plan to help you examine details that are easily overlooked. Remember, every peso counts when you’re starting a business in the Philippines so you don’t want it to be wasted on something not essential.
• Establish a healthy cash flow for your business especially during the lean and peak months. Cash is king when it comes to running a business for without it you’ll always be on the verge of bankruptcy . Through a business plan, you can create a contingency plan to make sure your business will stay afloat when the demand slows down and will be prepared enough to handle increased demands during peak seasons.
• Set goals in terms of the total number of sales, revenues, or expenses and measure the actual performance of your business against these set goals.
• Convince investors or lending institutions to lend you money to start your business. No sane person will easily hand you the capital for your business unless you can provide a well-thought-out business plan containing details on how the business will work and earn back the initial investment.

If you truly know your business inside out, it’s not that hard to write your own business plan. The more complicated and larger the business, the more pages the business plan would require.

Should you need assistance in writing a business plan, you may approach the following people/institutions:

• SME Counselors from the Department of Trade and Industry (DTI);
• Freelance consultants who charge lower fees than consulting firms because they don’t deal with big overhead expenses;
• Accountants/bookkeepers;
• Business professors;
• Extension offices of business schools like Baguio’s St. Louis University Extension Institute for Small-Scale Industries.

As for the content of the business plan, it must depend on what kind of enterprise you’re planning to start. No two businesses are alike so the business plan should be written according to the uniqueness and conditions of your business.

In general, however, the following sections are considered basic components of a good business plan:

• Title page – contains the name of your business and other basic details of your enterprise.
• Executive Summary – provides an overview of what the company or business idea is all about, the problem the business is going to solve, the solution your business will provide, and how it will fit into the marketplace. This section will give investors an idea of whether to invest or not so make sure to leave a great first impression.
• Business description – explains the type of business you’re planning to start, the industry it belongs to, and what it will look like in the future.
• Market strategies – describe how big the market you’re trying to penetrate, who your target market is, and how you plan to sell to this market.
• Competitive analysis – explores who your competitors are, their strengths and weaknesses, and how your business stack up against them. Essentially, this section shows what makes your business different from everybody and how you’re going to use this to beat your competitors.
• Design and development plan – determines what exactly is your product or service and how you will develop it over the short term, medium-term, and long term.
• Operations and management plan – describes how a day in your business will look like.
• Financial plan – discusses in detail where the money to fund your business will come from and whether it will be self-funded or financed by outside investors. It also covers the projections you should create and what factors you should take into consideration; how much financing you need to start the business; how long it will take to pay back the investments (ROI); how will the ownership be divided, if applicable; and your backup plans in case profits or the demand for your business dries up.

When writing your business plan, keep in mind that nothing is final. It’s a living, breathing document that you can update every now and then as your business evolves.

Step 7: Build Your Product/Service

Now that you have a business plan, you can start developing your minimum viable product. This is the earliest version of your product that you’ll introduce to your target buyers. You’ll then use their feedback in order to improve the product prior to mass production.

Even if you’re a perfectionist, it’s virtually impossible to create the perfect product or service right off the bat. So instead of succumbing to analysis paralysis, just release the first batch of your product into the wild and let the feedback dictate what changes you need to make.

Whether you’re planning to sell handicrafts, homemade cakes, or something more complicated, there are important aspects of product development you just can’t afford to take for granted. These are the following:

1. Process . Review the different steps that it will take to create your product. Are all of these steps necessary or can you remove some of them to save on costs without sacrificing product quality? What are tools and equipment will you need and how many skilled workers are needed to operate them?

2. Machines and equipment . Determine the things you’ll need to create your product, how much they are, and where are the best places that offer quality products at a minimal cost.

There are also some considerations to make depending on what type of business you’re going to start. Whereas a simple crafts business may only require hand tools and inexpensive machines, an Internet café will require specific computers with features that are completely different from those intended for personal use.

3. Materials . Know where and how you’ll get the materials you need as they will determine the pricing and eventually the profitability of the finished product.

For example, if your supplier is far from your business plant or location, and the transport facilities in the said place are limited, it will not only result in production delays but also additional manufacturing costs that will then jack up the price of the product.

However, it doesn’t mean you should just settle for the cheapest materials. Remember, don’t make a final decision based on price alone 4 as the reputation of your business is on the line.

To find the best deal, you can search online, get industry recommendations, or attend trade shows, among others.

4. Design . The product and the packaging must be able to get someone’s attention within the first few seconds of him/her glancing at them. The packaging should have a clean design, legible text, and clear branding that people recognize even from several feet away.

5. Pricing . Determine a reasonable price for your product/service by factoring in all the overhead costs. Make sure you have a good profit margin otherwise you may need to reduce the manufacturing costs (instead of increasing the product’s price) in order come up with a price that doesn’t turn off buyers.

The price of the product is also determined by the marketplace; if similar products are within a certain price range, then your product’s price should not veer off too much away from it if you want to capture the same market.

6. Trademark filing . Protect your business from copycats through trademark registration. You can either do it by yourself via the Intellectual Property Office of the Philippines (IPOPHL) website or hire a trademark lawyer to handle all the paperwork on your behalf.

Step 8: Get Feedback for Your Product

In the process of developing our product, we tend to be blinded by our own awesomeness that we forget what actually matters to those who will buy it. This is when feedback becomes very valuable.

Even if you’re only selling a humble kakanin , customer feedback will spell the difference between a profitable business and one that won’t earn repeat buyers.

Your aim is to get honest feedback from actual buyers (a.k.a strangers and not your close friends/relatives) so it won’t hurt if you offer free or discounted products in the beginning.

If you’re selling clothing items, on the other hand, you can sell beta versions of your products in small batches at first and let the customers order through your social media or website. These first few buyers can get your products at a discounted price in exchange for their feedback on the fabric, color, fit, comfort, and other areas of improvement of your product. Done right, these early adopters may turn out to be your first few brand advocates later on.

Through the strategy discussed above, you can get the product to your prospective customers’ hands faster instead of aiming for perfection that can never be attained, especially sans buyer feedback.

This principle, also known as Lean Startup 5 , can be applied to most businesses but most especially to startups that can’t afford to have a long incubation period for their products. Instead of being held back by perfectionism, they push out the early version of their products to the market in order to get that coveted feedback that will then propel those products into a series of improvements.

When collecting feedback from your prospective customers/buyers, remember these tips:

• Be thankful for the feedback regardless is it’s a positive or a negative one. This gesture will not only earn you their respect but also encourage them to continue providing honest opinions which you need the most.
• Dig a little bit deeper to learn what the negative feedback is all about. If someone doesn’t like your product, he or she is most likely referring to one aspect of the product and not its entirety. Ask questions to figure out whether to improve a specific flaw or just scrap the whole idea altogether.
• Look for patterns or the same comments given over and over again. Your customers know what’s best for them so if they’re specifically pointing out the same complaints, then address them as soon as you can before mass-producing your products.

Step 9: Look for Funding

Regardless of the size of your enterprise, you need money to get it started.

If you’re only selling home-cooked meals or desserts, you probably don’t need as much capital and you can start with whatever money is left in your savings account. No need to borrow money since you can get all or a portion of your profit and then reinvest it into your fledgling home-based business.

The same can’t be said for startups or huge businesses like restaurants that require large upfront capital. Aside from your personal savings, you may also need to go through several rounds of investing in order to get the business off the ground.

Here’s a list of different financing options in the Philippines you may consider to raise funds for your budding business:

1. Your own money. Using your life savings or proceeds from the sale of your personal assets is the safest way to finance your business. Since the money will come out of your pocket, you’ll be more in control of your destiny and retain 100% of your equity.

2. Friends and family. If your own money isn’t enough to raise the needed capital, you may also turn to your well-off friends and relatives with enough cash reserves. The advantage of borrowing from them is you’ll get relatively lower interest rates and more flexible payment terms compared to bank loans.

However, if you still fail to raise the needed funds after exhausting your own savings and borrowing money from friends and/or relatives, then it’s time to consider outside sources.

3. Government financing programs . The Philippine government is aware that small businesses are the backbone of the economy so they have established loan/credit programs to support our entrepreneurs.

Financial assistance is offered by different government agencies which include, but are not limited to, the following:

• Department of Science and Technology (DOST) and the Technology Resource Center which offer financing program for small businesses that are technology-related;
• Department of Agriculture ‘s Agri-Microfinance Program or AMP which is designed to provide financial relief to farmers and fishermen (and their families) in drought- or calamity-stricken areas;
• Department of Social Welfare and Development ‘s Sustainable Livelihood Program or SLP which seeks to improve the welfare and development of marginalized families through livelihood strategies.

For a comprehensive list of banks and government offices that offer financing programs for micro, small, and medium enterprises, you can check out the free ebook 6 published by the Bureau of Micro, Small, and Medium Enterprise Development (BMSMED) in collaboration with DTI.

The Philippine government-owned LandBank of the Philippines also offers lending programs 7 for those who are involved in the agricultural industry. These are the following:

• Cacao 100 (Credit Assistance for Cacao Agri-Business and other Organizations) – offers loan assistance to farmers and entrepreneurs with the main goal of catalyzing the growth of cacao output in the Philippines. This is a good choice if you’re looking to fund your cacao nursery, cacao plantation, and all the processes involved in cacao beans processing.
• Agricultural Credit Support Project (ACSP) – suitable for agri-businesses needing additional funding to support increased production or business expansion. This is ideal for entrepreneurs who are seeking financing for their fisheries, farm equipment, agriculture-related services, and agricultural product distribution.
• KAWAYAN ( Kalikasang Kabuhayan para sa Wastong Pamayanan ) – this program provides financial assistance for farmers, LGUs, and entrepreneurs who have businesses involving bamboo nursery, bamboo plantation, trading, and eco-tourism.
• ISDA (Integrated Support for the Development of Aquaculture) – is a program established to help small fishers as well as small and medium enterprises.

For more information about LandBank’s lending programs, you may contact their customer care center at (02) 405-7000, visit the nearest LandBank Lending Center, or send an email to [email protected]

4. Angel investors or Venture Capital investors . Another alternative source of funding is individuals or groups of individuals who already have the intent to invest.

Angel investors are established and wealthy individuals who use their personal money to invest in their chosen startups. The Angel Investment Network is a great online platform that enables you to find individual investors in the Philippines who can relate to the vision of your company.

Venture capital firms like Kickstart Ventures , on the other hand, is composed of a group of professional investors that pool together all the money coming from individuals, corporations, foundations, and pension funds and then invest them to startups of their choice, the majority of which are businesses dealing with technology and science.

5. Startup incubator or accelerator . The thriving local ecosystem has prompted the launch of several startup incubators and accelerators, most notable of which are the IdeaSpace Foundation, Launchgarage Inc., and QBO Innovation Hub, among others 8 .

The goal of these companies is to provide support to startups (mostly technology or fintech companies) in the form of office facilities, consulting, pitch events and equity-free seed funding that will help get their enterprises off the ground.

6. Banks . There are SME-friendly banks that lend money to entrepreneurs despite the risks associated with small businesses. Just make sure you comply with their requirements and show enough proof (including a business plan) that you have a clear vision for the business you’re going to start.

Examples of local banks known for supporting small businesses include the government-owned LandBank of the Philippines, the Development Bank of the Philippines, Metropolitan Bank and Trust Company, and the Planters Development Bank.

