The term small business is a misnomer. The definition of small business may vary from each country. However, the fact remains that 96% to 98% of all new businesses registered worldwide are small businesses. Thus, small businesses are the prime generators of economic activity in every country.
Small businesses help create employment, stimulate aggregate demand, and encourage consumer spending. US President Barack Obama declared small businesses as the number one growth engine of the US economy. President Obama’s administration enacted 18 tax cuts to support small businesses, including a key tax exemption on capital gains on key investments!
The definition of small business in the Philippines covers a scope wider than that covered by other countries. An enterprise with fewer than 10 employees or a company that generates low level of income per month is already considered a small business. It can be a corporation, partnership, or single proprietorship. It may also be an enterprise thriving in the informal sector.
However, regardless of the size or type of enterprise, collectively, small businesses are engines of growth for the Philippine economy. Here are a few of the statistics supporting the power of small business owners in the Philippines:
- Of the 850,225 businesses registered in 2014, 96% or 813,472 were small businesses.
- In 2011, small businesses accounted for 32% of the Philippines’ gross domestic product or GDP.
- Of the new jobs created, 61% were those from small businesses.
Small businesses may be small in size but gigantic in value!
After 15 years in the corporate world, I started my first small business venture in 2006. I set up an electronic cell phone loading machine in the ground floor of a commercial building in Makati. The machine looks and functions like an ATM, except that it dispenses load instead of cash.
In 2009, I cofounded a business process outsourcing (BPO) company. We started with only 15 employees. In 2012, we had 120 people in our payroll. We set up two private facilities for our clients, which totaled 200 seats.
In 2013, I started a new BPO company, Benchmark Global Management Solutions, which followed a completely different business model from the first outsourcing company. We’ve managed more than 30 campaigns, which are much more than those managed by my previous outsourcing company, but we did not build any facility!
Now in my 10th year as an entrepreneur and small business owner, I feel I have amassed enough experience to counsel current or future small business owners. Like many other small business owners, I’ve had my share of failures and victories. I would like to stress that the “nuggets of wisdom” listed below are a consequence of my experience as a proprietor in technology retail and BPO.
I only ask that you take them with an open heart and an open mind, and see if these will apply to your own business or ideas you have in the future.
Top 10 Small Business Tips in the Philippines for 2016
If you are planning to start a business, you have to define its type of organization. Businesses are typically registered as one of the following:
- Single proprietorship
Each type of business organization has advantages and disadvantages. I will not break these down, given that you can easily research them online.
However, I am a strong advocate of always registering a business as a corporation instead of as a partnership or a proprietorship.
On the business side, a corporation carries considerable weight and respectability. A corporation is generally recognized as THE organized enterprise. It connotes professionalism, the ability to scale operations, and the capacity to manage large volumes of business.
If you plan to start an e-commerce business and seek international suppliers, keep in mind that these supplies will require you to submit your corporate papers. Companies are more receptive to corporations than to partnerships and particularly proprietorships.
In BPO, clients prefer to deal with corporations over single-entity enterprises because they are looking past the initial client–service provider relationship. Clients are looking for a strategic partner in BPO.
In terms of risk, your obligations as a corporation only cover the extent of a company’s assets. If your business fails and you cannot pay your creditors, they will not be able to garnish any amount more than the value of the company’s total assets.
As a single proprietor, creditors can run after your personal assets. I’ve heard one too many horror stories of people losing their cars, houses, and other properties because of business losses as a proprietor.
No matter how great you believe your business idea is, you have to set risk management measures. A corporation is the best option.
2. Set REALISTIC business goals
Every idea is borne out of inspiration. It’s that “light bulb” moment we allude to whenever we find opportunity. Every entrepreneur thinks that they have the greatest idea or concept in the world, but only until reality sets in.
Setting goals is an important component of every business. Goals give us something to strive for. However, you have to place things in their proper perspective. Moreover, set goals that are realistic, doable, and achievable.
The purpose of having a goal in any endeavor is to keep moving forward. Every step we take forward is progress, and each progress should serve as our motivation. However, you may be setting yourself up for failure and disappointment if you set the bar too high.
Before you set any goal, always take the time to review your business objective and purpose. Your goals should never deviate from your objective and purpose.
Here are three simple rules for setting goals:
- The goal must be relevant.
- The goal must be actionable.
- The goal must be achievable.
For example, you have created a new online social sharing platform, and your goal is to sign up 100,000 subscribers by the end of the year.
- Is 100,000 subscribers a number that is relevant to your purpose and overall objective?
- Are the courses or actions you need to achieve the number of 100,000 subscribers applicable to your business or industry?
- Is 100,000 achievable considering that there are other established social sharing communities online?
Analyze your goals and make sure that there are quantifiable bases to setting them for your business.