How to Start a Small Business at Home in the Philippines


The start of every New Year is greeted with the tradition of making resolutions. People make resolutions because they look at the New Year as a new chapter in their lives—new beginnings, new relationships, and perhaps a new career. One of the most popular resolutions for Filipinos is to start a small business at home.

Operating a small business from home offers you several advantages:

  • Less costs. If you’re testing a concept or idea with a new product or service, limiting your operating costs is always a good idea. Rent is one of the most expensive fixed cost items in business.
    Working from home removes rent from the equation. However, always remember to factor in a “theoretical cost” for rent even when you are working from home. Your accountant needs this “theoretical cost” to have an accurate measurement of your income.
  • Convenient. With the MRT situation still in limbo, EDSA undergoing a face-lift, and a lack of a centralized traffic management system, traffic will only get worse. Other problems will make the commuting to work a nightmare in the next four years.
  • Higher productivity. You can control your time when you run your own business and work from home. You can also expect for the productivity to go sky high when there are few things to worry about and few stress factors to deal with.

The New Year may just be the perfect time to start your small business from home! The following are the two reasons:

  • Motivation is high. In reality, January 1, 2016 is just another day. The things that were left undone or unaccomplished in 2015 are still left as they were. Although the status remains unchanged, the attitude did change.
    People are highly motivated at the start of every year. They look at it as “Day 1”; thus, they have 364 more days ahead to make a difference. Once all the smoke from the fireworks have cleared, people become excited to start planning for the new business!
  • Demand is slow in the first quarter. Historically, market demand is slow during the first quarter of the year.
    People are trying to recover their expenses from the Yuletide Season. Students are preparing for the home stretch and spend less time in malls. Businesses are getting their year-end strategies in place for the new fiscal year.
    The first quarter of the year is the perfect time to PLAN your business. This is the time when you should develop ideas, conduct research, and prepare your business plan.

By contrast, demand picks up in the second quarter. Consumers are inclined to spend more during the summertime. If you used your time in the first quarter wisely, you should be ready to launch your business by the second quarter.

Remember, you have only three months for your business to gain traction! Demand starts to slow down by May because people are saving up for the start of school.

If you want to get your small business at home off to a flying start, it would be best to start NOW!

How to Start a Small Business at Home in the Philippines

1. Find an idea and build up on it!

I’m sure you’ve heard the saying “Necessity is the mother of all invention.” Great ideas are born out of necessity because necessity inspires innovation.

Look for the best, most ideal place for you to gain inspiration. Open your mind and ask yourself what goods and services would sell in the Philippines and perhaps other places in the world. List them all down on a piece of paper.

Do not discriminate! Just write everything that comes to mind. This process involves accumulating ideas. Let’s call it a “business funnel”; the larger the opening of the funnel, the more ideas you can filter through.

Related: 33 Best Home-Based Business Ideas in the Philippines

2. Qualify each idea and select the best one

Through elimination, cross out every idea that does not appeal to you. Initially, this will move fast. However, as more ideas are crossed out, the process slows down because the ones that are left start to make sense.

If you are down to the last five ideas, do a preliminary research on each idea. Use the Internet for resources or talk to people whose opinions you trust when it comes to business. These ideas should be the ones you feel you are capable of managing.

3. Develop a brand

Once you have selected the type of business you want to put up, develop a brand!

Yes, develop a brand right away. Most entrepreneurs make the mistake of developing a brand once the business has gained traction. However, how will the business gain traction if the market does not know what it is?

Your brand represents your business, and your business represents YOU. Thus, building a brand starts by identifying your purpose. Identifying your purpose starts with the question “why?”

“Why did you decide to get into this kind of business?”

“To make money” is not a purpose! Even charity organizations and foundations receive money in the form of donations or grants to function and sustain its operation.

The “why” determines your purpose:

  • Do you want to address a need?
  • Do you want to introduce an innovation?
  • Do you want to present a solution or an alternative?

Developing your brand starts with the name of the product and your business. The simple rule is that its name must be aligned and easily identifiable with your purpose.