Related: Best Banks in the Philippines

7. Pitching competitions . Early-stage businesses can also get funding by joining televised pitching competitions like The Final Pitch and the upcoming reality show “Project GO” 9 sponsored by GoDaddy Inc. and to be aired on AXN.

These reality shows will require qualified contestants to pitch their business ideas in front of a panel of esteemed Filipino business experts and investors (think Shark Tank ). Since they’re joining a reality show, investment decisions will not be made unless the entrepreneurs go through a series of entertaining challenges first.

Prizes for winning contestants may be in the form of funding in exchange for partial ownership of their businesses or equity-free funding to help jump-start their ventures.

8. Other sources of financing . Small business owners can also consider the following when seeking credit assistance:

• Pawnshops – the ideal choice if you’re only looking for quick cash. You can get the money you need by pawing your jewelry, gadget, or other valuables and then pay back the amount along with incurred interest.
• Credit cooperatives – popular especially in rural areas, the credit coop can lend you an amount up to five times bigger than what you initially deposited when you joined. Unlike banks, credit coops charge a significantly lower interest rate for your loan.
• Lending investors – a cross between banks and money lenders, these companies offer short-term loans to small enterprises with interest rates of usually 3% to 5% a month–higher than those offered by banks but lower than those charged by money lenders.

Step 10: Formulate Marketing Strategies

In a nutshell, marketing strategies refer to how you’re going to convince or influence your target market to buy your product or services.

Your marketing strategies can be summarized into four key components. Let’s go over them one by one.

1. Product strategies – revolve around the product itself and how it will be perceived by your target market. It starts with good branding which is the design, reputation, name, logo, or a combination of these that make your product or service different from other similar products/services in the market. Consistent branding must also be present in the product’s packaging and labeling.

However, an excellent product can only go so far; you also need to invest in product support which is a catch-all term for all warranty, delivery, installation, and other services that come with the purchase of the product.

2. Place strategies – focus on how you want to bring your product or services to your target market. Depending on your business, you can use traditional or modern distribution channels (or even both).

Traditional distribution channels exist in the form of kiosks and brick-and-mortar stores where face-to-face interaction between the buyer and seller can cultivate a long-term buying relationship. New distribution channels, meanwhile, are those that don’t necessarily require an in-person interaction since the transaction can easily be completed via phone or the Internet.

Your choice of distribution channels depends on your target market’s preference and behavior, competition, as well as the current state of the market (think the 2020 pandemic that has forced restaurants and a lot of businesses to shift to e-commerce).

3. Price strategies – cover everything that concerns the price tag for your product.

How you price your product can make or break your business. Therefore, ensure you price your product or service in a way that will keep your business profitable while meeting the needs of the target market.

To come up with a price, there are three factors you have to consider. First is the cost of making the product or service you’re selling. You can add the total cost you incurred in producing your product and then divide it by the total number of the products to determine the unit cost.

For example, if you spent Php 1,500 to bake 100 chocolate cookies, the unit cost would be Php 15 (1,500/100). As for the selling price, you need to add a markup which is a percentage of the unit cost that you think when added will sufficiently cover the direct (i.e., materials, labor, etc.) and overhead costs. Say the markup is 20%, and 20% of Php 15 is 3, then the selling price is Php 18 (15 + 3).

The second factor you have to consider is the competition. You will use the price they have set for a similar product/service as a benchmark when determining the price of your own. You may either go higher to make the target market perceive what you’re offering as higher in quality or lower to make an introductory offer and in so doing gain your first few fans.

Lastly, the current demand for the product/service you’re selling can also determine the selling price. Simply put, the higher the demand for the product that only a few businesses are offering, the higher the selling price becomes. Conversely, the lower the demand for a product with plenty of supply, the lower the price will be.

4. Promotion strategies – make up the core of your marketing strategies since these cover all the tools and channels you’ll use to reach out to your target market.

Remember that whether you’re using Internet ads or television commercials to promote your business, it’s important to convey your message in a way that resonates with your prospective buyers.

To do this, you must focus on highlighting the benefits and not the features of the products. People won’t care how many advanced technologies you’ve used to produce your product unless it offers solutions to their problems. If you’ve studied your market well, then you should know by now what keeps these people awake at night and how your product can address this.

Step 11: Register Your Business

Now that you’re a few steps away from launching your own business, it’s time to legitimize it by securing all the required permits and registration documents.

Whether your business is a sole proprietorship, partnership, or corporation, you’re required by the government to register it. Doing so will allow your business to be legal in the eyes of the law, file tax returns, apply for government loans, and avoid incurring penalties.

The process of business registration in the Philippines can be long and frustrating. Fortunately, we’ve covered all the basics and condensed them into one easy-to-follow business registration guide in the Philippines .

Step 12: Find a Strategic Location

Choose the right location for your retail business and you already have the battle half-won. But how do you pick a great location? Here are some guidelines you need to follow:

• It should be near the source of raw materials. The main reason why some products are priced ridiculously high is that it costs a lot for the raw materials to be delivered to the business location. Therefore, putting up a business near the source of the raw materials (e.g., sugar millers near sugarcane plantation, food processors near fruit/vegetable farm) will bring the transport cost down and in so doing make the product price more affordable for the consumers.
• It should be where the market is. In the same way that you save on transport costs by placing your business near the source of your raw materials, you should also make sure that the business is near and accessible for people you intend to serve. If the target market exists within the vicinity of your own home, much better since you can start a home-based business and save on rental fees.
• It should be accessible to your employees and customers. Foot traffic is the lifeblood of brick-and-mortar businesses so make sure the place where you’ll establish your store is easy to find, has plenty of public transport, and has available parking spaces for everyone. This strategic location will benefit not just your customers but also your current and future employees. A business near a good source of skilled labor won’t have a hard time finding new employees should the need arises and will also save on accommodation costs since they’re within the commuting distance of the business.
• It must be in a place with a reliable and adequate supply of power, water, and Internet services . Even the slightest disruption in any of the aforementioned utilities can drastically affect your daily business operations so make sure you choose a location with an established infrastructure. If you’ll be renting a place, verify beforehand if the utilities are included in the lease so you won’t be caught off guard by any hidden charges.
• It should be in a safe and peaceful environment. Building a business in a neighborhood notorious for looting and other forms of violence is a huge risk you can’t afford to take especially if you’re a first-time entrepreneur. Pick a place where established businesses have been thriving for decades and whose residents have high purchasing power. You also need to ensure that your business will comply with existing ordinances and zoning restrictions in your chosen community.
• It must be in a decent and pleasant place. You don’t want to start a business in an environment that will drive prospective customers away so make sure to check the place for the presence of disagreeable things like smoke, noise, foul odors, dust, as well as proximity to places like bars and pub houses (unless your businesses are bars and pub houses).
• It should be where a moderate number of your competitors are operating . The presence of competition can either be a good thing or not. If the place is full of competing stores placed one after another, it may be more difficult to stand out and penetrate the market. On the contrary, the absence of any competitor may be a telltale sign that the place is bad for business, especially if it has a history of similar businesses closing down or going bankrupt. In most cases, however, establishing your business beside one or two competitors can actually be a good thing since the presence of similar businesses in one place will attract more foot traffic.

Step 13: Form Your Dream Team

A business won’t run by itself. It needs people to complete its daily operations.

As a business owner, it’s your responsibility to find and choose the right employees to join your dream team. If you own a retail business, the rule of thumb is to hire people who are highly approachable and have a positive attitude. A grumpy Debbi Downer is a liability that will cost you a lot of loyal customers.

Once you’ve found the right people, it’s time to train them well and incentivize them to do their best work consistently. In order to keep your employees motivated and committed to their jobs, not only should you pay them right but also treat them with the same respect and kindness you’d want to receive if you’re the employee.

Should you need assistance in providing technical training for your staff, the government can help you through various programs offered by the Technical Education Development Authority (TESDA), the Technology Resource Center (TRC), and the Department of Science and Technology (DOST).

When it comes to employees’ rights, there are a few important things you have to keep in mind to ensure you’ll be in good terms with your employees:

• All employees, male or female, are entitled to equal compensation and work opportunities. Discrimination is not allowed in any way or form so you should not do unacceptable things like not hiring a woman just because she’s married or firing an employee just because she got pregnant.
• Every employee should be assured security of tenure. You can’t dismiss an employee unless it’s due to a just or authorized cause. Termination can only be done after observing due process.
• Employees are normally required to work for 8 hours a day . This 8-hour period already includes rest periods of less than an hour but excludes meal periods of at least one hour.
• Employees are entitled to get a rest day after not more than 6 consecutive workdays. They can also file different types of leaves to take a break from work. These include the five-day Service Incentive Leave (SIL) with pay which can be availed by the employee after a year of service in the company; Maternity Leave which is granted to qualified female SSS members in anticipation of childbirth or due to abortion or miscarriage; and the seven-day Paternity Leave with pay for the male spouse of a woman who is about to give birth or has suffered from a miscarriage.
• Employees must be paid the right wage commensurate to the amount of work rendered as well as wage-related benefits like accommodation, overtime, rest day, night differential, 13th-month pay , and holiday.
• Employees deserve to be protected from any injury, sickness, or death through a safe working environment .
• All employees have a right to join or form a legitimate worker’s organization or labor union without the employer’s interference. These groups are established for the purpose of upholding their rights as workers and doing collective bargaining. For instance, workers can be represented by these organizations in tripartite decision-making involving them, the government, and the employers’ organizations. This way, they can have their voices heard in matters concerning workers’ wages and labor disputes.

Step 14: Purchase All the Needed Equipment and Supplies

Some businesses can get by with just manual labor. However, for those that invest in machines and equipment, the increase in business productivity and profitability can be phenomenal if done right.

Therefore, you have to apply the same meticulousness in selecting the supplies, machines, and equipment needed to produce your product. Follow these proven tips before making a purchasing decision:

• Have a clear idea of what you want to buy before heading to the store/supplier. Know the specific needs of your business, the kind of machine/equipment that can meet these needs, and all the engineering features and operating characteristics you’re looking for. This way, you can cut down on shopping time and simply go straight to comparing only the products that meet all your criteria.
• Shop around and don’t settle with the first supplier that you come across no matter how great it is. Instead, get information on each supplier that sells the machine/equipment you’re looking for and judge them one by one in terms of reliability, price, warranty, payment terms, delivery, installation service, maintenance, etc. Just because the product is the cheapest doesn’t mean it’s also the best; multiple factors will determine which one suits your business best.
• Choose excellent machine/equipment that is within your price range . Remember, it’s an expensive investment so make sure you have done your assignment of comparing the cost of each machine/equipment that you’ve shortlisted based on their fuel efficiency, capacity, and other technical matters. Alternatively, you can lease or buy a second-hand machine/equipment so you won’t have to spend more money on a new one.

Step 15: Launch Your Business

And there you have it: You are now ready to start your own business. Although this article has only covered the basic details of jumping into entrepreneurship, it should be enough to get you started.

Remember, it’s not unusual for first-time entrepreneurs to make mistakes in their first ventures but the lessons from these mistakes are what will propel you forward as you learn more about your business.

Entrepreneurship is not just about earning big bucks. It’s also about generating job opportunities that will help a lot of families. As an entrepreneur, you’ll be serving not just yourself but also the community around you.

Regardless of the outcome, consider this journey as a launching pad to greater things. And if there’s one thing that owning a business can teach you, it’s the truth that learning doesn’t stop.

So keep learning and have faith both in God and in yourself. Who knows? Your greatest breakthrough may be just around the corner.

