It is generally easy to start a small business venture in the Philippines because it is encouraged by the government. But since we are talking of a small business, it follows that there is a lot of competition in this field because it is relatively easy for a lot of people to raise the capital needed to start a small business idea. So in order to succeed, you have to have more than just capital and a burning desire to succeed in your chosen business.
What is a small business venture in the Philippines?
First off, let us try to understand the size of a business based on the capital needed. The DTI has categorized Philippine businesses based on capitalization as follows:
Micro business = up to Php3 million capital
Small business = Php3.0001 million to Php15 million capital
Medium business= Php15.0001 million to Php100 million capital
Large business = more than Php100 million
So if your business falls to the Php3 million bracket, that means that what you are thinking is a micro type of business and therefore the smallest type in the Philippines. Small businesses are categorized by the DTI as MSMEs or Micro, Small, and Medium Enterprises. This categorization is important because the government has financial support programs for some businesses depending on the type of business you are into.
A look at your capital and financing sources
Okay, now you know where your business is categorized and it is time to determine the amount of capital that you have in relation to the requirements of the small business that you have in mind. Even if you have your capital ready and waiting, you also have to determine if there are financing options available for you. This is important especially if you experience liquidity problems. Take note that you can consider credit cards as one of your sources of financing aside from bank loans when cash problems happen.
The rule is not to spend all your capital in the initial set-up of your small business venture. Ideally, you have to spend only up to 60% of your capital and save the rest for operational expenses. It is expected that you will not make money immediately upon opening of the business so you have to have something to support the expenses of the business at least for the first 6 months. But if you are confident that the business can make money immediately, then you can break this cardinal rule.
Find your niche
When looking for a small business venture in the Philippines to start, you have to consider what you love doing. Your chosen niche can determine whether you will succeed or not. Part of this niche hunting is to look at the competitors. If the competitors are not making money in your chosen niche, then the business is not good for them and this may also happen to you. If the competitors have robust business, it is a good idea to join the competition because the signs are up that the market is strong for that niche.
If you are still uncertain what business to start, then this Small Business Ideas: 400 Latest & Greatest Small Business Ideas can help a lot in your quest for that ideal small business venture.
Look for suppliers
If the small business idea that you have in mind needs to have suppliers to trade goods, then it is important before starting the business to determine where you can get your supplies. It is not a good idea to buy from competitors because you cannot compete with them in terms of pricing unless there is a price protection coming from them. This you have to consider early on before making your business plan.
Make a business plan
Most small business ventures fail to make a business plan although this is one of the most important parts of starting a business. If you fail to plan ahead, then you are planning to fail. Make use of your initial research about the market potential, competitors, price positioning, and other data gathered. From there design an action plan that you will implement in both short and long term. Not only will you have to determine the profit expectations but you also have to project the financing and growth needs of your business.
Find an ideal place to start the business
Location is very important if you intend to sell a product to customers. If it is a service that you have in mind as a business, then location may not be that important because you can bring your service to customers. The type of business will determine in most cases the proper location for it. If it is a tire supply business, it follows that your shop must be in a major thoroughfare where motorists can see and remember the shop easily. Accessibility is important if you intend to sell goods to customers.
Register your small business venture
When you have determined the location of your business and already rented the space for it, it is time to register the business. You need to get DTI registration, Barangay, Municipal or city, and BIR registrations for it. Having the business registered at the very outset can make sure that you can start smoothly and without hassles.
Hire people to help
The size and type of your small business ideas will determine how many helpers or employees you will need to operate the business. Start with a lean organization and if possible seek the help of family members so you can start with minimal expenses. With family members around, you can also make sure that possible pilferage will not happen or at least minimized. If you intend to hire people to help in your business, make sure that you give them the wage that is mandated by Philippine labor laws. It is also important to give SSS and other State mandated benefits. This will ensure that you will not encounter possible labor problems later on.
It is not easy being an entrepreneur especially if you are not familiar with the ins and outs of the small business venture in the Philippines that you intend to open. You can increase your chances of success if you know the business first and foremost and at the same time you did your homework before starting the business. It’s your money, time, and energy so make sure you have all the bases covered so to speak.