10 Steps on How to Start a Small Business in the Philippines


“I want to start a small business.”

It’s probably the most popular declaration after “I want to lose weight.” I think most people see a new career as a metaphor for a new beginning just like weight loss.

However, starting a small business is not the same as changing jobs. It is a declaration of independence, the first step in the journey to take control of your finances and career. Have you ever noticed how people seem to bristle a bit when they mention “small business”? I read the message to say, “I want to be conservative in my approach, so I want to start out small.”

But how small is small? More appropriately, when is a business considered small? Depending on where you are in the world, the definition of a small business will be different.

In Australia, a business is categorized as small if it employs fewer than 20 people. However, the definition is relatively complicated in the United States.

According to the United States Small Business Administration (USSBA), the parameters that define a business as “small” vary depending on the industry. For example, a business in the manufacturing industry is considered small if it employs 500 to 1,500 people. In retail, a business is considered small if its annual receipts total no more than US$ 21 million.

In the Philippines, the definition of a small business is muddled because a great diversity in size and scale exists. Thus, businesses in the Philippines are categorized into scale.

In the Philippines, a small business is popularly referred to as a small-scale enterprise. By definition, a small-scale enterprise is a business that employs a few people and generates low volume of sales. For simplicity, let’s just stick with the term small business.

Despite the varied definitions, one thing holds true for small businesses regardless of where you are in the world:

Of all the businesses around the world, 98% are categorized as small businesses! You can check the statistics for Canada, Australia, and the United States, and the figure hovers around 98%.

This information means that the growth of an economy depends on the success of small businesses. In the United States alone, small businesses have accounted for 65% of new jobs created since 1996.

As a small business owner, you are not so small after all! You hold the key to getting the economy on the right track!

If you are serious about starting a small business, here is a 10-step guideline to get you on your way to an entrepreneurial career.

10 Steps on How to Start a Small Business in the Philippines

1. Draw up a short list of business ideas

An idea is popularly represented by a light bulb. The energy that powers the light bulb comes from the same source that fuels ideas: inspiration!

On a sheet of paper, write down a list of potential business ideas. Then, intuitively cross out the ones that you feel won’t work. Continue the process until only one idea is left on the list.

Entrepreneurs are intuitive people by nature. It is highly probable that the only idea left on the list has been in your mind for the longest time. It may have been a result of an incident that left an imprint in your subconscious that “there is opportunity here.”

Have you heard of Mira Modi, the 11-year-old girl who sells ultra secure, virtually unbreakable passwords? She got the idea while working for her Mom who was writing a book on cyber security.

You’ll never know when inspiration will strike. If it does, make sure to make a note of it before someone else does!

Related: 54 Best Small Business Ideas in the Philippines for 2016

2. Conduct a project study

Once you have identified your business idea, you have to validate it with a project study. Intuition by itself does not assure you of a good idea. A project study can give you the basis to push through with the idea or not.

A project study is composed of three parts:

  • Market study – Determines if there is a demand for the product or service and its target market.
  • Marketing study – Outlines the strategies to connect to the target market.
  • Feasibility study – Determines if the project will be viable.

Take your time in preparing the project study. If you have the budget, contract the services of a market research professional to conduct the market and marketing studies. Once these have been completed, you can contract an accountant to prepare the feasibility study.

3. Prepare a business plan

Every business needs a guide map that charts its course and navigates through periods of uncertainty. This guide map is called the business plan. A business plan consists of the following sections:

  • Executive Summary. Although an executive summary comes out first in the business plan, it is written last. As it implies, an executive summary is the condensed version of what a business plan is and what it seeks to achieve.
  • Business Overview. This part has three parts:
  • External Analysis – Overview of the industry and the economy
  • Internal Analysis – Overview of the company and its organizational structure
  • SWOT Analysis – Overview of the business’s strengths, weaknesses, opportunities, and threats
  • Business Goals and Objectives. What the business wants to achieve is identified in this section.
  • Courses of Action. This section identifies the strategies that the business proposes to implement in order to achieve its goals and objectives.
  • Business Model/Framework. It presents the system or set of processes that defines the operation.
  • Summary of Products or Services. This section includes the various offerings of the business.
  • Marketing Models. This section presents how the business plans to market and promote its product and services.
  • Financial Projections. In this section, how you plan to finance the business operations is discussed.

A project study is the reference for a business plan.

A business plan is also used by entrepreneurs in securing funding from banks, venture capitalists, and investors to capitalize the business.

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