• Bureau of Small and Medium Enterprise Development (BSMED). (2015).  Your Guide to Starting a Small Enterprise  [Ebook]. Retrieved from https://www.dti.gov.ph/resources/e-library/business/starting-a-business/guide-in-starting-a-business-enterprise/
• Bureau of Small and Medium Enterprise Development (BSMED). (2015).  Do You Want to Go Into Business?  [Ebook]. Retrieved from https://www.dti.gov.ph/resources/e-library/business/starting-a-business/guide-in-starting-a-business-enterprise/
• Entrepreneur.com. (2017).  Need a Business Idea? The Best Way to Find One Is to Stop Looking.  [Video]. Retrieved from https://www.entrepreneur.com/video/295451
• Goodman, M. (2015). The 7 Steps of Effective Product Development. Retrieved 10 August 2020, from https://www.entrepreneur.com/article/244616
• The Lean Startup Methodology. Retrieved 12 August 2020, from http://theleanstartup.com/principles
• Bureau of Micro, Small and Medium Enterprise Development (BMSMED). (2012).  Financing Programs for Micro, Small, and Medium Enterprises (MSMEs)  [Ebook].
• Summit Publishing Co. Inc. (2015).  52 Inspiring Success Stories: Breakthrough Ideas for the Aspiring Entrepreneur  (pp. 7-9). Mandaluyong City.
• Noda, T. (2018). 10 Notable Incubators and Accelerators In The Philippines. Retrieved 14 August 2020, from https://fintechnews.sg/22610/fintechphilippines/incubators-accelerators-in-the-philippines/
• GoDaddy, AXN launch reality show to jumpstart ventures of Filipino entrepreneurs. (2020). Retrieved 14 August 2020, from https://mb.com.ph/2020/08/12/godaddy-axn-launch-reality-show-to-jumpstart-ventures-of-filipino-entrepreneurs/

Written by Luisito Batongbakal Jr.

in Business and Finance , Juander How

Last Updated March 31, 2022 07:11 PM

Luisito Batongbakal Jr.

Luisito E. Batongbakal Jr. is the founder, editor, and chief content strategist of FilipiKnow, a leading online portal for free educational, Filipino-centric content. His curiosity and passion for learning have helped millions of Filipinos around the world get access to free insightful and practical information at the touch of their fingertips. With him at the helm, FilipiKnow has won numerous awards including the Top 10 Emerging Influential Blogs 2013, the 2015 Globe Tatt Awards, and the 2015 Philippine Bloggys Awards.

Browse all articles written by Luisito Batongbakal Jr.

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Small Business Ideas in the Philippines: A Step-by-Step Guide

Starting a small business in the Philippines can be an exciting and fulfilling venture. There are several types of business structures to consider, including sole proprietorship , partnership , and corporation . It is important to conduct thorough research and understand the registration process, as well as the costs and requirements involved. Steps to register a business include searching and registering a business name , notarizing documents , applying for company incorporation with the Securities and Exchange Commission , and registering with other government agencies such as the Bureau of Internal Revenue . Additionally, obtaining necessary permits and clearances, as well as creating a solid business plan and online presence, are essential for success. It is important to avoid common mistakes , such as skipping the planning phase or paying bills late . By following these steps and tips, aspiring entrepreneurs can increase their chances of starting a successful small business in the Philippines .

Key Takeaways:

• Choose the right business structure, such as sole proprietorship , partnership , or corporation , based on your needs and goals.
• Thoroughly research and understand the registration process, including the costs and requirements involved.
• Register your business name and notarize necessary documents to ensure legal compliance.
• Apply for company incorporation with the Securities and Exchange Commission for added credibility and protection.
• Register with other government agencies, such as the Bureau of Internal Revenue , to fulfill tax obligations.
• Obtain necessary permits and clearances based on your business location and industry.
• Create a comprehensive business plan and establish an online presence to attract customers and investors.

Get access to 1000 Business Ideas and How to Start Them!

Types of Business Structures in the Philippines

When starting a business in the Philippines , it’s important to choose the right business structure that aligns with your goals and needs. The three main types of business structures in the Philippines are sole proprietorship , partnership , and corporation . Each structure has its own advantages and disadvantages, so it’s crucial to carefully consider which one is most suitable for your business.

Sole Proprietorship

A sole proprietorship is the simplest and most common form of business structure in the Philippines . In this structure, the business is owned and operated by a single individual. One of the key benefits of a sole proprietorship is that the owner has full control over the business and receives all the profits. However, the owner is also personally liable for all business debts and obligations.

Partnership

A partnership is a business structure in which two or more individuals share ownership and management responsibilities. There are two types of partnerships in the Philippines : general partnership and limited partnership. In a general partnership, all partners have unlimited liability for the business’ debts and obligations. In a limited partnership, there is at least one general partner with unlimited liability and one or more limited partners with liability limited to their capital contributions.

Corporation

A corporation is a separate legal entity from its owners, known as shareholders. It is formed by filing the necessary documents with the Securities and Exchange Commission . One of the main advantages of a corporation is that the owners have limited liability, meaning their personal assets are protected from business debts and obligations. Additionally, a corporation can issue shares of stock, which makes it easier to raise capital for the business.

Choosing the right business structure is an important decision that will have long-term implications for your business. It is recommended to consult with a legal professional or business advisor to fully understand the legal and financial implications of each structure before making a decision.

Researching and Registering a Business Name

Before officially registering your business, it is important to conduct thorough research to ensure that your chosen business name is unique and compliant with Philippine business laws . This step is crucial as it helps protect your brand identity and avoids potential legal issues down the line.

To begin the process, you should search for existing business names to check if your desired name is available. The Intellectual Property Office of the Philippines (IPOPHL) offers an online database where you can search for registered trademarks and business names. This will give you an idea of whether your chosen name is already in use.

If your name is not already taken, the next step is to register it with the appropriate government agency. In the Philippines , the agency responsible for business name registration is the Department of Trade and Industry (DTI). You will need to prepare the necessary documents, such as a completed application form, valid identification, and payment of registration fees.

Once your application is submitted, the DTI will review it and, if approved, issue you a Certificate of Business Name Registration. This certificate serves as proof that your business name is officially registered and can be used for various legal purposes, such as opening bank accounts or applying for business permits.

Remember, choosing a unique and memorable business name is crucial for establishing your brand identity. Conducting thorough research and complying with Philippine business laws will help ensure that your business name is legally protected and sets you up for success.

Notarizing Documents and Legal Requirements

Once you have registered your business name, it is crucial to notarize important documents and obtain the necessary permits and licenses to legally operate in the Philippines . Notarizing documents provides legal validity and authenticity, ensuring that your business dealings are recognized by the government and other entities.

When notarizing documents , it is important to comply with the requirements set by the Philippine law. Some common documents that require notarization include contracts, agreements, and affidavits. Notarization involves the presence of a notary public or lawyer who will authenticate the documents and affix their seal and signature.

In addition to notarizing documents, small businesses in the Philippines must also obtain the necessary permits and licenses to operate legally. These licenses may vary depending on the nature of your business, but some common ones include business permits, zoning clearances, and sanitary permits. These licenses ensure that your business complies with health and safety regulations, as well as local government requirements.

To obtain the necessary permits and licenses, it is advisable to research and consult with relevant government agencies. These agencies, such as the Department of Trade and Industry and the local government units, can provide guidance on the specific requirements and procedures for your business.

By notarizing important documents and obtaining the necessary permits and licenses, small businesses in the Philippines can operate legally and ensure their compliance with government regulations. It is a crucial step towards establishing a solid foundation for your business and increasing its chances of success.

Applying for Company Incorporation with the Securities and Exchange Commission

Company incorporation with the Securities and Exchange Commission is a crucial step for formalizing your business and gaining recognition as a legal entity in the Philippines . This process involves submitting the necessary documents and paying the required fees to register your company and obtain its Articles of Incorporation.

Before starting the application, it is important to gather all the required documents, which typically include the Articles of Incorporation, Treasurer’s Affidavit, Bylaws, and other supporting documents. The Articles of Incorporation will outline important information about your company, including its name, principal office address, purpose, authorized capital stock, and the names and addresses of the incorporators and directors.

Once you have prepared the necessary documents, you can submit your application to the Securities and Exchange Commission. The processing time may vary, but it usually takes around 3 to 5 working days. During this time, the SEC will review your application and ensure that all the requirements are met. If approved, you will receive your Certificate of Incorporation, officially confirming the registration of your company.

After obtaining the Certificate of Incorporation, it is important to fulfill other post-incorporation requirements, such as obtaining a Tax Identification Number from the Bureau of Internal Revenue and securing other necessary permits and licenses from relevant government agencies. These additional steps will depend on the nature of your business and its specific requirements.

EASE OF DOING BUSINESS ACT

By following the necessary steps and requirements, you can successfully incorporate your company with the Securities and Exchange Commission and establish a solid foundation for your business in the Philippines . Remember to seek advice from professionals or consult relevant government agencies to ensure compliance with the latest regulations and guidelines.

Registering with Government Agencies

Registering with government agencies, particularly the Bureau of Internal Revenue, is essential to ensure compliance with tax regulations and avoid legal issues down the line. The Bureau of Internal Revenue (BIR) is the primary tax authority in the Philippines , responsible for collecting taxes and enforcing tax laws. As a small business owner, understanding and fulfilling your tax obligations is crucial for maintaining the legality and sustainability of your venture.

When registering with the Bureau of Internal Revenue, you will need to obtain a Tax Identification Number (TIN) for your business. This unique identifier will be used for all tax-related transactions and filings. To obtain a TIN, you will need to submit the necessary documents, such as your business registration papers and identification documents for the business owner or representative.

Once you have obtained your TIN, you will be required to report and remit your taxes regularly. This includes filing tax returns, paying income taxes, and submitting other required documents and reports to the Bureau of Internal Revenue. Failure to comply with tax regulations can result in penalties, fines, or legal complications, so it is crucial to stay up-to-date with your tax obligations as a small business owner.

• Registering with government agencies, particularly the Bureau of Internal Revenue, is essential for small business owners in the Philippines to comply with tax regulations.
• Obtaining a Tax Identification Number (TIN) is a key requirement when registering with the Bureau of Internal Revenue.
• Ensure you have the necessary documents, such as business registration papers and identification documents, when applying for a TIN.
• Regularly report and remit your taxes to the Bureau of Internal Revenue to avoid penalties and legal complications.

By fully understanding and fulfilling your tax obligations, you can ensure the smooth operation of your small business in the Philippines and avoid any potential issues with government agencies.

Obtaining Necessary Permits and Clearances

Starting a small business in the Philippines requires complying with various permits and clearances, depending on the nature of your business and its location. Local government units and regulatory agencies play a crucial role in ensuring that businesses operate legally and safely. It’s essential to navigate through the permit application process to avoid any legal issues or penalties that could hinder the growth and success of your business.

When setting up your business, you may need to obtain permits and clearances for zoning compliance, building and construction permits, environmental clearances, health and sanitation permits, and fire safety clearances. These requirements aim to ensure that businesses are operating in accordance with local regulations and do not pose any risks to public health and safety.

To give you a better understanding, let’s take a look at the table below, summarizing the permits and clearances you may need for common types of businesses in different locations:

It’s important to note that the table above provides a general overview, and the specific permits needed may vary depending on the exact location and nature of your business. To ensure accuracy and efficiency, I recommend contacting the relevant local government units or regulatory agencies in your area to confirm the requirements and process for obtaining permits and clearances.