4. Register your business

Another mistake that many small business owners commit is not registering their business. I’ve met quite a few entrepreneurs who did not register their businesses, and their most popular reason is that they do not want to deal with the “hassles of the bureaucracy.”

I admit that the process of registration, including acquiring permits, clearances, and licenses, can be cumbersome. However, these are necessary for your business to function efficiently.

These are the advantages of registering your business:

  • Your business identity is established. A business by definition is a “living, breathing entity.” Therefore, it has a personality. The personality will be hard-pressed to function normally if it is not formalized as an organization.
  • Your business is professionalized. Most clients and consumers do not patronize or enter into agreements with a business that is not registered. If your business is not recognized by Securities and Exchange Commission (SEC) or Department of Trade and Industry (DTI), your chances of securing contracts from good clients and suppliers lie between nil and zero. Keep this in mind: the largest suppliers do not deal with retailers who have no legitimate business papers!
  • You are protected. If your business is not registered as a corporation and you get into a debt with your suppliers or creditors, they can run after your personal assets. Separating your professional identity from your personal identity protects your personal assets should your business idea fail.

Registering your business is easy with the evolution of the Internet. You can register with SEC and DTI online. The first thing that you should do is register the name of your company. The reservation fees are minimal. By registering your business, you can be assured of your corporate identity.

Other permits and documentation that you should secure are Bureau of Internal Revenue (BIR) tax number and business/mayor’s permit from your local government office.

Related: 5 Essential Business Permits and Licenses in the Philippines

5. Prepare a business plan

An idea is nothing but a lump of clay until you start honing its details. When starting a business, you have to validate its viability by preparing a business plan.

A business plan is the blueprint or reference point of your business. You will constantly refer to it in all stages of the development process, from pre-operating mode to launch mode.

A business plan consists of three parts:

  • Market study. A market study aims to determine if there is a demand for your product or service. It seeks to identify potential markets by researching on the industry, trends, main competitors, profit margins, products and services, and other items that can paint a clear picture of how the market has been thriving.
  • Marketing study. If the market study has identified a market, the focus shifts to how your business can reach them by conducting a marketing study. This study is important because it shows you how to compete with the rest of the industry. It also lays out the behavioral profile of your market.
  • Financial study. Once you have the figures from the market and marketing study, combine these data and determine how you can fund the business. A financial study consists of the following:
    • Summary of capital expenditures (CaPex) and operating expenses (OPex). The summary of CaPex and OPex presents your investments in assets and the working capital needed to start your business.
    • Projected income statement. This measures your effort with productivity and gives you an idea of what your targets should be to attain your desired profit margins.
    • Cash flow projection. You should know how cash flows in and out of your business so you can fund its needs on time. The cash flow projection tells you if you need to borrow money and if you can pay off any loans you plan to apply for.

Collectively, these make up your business plan, which can inform you if the business is viable to undertake or not.

6. Set up the operational system

The operational system consists of the processes and frameworks that make your business run efficiently. It consists of the following:

  • Website and social media accounts. Regardless of the type of business you are in, you must absolutely have a website. You cannot expect your business to expand if you do not by any means reach out to large markets. Your website is your portal to a population of 3 billion Internet users every day. Your social media accounts help your business be found and are great avenues to promote your services.
  • Back office support. A back office is made up of accounting, human resources, and information technology department. These are all important to ensure that your business is up to date with its business needs.
  • CRM support. It is absolutely crucial for all businesses to organize information on clients, subscribers, and prospects. This is how you stay updated on the status of your various projects or commitments.
  • Communication. Lack of effective communication channels can lead to several missed business opportunities.
  • Report generation. If you employ other people, make sure you keep track of their performance and that they are working within the parameters of your business.