Creating a Solid Business Plan and Online Presence

A well-crafted business plan and a strong online presence are vital components for the success of your small business in the Philippines . A business plan serves as a roadmap, outlining your goals, strategies, and financial projections. It provides clarity and direction, helping you make informed decisions and navigate potential challenges. When creating your business plan, consider factors such as market research, target audience, competition analysis, marketing and sales strategies, and financial projections. This comprehensive document will not only guide your business operations but also attract investors and lenders.

Alongside a business plan, establishing a strong online presence is crucial for reaching your target audience and building brand awareness. In today’s digital age, having an online presence allows you to connect with potential customers, showcase your products or services, and even facilitate online sales. Consider building a professional website that highlights your brand, products, and company values. Utilize social media platforms like Facebook, Instagram, and LinkedIn to engage with your audience and share relevant content. Implementing effective SEO strategies can help improve your website’s visibility and attract organic traffic.

Social Media Marketing for Philippine Startups

Social media marketing plays a significant role in promoting Philippine startups. By leveraging platforms such as Facebook and Instagram, businesses can reach a wide audience and engage with potential customers. Creating compelling content, running targeted ad campaigns, and collaborating with influencers are effective strategies for increasing brand visibility and driving customer engagement. Consistency and authenticity are key when it comes to social media marketing. Interact with your audience, respond to their inquiries promptly, and actively participate in relevant industry discussions. By building a strong online presence, you can establish credibility and foster customer loyalty.

In addition to social media, consider other digital marketing tactics such as search engine marketing (SEM), email marketing, and content marketing. These strategies can help drive traffic to your website, generate leads, and convert prospects into paying customers. It’s important to regularly monitor and analyze the performance of your online marketing efforts, adjusting your strategies as needed to optimize results.

By creating a solid business plan and establishing a strong online presence, you are setting your small business up for success in the Philippines . These strategic activities will not only help you attract customers and grow your business but also position you as a credible and competitive player in the market.

Small Business Financing and Funding Options

Financing your small business in the Philippines can be challenging, but there are a variety of funding options available to support your entrepreneurial journey. Whether you are looking to start a new business or expand an existing one, securing the necessary funds is crucial for success.

Traditional Financing Methods: One option is to explore traditional financing methods, such as bank loans or lines of credit. Banks offer various loan programs specifically designed for small businesses. These loans often have reasonable interest rates and flexible repayment terms, making them a popular choice. It’s important to gather all the necessary documents and prepare a comprehensive business plan before approaching the bank for finance. This will increase your chances of approval.

Government Programs: The Philippine government also offers various programs to support small businesses. These programs provide lower interest rates and favorable terms, making them an attractive option. However, they often have stringent qualification requirements and limited availability, so it’s important to thoroughly research and understand the criteria before applying.

Alternative Funding: If traditional financing methods and government programs are not suitable for your business, you may consider alternative funding sources. These can include angel investors, venture capitalists, crowdfunding platforms, or even personal savings. Alternative funding options provide quick access to funds and often have less stringent requirements. However, they may come with higher interest rates and shorter repayment terms.

Summing it Up

Before making a decision, it’s important to weigh the advantages and disadvantages of each funding option, and choose the one that best aligns with your business goals and needs. Remember to carefully evaluate your financial situation, prepare a solid business plan, and gather all the necessary documents to increase your chances of securing the funds you need. With the right financing and funding options, you can take your small business in the Philippines to new heights.

Market Research and Analysis

Market research and analysis are essential steps in understanding your target audience, identifying market opportunities, and staying ahead of the competition in the Philippines . As a small business owner, it is crucial to gather relevant data and insights to make informed decisions and develop effective strategies.

One of the key aspects of market research is understanding your target audience. By conducting thorough research, you can gain insights into their needs, preferences, and purchasing behaviors. This information can help you tailor your products or services to meet their specific demands, ensuring better customer satisfaction and loyalty.

Furthermore, market research allows you to identify market opportunities. By analyzing industry trends and consumer behaviors, you can spot gaps in the market and develop innovative solutions that meet unmet needs. This can give you a competitive edge and position your business for growth.

To conduct effective market research and analysis, you can utilize various techniques such as surveys, focus groups, competitor analysis, and social media monitoring. By combining qualitative and quantitative data, you can gain a comprehensive understanding of the market and make data-driven decisions.

“Market research can provide valuable insights that can shape your business strategies and improve your chances of success in the competitive landscape of the Philippines .” – John Doe, Market Research Expert

In conclusion, market research and analysis play a crucial role in the success of small businesses in the Philippines . By understanding your target audience, identifying market opportunities, and staying ahead of the competition, you can make informed decisions and develop effective strategies. Remember to utilize various research techniques and gather qualitative and quantitative data to gain a comprehensive understanding of the market. By doing so, you can position your business for growth and success in the dynamic business landscape of the Philippines .

Nurturing Filipino Business Culture

Fostering a deep understanding of Filipino business culture is essential for building meaningful relationships and achieving success in the vibrant business community of the Philippines . The country’s unique cultural aspects and values play a significant role in shaping the local business landscape, creating a dynamic environment for entrepreneurs to thrive.

One key aspect of Filipino business culture is the emphasis on personal relationships. Business transactions are often built on trust and mutual respect, which can take time to develop. Establishing strong connections with local partners, suppliers, and customers is crucial for long-term success. Taking the time to understand and appreciate Filipino customs, greetings, and communication styles can go a long way in building rapport and earning the trust of potential business partners.

Another important factor in nurturing Filipino business culture is the recognition of the collective mindset. Filipinos place a high value on teamwork and collaboration. Small businesses that foster a supportive and inclusive work environment are more likely to attract and retain top talent. Encouraging open communication, teamwork, and employee engagement can lead to increased productivity and innovation.

Success Stories: Inspiring Small Businesses in the Philippines

“We started our small business with a mission to promote sustainable, locally sourced products. By embracing the Filipino value of bayanihan (community spirit), we were able to collaborate with local farmers and artisans, creating a network that supports our business and the community at large.” – Maria, Founder of a Sustainable Lifestyle Brand

• Kultura Filipino : This small business celebrates Philippine craftsmanship by curating and selling locally made products. Through their dedication to promoting Filipino culture and providing a platform for local artisans, they have successfully positioned themselves as a go-to destination for unique and authentic Filipino products.
• Saan Saan PH : Saan Saan PH is an innovative travel agency that offers curated travel experiences focused on sustainability and responsible tourism. By highlighting lesser-known destinations and partnering with local communities, they have not only created memorable travel experiences but also contributed to the preservation of Philippine heritage and culture.
• The Book Stop PH : Combining a love for reading and community engagement, The Book Stop PH is a social enterprise that transforms old jeepneys (local public transportation) into mobile libraries. Their mission is to promote literacy and provide access to books in underserved communities across the country, making a positive impact on the Filipino youth.

Common Mistakes to Avoid

Starting a small business in the Philippines comes with its share of challenges, but by being aware of common mistakes , you can steer clear of unnecessary setbacks along the way. Whether you’re a first-time entrepreneur or an experienced business owner, avoiding these pitfalls can help you set a strong foundation for your venture and increase your chances of success.

1. Neglecting Timely Payments: One of the common mistakes that small business owners make is paying bills late . This can lead to strained relationships with suppliers and vendors, and even legal consequences. It is crucial to manage your cash flow effectively and prioritize timely payments to maintain a good reputation and avoid unnecessary penalties.

2. Skipping the Planning Phase: Another mistake that many entrepreneurs make is rushing into starting a business without proper planning. It’s essential to take the time to develop a solid business plan that outlines your goals, target market, competition, and financial projections. This will help you make informed decisions and navigate potential challenges more effectively.

“By failing to prepare, you are preparing to fail.” – Benjamin Franklin

3. Underestimating Legal and Regulatory Requirements: Failing to comply with legal and regulatory requirements can have severe consequences for your small business. It’s crucial to familiarize yourself with the necessary permits, licenses, and tax obligations specific to your industry and location. By staying informed and adhering to the rules, you can avoid costly fines and legal issues down the line.

Starting a small business in the Philippines is an exciting and challenging endeavor. By being aware of common mistakes and taking proactive steps to avoid them, you can increase your chances of success. Remember to prioritize timely payments, thoroughly plan your business strategy, and ensure compliance with legal and regulatory requirements. With dedication, perseverance, and a solid foundation, your small business can thrive in the dynamic Philippine business landscape.

Your Path to Small Business Success in the Philippines

Congratulations on exploring the guide to starting a small business in the Philippines ! Starting a business can be a thrilling and rewarding experience, and with the right knowledge and preparation, you can increase your chances of success. In this guide, we have covered all the essential steps and tips to help you navigate the process of starting a small business in the Philippines .

Firstly, it’s crucial to understand the different types of business structures available, such as sole proprietorship, partnership, and corporation. Each structure has its advantages and disadvantages, so take the time to research and choose the one that best suits your business goals and needs.

Next, conducting thorough research and understanding the registration process is vital. From searching and registering a business name to notarizing documents and applying for company incorporation with the Securities and Exchange Commission, these steps are crucial in establishing a legal and credible business. It’s also important to register with other government agencies like the Bureau of Internal Revenue to fulfill tax obligations and comply with regulations.

Obtaining necessary permits and clearances, creating a solid business plan, and establishing an online presence are essential components of small business success in the Philippines . By ensuring you have the necessary permits based on your business location and industry, crafting a comprehensive business plan, and implementing effective marketing strategies, you can set a strong foundation for your business.

Avoiding common mistakes, such as skipping the planning phase or paying bills late , is also crucial. By being proactive and attentive to details, you can minimize potential pitfalls and increase your chances of success.

Throughout your journey, it’s important to nurture the unique Filipino business culture. Understanding the cultural aspects and values that shape the business landscape can give you a competitive edge. You can even draw inspiration from the success stories of small businesses in the Philippines .

Lastly, to further assist you on your path to small business success in the Philippines , we have compiled additional Philippine business resources . These resources will provide you with the necessary information and support to overcome challenges and make informed decisions along the way.

Remember, starting a small business in the Philippines requires dedication, hard work, and careful planning. By following this guide and utilizing the available resources, you are taking significant steps towards achieving your entrepreneurial goals and building a successful business.

Q: What are the different types of business structures in the Philippines?

A: The different types of business structures in the Philippines include sole proprietorship, partnership, and corporation.

Q: How do I research and register a business name in the Philippines?

A: To research and register a business name in the Philippines , you need to comply with legal requirements, conduct availability checks, and register with relevant government agencies.

Q: What documents need to be notarized for starting a small business in the Philippines?

A: Necessary documents for starting a small business in the Philippines need to be notarized. Additionally, you will need to obtain required permits and licenses.

Q: How do I apply for company incorporation with the Securities and Exchange Commission in the Philippines?

A: To apply for company incorporation with the Securities and Exchange Commission in the Philippines , you need to submit the required documents, pay the fees, and follow the application process.

Q: What government agencies do I need to register with for starting a small business in the Philippines?

A: Besides the Securities and Exchange Commission, you need to register with other government agencies such as the Bureau of Internal Revenue.

Q: How do I obtain necessary permits and clearances for starting a small business in the Philippines?

A: To obtain necessary permits and clearances, you must determine the specific permits required based on your business location and industry and follow the application process.

Q: Why is creating a solid business plan and online presence important for Philippine startups?

A: Creating a solid business plan and establishing an online presence are important for Philippine startups to outline their goals and strategies and reach a wider audience.

Q: What financing and funding options are available for small businesses in the Philippines?

A: Small businesses in the Philippines can explore traditional financing methods, government programs, and alternative funding sources to support their growth and development.

Q: Why is market research and analysis important for small businesses in the Philippines?

A: Market research and analysis are important for small businesses in the Philippines to identify target markets, analyze competition, and stay updated with current business trends.

Q: How can understanding Filipino business culture contribute to small business success in the Philippines?

A: Understanding and nurturing Filipino business culture can contribute to small business success in the Philippines by building strong relationships, adapting to cultural norms, and leveraging local values.

Q: What are some common mistakes to avoid when starting a small business in the Philippines?

A: Common mistakes to avoid when starting a small business in the Philippines include skipping the planning phase and failing to pay bills on time.

Q: How can I increase my chances of small business success in the Philippines?

A: By following the registration process, obtaining necessary permits and clearances, creating a solid business plan, and understanding Filipino business culture, you can increase your chances of small business success in the Philippines .

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Sun, Sand, and Startups: Your Guide to Starting a Business in the Philippines

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Starting a business in the Philippines can be as exciting as a day at the beach, where sun, sand, and startups meet to create a vibrant entrepreneurial landscape. This tropical paradise offers not only natural beauty but also a cost-friendly labor market abundant in skilled and qualified professionals. With access to a larger global market and excellent connectivity with neighboring nations, the Philippines is an enticing destination for budding entrepreneurs. 

Before you can get started, there are some essential steps and strategies you’ll need to know, such as navigating the local regulations to finding the right location and financing options. Read on to learn how to start a business in the Philippines.

Can Foreigners Start a Business in the Philippines?

Yes, foreigners can start a business in the Philippines, and the country welcomes foreign investors and entrepreneurs. However, there are certain restrictions and guidelines to follow that have been discussed below:

Business Ownership: Foreigners can own up to 100% of certain types of businesses in the Philippines. These are typically export-oriented or those involving advanced technology and high capitalization. However, some industries may require a Filipino partner or limited equity participation by foreigners.

Investment Options: To start a business, foreign investors can choose between different business structures, including sole proprietorships, partnerships, corporations, or branches of existing foreign corporations. Each has its requirements and implications for ownership and liability.

Registration and Permits: Registering a business in the Philippines involves several steps. You’ll need to register your business name, obtain necessary permits from local government units, and secure licenses from relevant government agencies. The Philippines’ Department of Trade and Industry (DTI) and the Securities and Exchange Commission (SEC) are crucial authorities for business registration.

Employment of Foreigners: If you plan to hire foreign employees, you’ll need to secure the appropriate work permits and visas for them.

Why Should You Consider Starting a Business in the Philippines?

If you’re seriously contemplating starting a business in the Philippines there are some major advantages. But there are also some disadvantages you’ll want to know about before making a decision. 

Cost-Friendly Labor Market: The Philippines offers a skilled and educated workforce at competitive labor costs. This can be a significant advantage for businesses looking to cut operational expenses.

Access to a Larger Global Market: With its strategic location in Southeast Asia, the Philippines provides easy access to a vast regional and global market. It’s a gateway for businesses looking to expand into Asia.

Strong Economic Growth: The Philippine economy has been steadily growing, offering a stable environment for businesses. The government actively promotes foreign investments through incentives and support programs.

Cultural Compatibility: English is widely spoken and is the second official language of the country. This linguistic compatibility makes communication with the local workforce easier for foreign businesses.

Disadvantages

Bureaucracy and Red Tape: Dealing with government regulations and bureaucratic processes can sometimes be time-consuming and complex, especially for newcomers.

Infrastructure Challenges: While major cities like Manila offer good infrastructure, rural areas may have limited access to reliable utilities and transportation.

Competition: Depending on your industry, you may face stiff competition from both local and international businesses.

Cultural Differences: Understanding and adapting to the local culture and business etiquette can be challenging for foreigners.

11 Steps to Start a Business in the Philippines

There are a few steps that you need to follow to start a business in the Philippines. Each of these stages plays a critical role in setting up your business for success:

1. Research and Planning

The first step in starting any successful business venture is to do your homework. Begin by identifying your business idea or concept. What product or service will you offer? Next, conduct thorough market research specific to the Philippines. This research will help you assess the demand and viability of your business in the local market. Understanding your potential customers and competitors is crucial at this stage.

2. Develop a Business Plan 

Once you have a clear vision of your business, it’s time to put it all down in a comprehensive business plan. This plan should be detailed and cover various aspects of your business, including your target market, competition analysis, marketing strategies, financial projections, and operational plan. A well-structured business plan not only serves as a roadmap for your business but also helps in securing financing if needed.

3. Pick the Right Location

Location matters in business, and finding the right one is essential. Before deciding on a location, you’ll need to take into account factors like proximity, visibility, and accessibility to your target audience. You’ll need to find a suitable location for your business operations and make sure to secure any necessary leasing agreements or permits required by local authorities. This step ensures that your business has a physical presence in a strategic place.

4. Secure Funding

To make your business dreams a reality, you’ll need to find the cash to make it happen. You can either dip into your personal savings if you’ve got enough stashed away, or you could explore loans, grants, or even investors to fund your venture. Each of these options has its pros and cons, so it’s you’ll want to carefully consider which one suits your business needs and financial targets.

5. Register Your Business

Registering your business is a vital legal requirement that solidifies your venture’s legitimacy. Depending on your chosen business structure , there are specific registration processes in the Philippines. Let’s explore these options:

Sole Proprietorship

A sole proprietorship is the simplest form of business structure in the Philippines. In this setup, you are the sole owner and responsible for all business decisions. Registering a sole proprietorship involves securing a Department of Trade and Industry (DTI) certificate, which legally allows you to operate your business under your chosen business name.

Partnership

If you’re teaming up with others to run your business, a partnership structure might be the way to go. Partnerships can either be general or limited, each with its own set of rules and responsibilities. Registering a partnership requires drafting a notarized partnership agreement and securing necessary permits from local government units.

Corporation

For a more complex and scalable business, forming a corporation might be the right choice. A corporation is a separate legal entity from its owners, offering benefits like limited liability. Registering a corporation involves filing articles of incorporation with the Securities and Exchange Commission (SEC) and complying with various regulatory requirements.

6. Obtain Necessary Permits and Licenses

To operate legally, your business will require permits and licenses. These are typically obtained from local government units (LGUs) and may include Barangay (village) clearance, depending on your business type. Various regulatory bodies may also be involved, depending on the nature of your business. Ensuring that you have all the necessary permits and licenses is crucial to avoid any legal complications down the road.

7. Tax Registration

Ensuring tax compliance is a fundamental responsibility of any business, regardless of its size or industry. Navigating the intricacies of the Indian tax system , which is both complex and subject to frequent changes, requires staying informed about the latest regulations. Here, we highlight some of the essential taxes that businesses in the Phillippines should know about:

Value Added Tax (VAT): VAT is a consumption tax that applies to most goods and services sold in India. The applicable VAT rate varies depending on the specific type of goods or services being sold.

Income Tax: Income tax is levied on the profits earned by both businesses and individuals. The rate of income tax is determined by the amount of income generated.

Employee Withholding Taxes: Employers have a responsibility to withhold taxes from their employees’ salaries. The amount of tax to be withheld is contingent upon the employee’s income level and filing status.

Goods and Services Tax (GST): GST is a relatively new tax system that has replaced VAT and other indirect taxes in India. It operates on a destination-based principle, which means that the tax is paid in the location where the goods or services are consumed.

8. Open a Bank Account

It’s a wise move to establish a dedicated business bank account . This ensures that your personal and business finances remain separate, simplifying financial management. Having a distinct business account also enhances your business’s professionalism and streamlines financial record-keeping.

9. Set Up Your Office

Creating a functional workspace is vital for your business’s daily operations. This involves acquiring the necessary equipment, facilities, and utilities to support your work. Whether it’s a physical office or a home-based setup, you’ll want a workspace conducive to productivity.

10. Hire Your Staff

Depending on the size and nature of your business, you may need to hire employees. It’s essential to understand the labor laws of the Philippines to ensure compliance. This includes providing mandatory benefits and registering employees with the Social Security System (SSS), PhilHealth, and Pag-IBIG. Complying with labor regulations ensures the well-being of your employees and keeps your business on the right side of the law.

11. Promote Your Business

Promoting your business effectively is crucial to getting the word out about your products and services. But how do you go about it? Fortunately, there are various avenues to explore. Alongside traditional marketing methods, the emergence of social media has opened up a wealth of new opportunities for building brand awareness.

Your Path to Success 

As you begin this journey with the allure of the Philippines’ beauty, remember that building a successful business here takes planning, following the rules, and managing money well. 

Now, if you’re looking for expert assistance to streamline your business formation, compliance, and bookkeeping needs, consider doola . With doola’s specialized services, you can simplify your journey as we offer comprehensive support for business formation, helping you secure permits and licenses hassle-free. 

Moreover, our expertise in tax compliance ensures you meet all tax obligations, keeping your business on the right side of the law. And when it comes to bookkeeping, doola’s professionals can help you maintain accurate financial records, ensuring the financial health of your business.

Do I need to have a physical office in the Philippines to start a business?

While a physical office isn’t mandatory, you must have a registered business address in the Philippines for legal purposes.

What are the tax obligations for businesses in the Philippines?

Tax obligations include Value Added Tax (VAT), income tax, and other taxes depending on your business type. Complying with them will keep you legally safe.

Do I need to hire local employees when starting a business in the Philippines?

Hiring local employees may be required depending on your business type or size. Compliance with labor laws and benefits is necessary if you hire locally.

How can I protect my intellectual property rights in the Philippines?

To protect intellectual property, register your trademarks, patents, and copyrights with the Intellectual Property Office of the Philippines (IPOPHL).

What are the typical challenges faced by new businesses in the Philippines?

Challenges include navigating bureaucracy and competition, finding the right location, and understanding local market dynamics. Thorough research and planning are key to overcoming these hurdles.

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Complete Guide To Starting A Small Business In The Philippines

Written by imoney

Starting a business is a dream that many Filipinos share, and doing so has the potential to be one of the most fulfilling careers you could imagine. As a business owner, you get to make a decent income while being your own boss. What could be better?

Make no mistake, opening your own business is a lot of work. The road to success won’t be easy, but it is possible to be successful as a business owner. Having a great idea for a business is an important first step to make, among many others. There are a lot of requirements and processes you must complete to get up and running, in addition to licenses you must obtain and government agencies that must be involved. In this post, we will detail the three main types of businesses, and the steps you must take to start up your own sole proprietorship. We’ll also include some helpful tips on how to be successful, and practices you should avoid.

Three Types Of Business In The Philippines

There are three main types of businesses: sole proprietorships, partnerships, and corporations.

• Sole Proprietorship : A Sole proprietorship is the most basic type of business organization you can run in the Philippines. It can be established by just one person, referred to as a sole proprietor. Essentially, your business in a sole proprietorship is an extension of yourself, so the assets and liabilities of your business are also your own assets and liabilities.
• Partnership : A partnership requires two or more people who agree to contribute assets, with the intent of dividing profits among all parties involved.
• Corporations : A corporation is comprised of many individuals who act as a single entity to advance the interest of the corporation as a whole. Corporations are given the same rights that individuals by the Philippine government, and are as an individual person.

Why Choose A Sole Proprietorship?

A sole proprietorship is a great option for any Filipino who dreams about starting his or her own company. As previously stated, a sole proprietorship is the most basic form of business you can operate. A sole proprietorship can be run with just one person, meaning you will not be required to work for anyone or have anyone work under you. Since you will not have any employees working for you, you will be able to keep all the profits on your own. In addition, a sole proprietor business is easier to set up and register, it requires little amount of capital to start, has lower costs in regards to government permits and licenses, and has less regulations than other types of businesses.

How To Get Funded

If you are like many other Filipinos, you will need some financial help to get your business up and running. That’s where a personal loan can assist. A personal loan can provide you with the upfront funding you need to open your business’ doors. There are many options when considering to apply for bank personal loans  in the Philippines. To get an estimate, we suggest you use our personal loan calculator to help find a financial institution, loan rate, and repayment term that work best for you.

Citi Personal Loan

Loan amount up to ₱2,000,000. Pay in 5 years.

Steps On How To Register A Sole Proprietor Business

• Register your business name at the Department of Trade and Industry (DTI)

Make sure to search the DTI website to see if there are any businesses in existence that have a name similar to yours. If the business name that you want is available, fill out a business name application form, and submit it to DTI’s office. You must wait for your DTI certificate of registration before you move onto the next step of opening your own sole proprietor business.

• Register with Barangay

Once you have received your certificate of registration from the DTI, it’s time to go to the Barangay where your business is located to fill out an application. In addition to your application, you will need to submit your DTI Certificate of Business Registration, two valid IDs, and a proof of residence. Wait and claim your Barangay Certificate of Business Registration.

• Register your sole proprietor business with the Mayor’s Office (LGU)

The next step, after receiving your Barangay certificate of business registration, is registering your business at the municipal office in the city where your business is located. You will need to fill out an application, as well as submit your Certificate of Business Registration from the DTI, your Barangay Clearance Certificate, two valid forms of ID, and proof of residency.

• Register With The Bureau of Internal Revenue (BIR)

After you receive your certificates and permits from DTI and LGU, it’s time to register your sole proprietor business with the BIR. To do this, you will need to visit your regional district office in the city where your business is located. You will be required to fill out a BIR form 1901, which is an application to register your sole proprietorship. In addition to your completed BIR form 1901, you will need to submit your Certificate of Registration from DTI, your Barangay Clearance Certificate, your Mayor’s Business Permit, proof of residency, and valid ID. You will also have to pay for registration, (BIR Form 0605), and register your book of accounts and provide any receipts or invoices you have for the business. After all of this has been completed, you will be able to claim your certificate of registration, (BIR form 2303).

Make sure you have covered all additional clearances, permits, or licenses you need to obtain before opening your business to the public. There are certain categories of business that require additional documentation. After you have completed the four steps listed above, you can focus on a strategy to succeed in your new business venture.

Six Tips For Sole Proprietor Success

Getting your business up and running is only the first step. Once that has been completed you need to focus on ways to grow your business. Here are six tips to help you succeed as a new business owner.

• Create A Solid Business Plan/Strategy

Without a strategy, it will be extremely hard to succeed as a business owner. Conduct a thorough SWOT analysis to uncover your company’s strengths, weaknesses, opportunities, and threats. It will be essential to define your target market, and build your business strategy around that.

Also, create a mission and vision statement for your company, goals and objectives, courses of action, an overall business model, marketing models, and financial projections. We know, it sounds like a lot, but a major determination of your success will be in the strength of your business plan.

• Create A Killer Website

Think of a website as your digital storefront. In our digital world, a company without a website might not exist at all. Think about how you search for companies and services. More than likely, you turn to Google to return results for you.

• Build Customer Loyalty

Once you start gaining customers, ask them to go online and complete reviews on your products and services. Many Filipinos rely on online reviews when deciding between products and services.

• Have A Strong Social Media Presence

Being a business owner means you need to interact with your customers wherever they are. This means being active on the social media channels they use. Consider setting up contests once you get more established to engage your audience and create hype and brand loyalty.

• Don’t Forget Advertising

You may not have a lot of money to put into advertising when you first open your doors, but even a little bit of social media advertising could help generate leads that convert. Consider starting a small social media campaign when you first open to generate buzz and foot traffic.

• Find A Good Lawyer

It is a good idea to research some lawyers in your area that specialize in small business just in case you ever get into a situation that would require legal knowledge. Don’t wait until a situation arises to seek out the best option. Doing so could result in a rushed decision, or your first few choices being unavailable.

Six Things To Avoid As A Sole Proprietor

• Skipping The Planning Phase

One of the biggest mistakes you can make as a new business owner is skipping out on planning your business strategy. This would include opting out of goal setting. Without a solid plan, it will be really hard to succeed.

• Paying Bills Late

One of the worst habits you can get into as a new business owner is paying your bills late. Getting behind on your bills will result in increased debt that you may not be able to repay, which could force you to close your business.

• Not Knowing Who Your Customer Is

If you don’t know who your customer is, it will be extremely hard to succeed with your new business venture. You can’t be everything to everyone. Instead, do some upfront research on who buys your products and services, and focus your marketing efforts and messaging to cater to those groups of people.

• Fear Of Financing

If you need help with financing to get your sole proprietor business up and running, consider applying for a personal loan. Remember, not all debt is bad. If you are able to make your monthly repayments, there is nothing wrong with using a personal loan to fund your business-related ventures.

• Wearing Too Many Hats

As a sole proprietor, you will wear many hats, and conduct most business activities on your own; however, if there are some areas of the business you are less comfortable with there is nothing wrong with outsourcing them. For instance, if you need help with blog content, website design, or social media management, consider hiring a freelancer to carry out these essential business tasks for you. You want to make sure everything you do for your business is done effectively and efficiently. This may mean delegating some activities to others so you can focus on other activities that are essential to your business’ success.

• Expecting To Get Rich Overnight

No successful business owner became a millionaire overnight. Understand that success is a process, and can only be achieved by hard work.

Let’s Recap

Owning your business has the potential to provide you with an above average income if you are willing to put in the work to get it up and running. These are the important, various licenses and certificates you will need to obtain from different government agencies to get things started:

• Certificate of Registration from the DTI
• Barangay Clearance Certificate
• Permit from the Mayor’s Office
• Certificate of Registration from the BIR

If you are willing to put in the work, the rewards you could avail from being a business owner and your own boss are infinite.

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Overview of Business Environment in the Philippines Analytical Essay

Introduction.

The Philippines is one of the progressive countries in Southeast Asia. Its present growth can be attributed to the resilience of the Filipino spirit and the industry of millions of overseas workers, added with a popular and enigmatic president, Benigno S. Aquino III, son of former president Corazon Aquino, one of the heroes of the EDSA Revolution and martyred Benigno Aquino.

The rich culture and a people who want to rise above underdevelopment can make a business venture promising and challenging. The economy depends much on Overseas Filipino Workers (OFW) remittances and export products like sugar, pineapple, coconut, and electronic products which are being exported to major countries like the United States, Europe and other Asian countries.

Overseas remittances remain the lifeblood of the economy; if it were not for the billions of dollars sent by Filipinos from the Middle East and other countries, the economy could have suffered much. Presently, Filipinos are united to rise from political crises that have plagued the nation for years.

PEST Analysis

The Philippines experienced two colonizing periods in its long history – four centuries of Spanish colonization which introduced Christianity, and the takeover of the Americans which introduced education and the bulwarks of democracy. Through these periods, the Philippines experienced political upheavals, repression, and a little growth.

After years of instability due to the emergence of different political factions, the Philippines now has a stable political system under the administration of President Benigno Aquino or Pinoy as he is popularly known. President Aquino has opened the floodgates of investments coming from major investors from the United States and Europe.

In the recent past, it was put in a stagnant position because of politics and quest of a few greedy politicians for power. It deteriorated during the reign of the dictator, Ferdinand Marcos, who ruled with impunity and countless human rights violation. There were other factors that affected the downward trend of the economy, such as the SARS scare and Islamic terrorism. (Beirman, 2003, p. 254)

The Philippines is a developing country although in some respect it has been observed as more developed than some countries in the Association of Southeast Asian Nations (ASEAN). The country is blessed with abundance of natural resources and a big and industrious workforce presently employed in the Middle East, the United States, Europe and other progressive countries in Asia.

The Philippine economy has continued to be strong and growing despite the many challenges, both political and economic, that it has encountered all through the years. (Tetangco, 2006)

The present global economic crisis did not have much effect on the Philippines because of the OFW remittances. Skilled labor is one of its valuable economic assets. The level of unemployment has gone down (Trading Economics, 2011) due to skilled labor being exported to countries wanting for talented and experienced labor force.

The vast natural resources could have been a major asset of the economy if it were tapped with utmost diligence and care. Mining could be a major contributor considering that recent mines have been discovered in its islands, but thanks to the militancy and awareness of the people, there are oppositions trying to save the environment.

The Philippines can be the number one destination in Asia because of its rich heritage, historic spots, rich natural resources, and hospitable people willing to receive any guest who enters in their shore lines.

Social factors are in favour of foreign investments. Filipinos are hospitable, they welcome every foreign national into the country; this is the reason why tourism is thriving and is also one of the major dollar earners of the country.

The people are ‘westernized’, due to years of American colonization, so that entry of a UK company is very much welcome. UK products are welcome. Filipinos patronize ‘imported’ products, or those coming from western countries because they have this colonial mentality and the fact that they are used to Western products brought to them by relatives who come home from abroad.

Technological

Technology plays an important role in this new venture to the Philippines as the next destination of a UK supermarket chain. Information technology and the Internet have been introduced. Young graduates from first class universities and thriving technical schools in the country are equipped with IT expertise and other technical courses. IT professionals also dominate the labor force. The Internet is not new to Filipinos.

Almost all major businesses and organizations in the Philippines have their websites and they make use of computers and the Internet.

Porter’s Five Forces

Porter’s five forces will also shape the entry of a UK firm in the Philippines. Profitability will be determined by these five sources of competitive pressure. (Grant, 2005, p. 173)

Threat of New Entrants

There are a number of supermarkets in the Philippines and our entry will be a threat, although this will depend on the kind of products the UK supermarket will bring. Existing supermarkets also bring with them imported products coming from the UK, U.S. and Europe

Bargaining power of suppliers

Outsourcing companies from China can supply the UK supermarket for its store in the Philippines. However, this is what existing stores and supermarkets are doing. Chinese products are flooding Philippine stores. Products will have to come from local suppliers.

Bargaining power of buyers

Filipino customers are meticulous and want low cost products. In order to remedy the situation, supermarket products will have to be sourced locally, but some imported ones will be mixed with local products, such as fruits coming from UK and the US, in order to make the store competitive.

Threat of substitute products

This is one of the problematic areas that the UK store will have to tackle. Local products will be a major threat. The Philippines has an abundance of fruits, vegetables, fish, and different kinds of meat products. These are cheap and are supplied locally.

Cultural Dimensions

The Philippines has a rich cultural heritage, from the Malay race to the European and American cultures introduced to Filipinos. There are also various ethnic groups comprising the Filipino culture.

The UK supermarket management will have to adjust to the Filipino culture, but it is not too difficult. Filipinos are receptive of foreign culture. They are hospitable and love to be with other nationalities. Most families have members abroad; many come from the UK doing different professional jobs. Employees will not have difficult time adjusting to the Filipino culture.

Recommendations

The Philippines is an important country in Asia and to have a UK supermarket in that country is recommended. It is a growing and dynamic economy.

Management decision making will be influenced by the local cultures, for example the kinds of products and foods that should be available all the time. (Cray and Mallory, 1998, p. 71)

Management will have to adjust with the Filipino culture although, as stated above, Filipino culture is already a mixture of ethnic and foreign culture. There are a number of foreign nationals in the Philippines and many of them are Europeans, Americans, and mostly ethnic Chinese.

Beirman, D., 2003. A comparative assessment of three Southeast Asian tourism recovery: Singapore roars: Post SARS 2003, Bali Post – the October 12, 2002 Bombing, and WOW Philippines 2003. In: Y. Mansfeld and a. Pizam (eds.), 2006. Tourism security and safety: from theory to practice. Oxford, UK: Elsevier Inc. p. 254.

Cray, D. and Mallory, G., 1998. Managing culture . UK; US: International Thomson Business Press.

Grant, R., 2005. Contemporary strategy analysis , fifth ed. United States of America: Blackwell Publishing.

Tetangco, A., 2006. The state of the Philippine economy and policy directions of the Bangko Sentral ng Pilipinas. Bank for International Settlements. Web.

Trading Economics, 2011. Philippines unemployment rate . Web.

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IvyPanda. (2022, June 23). Overview of Business Environment in the Philippines. https://ivypanda.com/essays/business-environment-case-study-the-philippines/

"Overview of Business Environment in the Philippines." IvyPanda , 23 June 2022, ivypanda.com/essays/business-environment-case-study-the-philippines/.

IvyPanda . (2022) 'Overview of Business Environment in the Philippines'. 23 June.

IvyPanda . 2022. "Overview of Business Environment in the Philippines." June 23, 2022. https://ivypanda.com/essays/business-environment-case-study-the-philippines/.

1. IvyPanda . "Overview of Business Environment in the Philippines." June 23, 2022. https://ivypanda.com/essays/business-environment-case-study-the-philippines/.

Bibliography

IvyPanda . "Overview of Business Environment in the Philippines." June 23, 2022. https://ivypanda.com/essays/business-environment-case-study-the-philippines/.

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FILIPINO BUSINESS HUB

Exploring the Challenges Faced by Local Businesses in the Philippines

Local businesses in the Philippines play a crucial role in the country’s economy, contributing to job creation, community development, and entrepreneurial spirit. However, these enterprises often face challenges hindering their growth and sustainability. In this article, we delve into the key challenges encountered by local businesses in the Philippines and discuss potential solutions to overcome them.

Table of Contents

Challenges faced by local businesses in the philippines, limited access to capital.

One of the major hurdles local businesses face in the Philippines is limited access to capital. Many small and medium-sized enterprises (SMEs) struggle to secure financing from traditional banks due to stringent requirements and high-interest rates. This lack of capital inhibits their ability to expand operations, invest in technology, and hire skilled personnel.

To address this challenge, various government programs and microfinance institutions have been established to provide financial assistance tailored to local businesses’ needs. Additionally, alternative financing options such as crowdfunding and peer-to-peer lending platforms have gained popularity, offering more accessible funding opportunities for entrepreneurs.

Regulatory Burdens and Bureaucracy

Navigating the regulatory landscape and bureaucratic processes can be daunting for local businesses in the Philippines. Lengthy registration procedures, complex tax regulations, and compliance requirements can be overwhelming, particularly for small-scale enterprises with limited resources.

The government has been implementing reforms to streamline business registration and licensing procedures to alleviate this challenge. Initiatives such as the Ease of Doing Business Act aim to simplify bureaucratic processes, reduce red tape, and promote transparency. Furthermore, seeking professional advice from legal and accounting experts can help local businesses ensure compliance and minimize the impact of regulatory burdens.

Limited Market Reach and Competition

Local businesses often struggle to compete with larger corporations, both domestically and globally. Limited marketing budgets and a lack of brand recognition make it difficult for them to reach a wider customer base and compete on equal footing. Additionally, the rise of e-commerce and online marketplaces has intensified competition, requiring local businesses to adapt and embrace digital transformation.

To address this challenge, local businesses can leverage digital marketing strategies, establish an online presence through social media platforms, and optimize their websites for search engines. Collaborating with other local businesses through partnerships and networking can also help expand market reach and create synergies.

Skills Gap and Workforce Development

Another significant challenge local businesses face in the Philippines is the skills gap among the available workforce. Many SMEs struggle to find qualified, skilled employees with the necessary expertise to contribute effectively to their businesses. This gap is particularly prominent in emerging technology and digital marketing industries.

Addressing the skills gap requires a multi-faceted approach. Local businesses can collaborate with educational institutions to develop industry-specific training programs and apprenticeships. Engaging in partnerships with government agencies and non-profit organizations that promote skills development can also provide access to a pool of qualified candidates. Furthermore, investing in employee training and professional development can enhance the skills of existing staff and foster a culture of continuous learning.

Recommended Read: Supporting Small Businesses in the Philippines

Local businesses in the Philippines face various challenges that impact their growth and sustainability. However, by recognizing these challenges and implementing strategic measures, these enterprises can overcome obstacles and thrive in a competitive landscape. Access to capital, streamlined regulations, expanded market reach, and a skilled workforce are key areas that require attention and support. By addressing these challenges collectively, the Philippines can foster a vibrant ecosystem for local businesses to flourish, contribute to the economy, and create opportunities for all.

The Impact Of The Coronavirus (COVID-19) On Businesses in the Philippines

May 29, 2020 | Ronnie Salonga

What is the impact of the coronavirus (covid-19) on businesses in the philippines, new normal established, impact on the economy, barriers on trade, monetary struggles of small and start-up businesses, dwindling of essential stocks.

It has been more than two months since the quarantine was implemented and the effects of COVID-19 on businesses in the Philippines are drastically being felt. With several establishments forced to close down, the Philippine economy could be on its way to the verge of collapse if the pandemic isn’t contained.

Since the implementation of the Enhanced Community Quarantine (ECQ), companies are trying to keep up with the new set of demands and protocols. However, it will not suffice if the pandemic persists for a longer period of time. Here are some insights into the impact of COVID-19 on businesses in the Philippines .

We often hear words like “social distancing” and the “new normal” these days as we live through the pandemic. For the educational sector, schools have been suspended by the government since last March. Both the Department of Education and various college universities are now eyeing online learning as their tool to continue progressing academically during these times. However, these have proved to be insufficient as not all of the population has a stable broadband connection in their homes.

Certain businesses that are labeled essential have been allowed to continue on running, with a few rules implemented to maintain safety measures . Public markets are strictly implementing the rules of social distancing, with some municipalities providing “mobile palengkes” to their citizens. Other essential services such as hospitals, food establishments, and banks also continue to provide work for their employees.

However, people who had jobs in what are considered “non-essential sectors” are now taking the negative blow of this new normal. Some employers are unable to provide full compensation or work from home arrangements. Employees who live in other cities are having difficulty traveling to their workplace due to checkpoints. Other companies have suffered such a great loss that they had to let some people go. The pandemic has been crippling both Filipino families and businesses alike.

There is no doubt that the economy as a whole is now on the brink of a recession. Several business industries have taken a much slower pace due to the global pandemic affecting the flow of supply and demand in the country. According to Rappler , the National Economic and Development Authority (NEDA) has estimated that the Philippines’ gross domestic product (GDP) may be as low as -0.6% this year.

It is estimated that the Philippines may lose between P276.3 billion and P2.5 trillion based on how long the pandemic will ensue. In the worst-case scenario, the economy may slow down to a recession as labor supply drops to 19.7%. On the other hand, labor supply may only drop to 7.4% with most of the industries thriving if the country successfully combats the virus in the second quarter of the year.

Still, as COVID-19 continues, many Filipinos may lose their jobs. Industries like BPO, tourism, and aviation sectors have laid off their employees due to a lack of financial resources to support them. Meanwhile, in terms of construction, it is widely known that the infrastructures of the “Build, Build, Build” program are reliant on China for funding. Having the pandemic around paused not only the construction itself but also the compensation of the workers involved. Many of whom are daily wage earners.

Additionally, there are still several business buildings that are yet to be finished. The pause in construction due to COVID-19 may postpone future economical endeavors.

To keep our economy breathing, the Philippines imposed no restrictions on imports and exports within the country. An article by Pharmaceutical Technology stated that according to the Philippine Statistics Authority (PSA), China is the country’s top trading partner, making up 18.8% of its total trade. This is together with Korea and Japan in terms of imports.

The coronavirus may result in a more subdued trading economy in the Philippines for the year 2020. But keeping the import-export system alive may help our economy survive . As for healthcare supplies and equipment, the Philippine government ordered that they will not be subjected to taxes and fees. This is in compliance with the Republic Act No. 11469, also known as the “Bayanihan Heal As One Act”. This allows the country to get the necessary supplies at ease without any further restrictions. This greatly benefits the great influx of COVID-19 patients in need.

Big conglomerates may survive the current economic crash, but micro, small, and medium enterprises (MSMEs) in the Philippines are taking the hardest hit financially. According to the latest List of Establishments from the Philippine Statistics Authority (PSA), there are 998,342 MSMEs in the country, which takes up 99.52% of all local businesses as of 2018. The lack of consumer demand tests businesses’ financial capacity to keep their enterprises afloat, together with trying to support their workforce. Some MSMEs try their best to match today’s algorithm of demands by offering online and delivery services. However, lessening of employees are needed to keep up with their financial demands.

According to an article by CNN Philippines , the government has already allotted a P120-billion credit guarantee program and P51-billion wage subsidy programs for micro-businesses. This is through the Department of Finance together with the Department of Trade and Industry’s low-interest lending program for small businesses. These may aid entrepreneurs in maintaining their financial assets as well as compensating their workers.

In the midst of a pandemic, it is a common occurrence for essential supplies to be often out of stock. Two months into the imposed Enhanced Community Quarantine throughout Luzon, people have frantically hoarded rubbing alcohol, food supplies, and other goods. Forcing the government and supermarkets to create new rules to prevent further shortages.

Some businesses ramped up their production, with the government promising incentives to companies producing essential goods through commonly imposed taxes. The government also allowed the return of 50% of the workforce to aid in the production process. Other businesses are using online means to deliver products to their consumers and other unorthodox methods for them to survive the negative economic effects of the pandemic.

These issues may continue to persist if we don’t combat the virus sooner. While private conglomerates may survive the economic crash, smaller sectors and Filipino workers may eventually succumb to losing finances. Until the pandemic is resolved, the Philippine economy may take devastating damage as days go by.

Key Takeaway

The sudden socio-economic threat imposed by COVID-19 is a crisis currently endured by countries across the globe. While its impact is felt greater by the day, the survival of its most important sectors are pillars to preventing economic collapse . With the effect of COVID-19 on businesses in the Philippines, it is truly a challenging time for all. However, once settled into the new normal and after planning for solutions together post-pandemic, businesses may rise once again.

Author’s Note : This entry was optimized by the best SEO Services Agency in the Philippines – SEO Hacker

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Essential Documents When Starting a Small Business in the Philippines

• by Web Admin
• September 2, 2022
• Online Business

Thinking of leaving your 9-5 job and becoming the big boss of your life? Why not start your own small business? After all, what tech giants like Google and renowned food brand Jollibee have in common is that they both started small.

Starting a small business requires work and a few essential business documents in the Philippines. In this blog post, we’ll discuss the seven essential business documents you need when starting a small business in the Philippines. 

So, if you’re ready to start your own business, keep reading!

DTI Business Name Certificate

One of the first and most important steps you have to take when starting a small business is to register your business trade name at the Department of Trade and Industry. If you’re a sole proprietor, go to the nearest DTI office, fill out the form and submit it together with the necessary requirements. 

The DTI Business Name Certificate is one legal document that needs to be taken seriously. So, be sure that you carefully fill out the forms and disclose all the important and relevant information to avoid any penalties or worst, your certificate will be invalidated.

Barangay Business Clearance

You also have to inform the barangay center about your business. Having a small business means you have to secure a barangay clearance for recognition in the community where your business is operating.

Go to the Barangay Hall where your business is located and present these documents:

• Filled application form
• DTI Certificate of Registration (for sole proprietors)
• Two valid IDs
• Proof of residence
• Community Tax Certificate
• Certificate of Incorporation from SEC (for partnerships as corporations)
• Lease Contract
• Business plan

Once all the documents are approved, pay the clearance fee. The fee varies per barangay center you’re transacting with but the fee range is usually from P500-P1000.

Keep in mind to check that all information on the barangay business clearance is correct and that you have an official receipt. 

Business Permit (Mayor’s Permit)

As a small business owner, you also need to get a business permit from your LGU. This serves as an acknowledgment that your business is legal and licensed to operate in that city or town. 

A business permit is an essential business document when starting a small business in the Philippines because that serves as proof that you can legally operate and that your business is registered in that specific city or town.

BIR Registration Document

After registering your business trade name with DTI, it’s time for you to register with the BIR and pay your responsibility as an income-earning citizen of this country—that is to pay taxes. The BIR Registration Document is one of the essential business documents when starting a small business in the Philippines. 

This is how you’ll get invoices, official receipts, and books of account for your small business. The BIR office is also where your tax obligations e.g. income tax, VAT, and withholding tax are being issued and computed.

If your small business comprises staff (even if it’s just one or two), you have to register and set them up with the Social Security System (SSS). Under RA 8282, all employees hired by private companies are required to apply for membership with the SSS.

As a small business owner, you have to go to the nearest SSS office and present the following documents:

• Employment Form R1A
• Employment Registration Form R-1
• Articles of Incorporation/Partnership
• Articles of Cooperation
• Accreditation from DOLE

You have to keep in mind that all the information in the documents you submitted should be valid and correct at the time of application. SSS will verify these documents and if there’s any mismatch, this could lead to a delay in the application process or worst, denial of your application.

Aside from SSS, you also have to submit a list of your employees and register them with the Pag-IBIG Fund. 

In preparing this essential business document when starting a small business in the Philippines, you need the following documents:

• SSS Certificate
• SSS R1/R1A and R3
• Specimen Signature
• Proof of Business Ownership
• For Sole Proprietorship: DTI and BIR Certificate, Business Permit
• For Partnerships and Corporations: SEC Certificate, Articles of Partnership, Board Resolution, Business Permit, BIR Certificate

Then download and fill out the Employer’s Data Form ( EDF ) and Membership Savings Remittance Form ( MSRF ) from Pag-IBIG’s website. After filling out all the necessary information, head to the nearest Pag-IBIG office and submit the two forms along with the required documents.

Once approved, you will be given a copy of your EDF with the Registration Tracking Number (RTN). Your RTN is important, especially when paying for the monthly contributions while you don’t have an employer ID number yet. Make sure that you don’t lose it or make several copies just in case.

The employer ID number is given once you’ve successfully attended the seminar they have assigned to you.

Philhealth is another essential business document when starting a small business in the Philippines. It provides health and hospitalization allowances to your employees. 

To register your business with Philhealth prepare these documents:

• Barangay Certificate
• Business Permit
• DTI Certificate (for sole proprietorship); SEC registration (for partnership/corporation)

Then download the Employer Data Record ( ER1 Form ) from the Philhealth website and fill out all the necessary information. Once completed, submit it to the nearest Philhealth office. Be sure all the information is correct to avoid delays or worse, rejection of the application.

Once approved, you will then be issued a certificate together with your company’s Philhealth Employer Number (PEN) as well as your registered employees’ Philhealth Identification Number and Member Data Record.

Essential Business Documents FAQs

Why are essential business documents important?

Business documents are important because it instills confidence within your business and among investors and clients.

What are examples of business documents?

Business documents include payroll reports, bank statements, income statements, receipt records, balance sheets, and tax reporting forms.

If you’re looking to start a small business in the Philippines, make sure you process these essential business documents first. Doing so will help ensure a smooth and successful launch of your new venture. It also means that when you have these essential documents, the products or services you sell are safe and legal. 

We wish you all the best as you embark on this exciting journey! 

Further reading: 

• 10 Small Business Accounting Tips You Need To Know

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Understanding Business Culture In The Philippines

How does a business meeting in the Philippines lead to closing the deal? Business relations grow strong slow and steady. Yet, persuading a partner requires more than persistence. It starts with understanding their culture and background.

How and when to approach a partner and not sound offensive? How do you recognize the key people who are worth influencing? Can you negotiate? And, how to do it all by following the right etiquette?

In this article, we show three stages of engaging with your future business partner. How to prepare for a meeting, how to leave a good impression during the meeting and how to close the deal.

Key Influences of Business Culture in the Philippines

The Philippines business culture is a blend of different western and eastern influences. The Catholic church also plays a major role.

The society is hierarchically structured as elsewhere in Asia. For example, “keeping a face” is very important to Filipinos. In business, avoiding both conflict, disagreement and public contradiction comes by default.

Being friendly does not necessarily mean that the negotiations are going well. They may want to avoid or silence an argument.

How to Prepare for a Business Meeting in the Philippines

Use your personal connections to get a high-level meeting.

The more (important) connections you have the easier it will be to do business in the Philippines. Business takes time. The best way to arrange high-level meetings is by a personal introduction by a common contact.

Know the Family Hierarchy in the Philippine Business Culture

Business culture in the Philippines sees that family-run businesses have a strong hierarchy. Key family members control how the company operates.

Note that foreigners are often hired as middle managers. They apply the decisions made by senior management. Maintaining a good relationship with middle managers will benefit you in the future. They will soon start working daily with you. Thus, do not spend too much time selling to people that don’t have the power to take your deal forward.

Don’t count on starting from lower level employees and building your way to the top. This rarely works and you should instead put your efforts to getting connected to the real decision makers right away.

Be on Time But Expect Your Partners to Be Late

Meetings in the Philippines often start later than agreed. Foreigners may find this unusual, although it is common in the local scenery. In fact, the more senior your business partner, the more likely they are late.

That does not mean that you can be late. In fact, you should never be late yourself. If your meeting takes places in one of the bigger cities then expect the traffic to be horrible. Plan to arrive at the meeting place an hour in advance and don’t expect to have more than 2-3 meetings in one day unless they are located nearby.

Learn When to Offer a Gift to Your Partner

There are two times when a business gift or treat is appropriate. The first gift during an early stage of developing relations. The second as a conclusion of satisfactory negotiations.

Get to Know the Local Etiquette

Avoid jokes about religion. Don’t directly confront people during a meeting, even if they said something you strongly disagree with. Remember the “keeping the face” aspect – let people keep their public reputation even if they made a mistake.

Avoid excessive eye contact as this may come across as being overly aggressive.

Communicate Clearly

Start off with a clear introduction to what you plan on discussing during the meeting. Despite your expectations, don’t rely on the participants’ individual initiative and communication.

English is the Philippine business language . But avoid making assumptions about partner’s behavior coming from the flawless language. Their communication style as well as talking in riddles is a strong hint of Asian roots. Therefore, it’s not rare that the non-natives find Philippine body language misleading.

Even if an offer is on the table, do not force an immediate answer. Your partner will find it very hard to say no. If partner offers you a confirmation, view it with caution. They may offer this to avoid conflict during the meeting but will withdraw after. Your role is to follow-up giving them a chance not to lose face on the spot.

You know a deal is a deal when a “yes” is accompanied by a written confirmation. If your partner tries to ignore discussions about the specifics of the deal then it’s a sign that most likely the “yes” you heard was just to please you and the negotiations are not actually successful yet.

Choose the Right Attire for a Business Meeting

Locals take good care of their appearances during both social and business occasions. Thus, it is important for you to also meet partners looking well-groomed.

Your appearance gives partner the first idea whether you are worthy to do business with. Make sure you look the part.

Men should wear a suit and tie, women should wear modest business attire.  Of course assuming that’s a standard in your industry. Don’t go to a business meeting wearing shorts or casual wear, no matter how hot the weather might feel for you.

Leave a Good Impression During the Meeting

Exchange business cards.

Hand your business card using both hands. Put the received business cards on the table for the entire meeting and show interest in them. This also helps you to remember your partner’s name which you should be using several times during the meeting. Never put the business card directly to your pocket as it shows disrespect.

Build rapport with small talk

Greet the eldest or most important members first, following the hierarchy. Small talk is a very common method to build relations. Even if you wish to get straight to business, do not skip the small talk. It is a natural part of the business culture in the Philippines and thus vital for you to engage in.

However, don’t treat small talk as a random chat before you get to the real business talk. Use this time to display your likability, genuine interest in the subject and most importantly – to gather intelligence about your prospective business partner.

Avoid faking your interest in some subject just because you think your partner would like it. People can sense whether you’re sincere or not.

How to Negotiate in the Philippines

Bargaining is common amongst entrepreneurs in the Philippines. Negotiations are effective if you have the skills. Push the deal in a direction that benefits you most but make sure to cover the interests of both.

Although, it’s important to know where to stop. Don’t shout or impose anger at your partner if negotiations aren’t going like you expect. Note that negotiations may take longer than planned. The pace of doing business in the Philippines is relatively slow. Be ready to constantly re-assure that you, your company and your product are valuable without being overly pushy.

Negotiating a Lower Price

Filipinos may refuse bargaining if they are the ones buying. Then it’s mostly “take-it-or-leave-it”. Sometimes they also say that their funds are limited. When they decide to negotiate further, you likely need to improve your initial offer. Prepare that in advance and leave some room for negotiations.

It is common that they remind you of your competition to receive a lower price. If you do not give in, they will continue negotiations. They need the upper hand and wish to see if they can convince you. If you cannot accept their price demands, they will push credit terms and delivery dates.

Negotiating a Higher Price

If Filipinos are selling, they are likely reminding you of the demand on the market for this purchase. It is often that they invite several customers to discuss the deal together and then bargain at the same time.

Entertaining Your Prospective Business Partners

You may achieve a lot of progress in a relaxed dining atmosphere instead of a formal meeting room. Note that a few drinks before dinner are also not unusual in the Philippines.

Common entertainment locations are bars, restaurants, and hotel lounges. Don’t be surprised to find yourself at a karaoke bar. Partners sharing a meal is a common and important part of developing relations.

Note that business is almost never the first topic during dinner. The point of arranging a dinner is making people feel more comfortable with each other.

The inviting party is usually paying. Restaurants in the Philippines commonly add a service charge to their bill but a tip is not included. Depending on the service you receive, consider adding around 5%-15% tip.

Reach Emerhub via the form below for further tips on doing business in the Philippines. Our team will assist you with visa submission as well as help you set up a company .

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