From the outset, the elements of an operational system look like a lot of work to do. However, in truth, they are readily available online. The following are a few tips that you can consider:

  • Hire a virtual assistant for back office and CRM support. They do not cost a lot of money to hire, have flexible schedules, and have the experience and expertise to manage several key areas of responsibility.
  • Sign up for various online tools. Most of these are free and downloadable, such as the following:
    • Project management: ASANA
    • File sharing: DropBox
    • Communication: Skype
    • Conference meetings: WebEx

7. Invest in the infrastructure

Once you’ve set up your operational system, you have to make sure that you have the infrastructure to support it. When running a small business from home, you have to provide the following:

  • A good place to work. Your chosen location must give you privacy and have the conditions that encourage productivity.
  • Good and stable Internet connection. If your small business depends heavily on the Internet, you will need at least 3 MB connectivity.
  • Reliable and battle-ready computer. A computer will be your main business hub. Most of your files and documents will be stored in your computer. In addition, communication will be relayed through e-mail and online programs. Make sure that your computer is upgraded and equipped with the best hardware.
  • Storage room. If you house inventory, the storage room must have the conditions necessary to maintain the quality of your goods.

Final word on running your small business from home: check with your village association if they allow residences to house businesses. Some villages have strict zoning restrictions, and if you are caught, the penalties can be heavy.

You have to be prepared to rent at least an office space that functions only to receive communication. When you register a business with SEC and DTI, they will require a business address in your application. If your village does not allow businesses, your application may be declined.

8. Develop a value chain

A value chain consists of every party involved in your business.

These parties include employees, contractors, suppliers, clients, and of course, customers or end-users. You have to establish a value chain before you launch your business.

If you are running an online retail business or an e-commerce business, building your supplier chain is very important. The suppliers you contract determine your pricing, margins, and delivery commitments to customers. If your suppliers are unreliable, your business is at great risk of losing prospective sales.

The best approach is to contact the manufacturers of your products and ask them for a list of their authorized suppliers. This is one of the advantages of being a legal business entity.

Manufacturers will always ask you for business papers, such as SEC or DTI registration, BIR tax number, and credit referrals. If you pass their screening, they will refer you to their best suppliers.

An important aspect of the e-commerce business is the storage of products. Discuss with the supplier if they are amenable to drop-shipping. This is the process through which the supplier takes care of the storage and delivery of the item to the customer.

9. Network!

Your business cannot sustain its success or progress further if you fail to network consistently.

You should always network to expand the scope and reach of your business. There are two popular ways of networking:

  • Traditional networking. This includes attending trade shows, business forums, and other networking events.
  • Digital networking. This includes the use of social media and other methods of Internet-based marketing processes.

You must network as regularly as possible. You can do this by joining associations and focus groups. You can also authorize your virtual assistant to network on your behalf via social media. LinkedIn, Twitter, and Facebook are great communities to build your network.

10. Institute process improvement

Business is constantly evolving for the simple reason that markets are also constantly evolving. This is why when planning your business, only 20% of your resources should be spent on strategy design and 80% on implementation.

The strategy you designed may no longer be applicable within a few weeks or months. The need to foresee changes in demand before they happen and implementing solutions are more important than looking for a perfect strategy.

You must periodically assess business performance by instituting process improvement systems. These include the following:

  • Evaluating online analytics. What do your figures from the website and social media accounts tell you about the behavior of your market?
  • Analyze financial statements. How are your projections measuring against the actual performance?
  • Operation performance. Are there unresolved issues? What is the turnaround time or delivery time for a finished product or service?

If you are working with people, schedule conference meetings every end of the week, month, quarter, and year. Provide everyone with their performance and work evaluation to resolve perceived weaknesses.

Find what you love to do and never work a day in your life. – Confucius

When you do your research on small business, you will encounter statistics on how small businesses generally perform worldwide. The numbers may appear discouraging but don’t let them get to you.

You will also have to deal with the “naysayers”; these are the people who will try to discourage you with their pessimism. Some of them may even be close friends or family. When dealing with unwanted advice, reframe it merely as a “show of concern.” Do not let them deter you from fulfilling your dreams.

Success in business is never achieved overnight. It will entail plenty of hard work. Sacrifices and compromises will be made and relationships may be regarded as collateral damage.

However, this is the journey to which you have committed. This journey will be difficult and will be fraught with challenges. Failure will be your constant companion. Sir Richard Branson, founder of the Virgin Group of Companies, once remarked that he had failed more times than he ever succeeded. Sir Richard is one of the richest and most successful businessmen in the world!

In the end, your success is the result of what you do to achieve it. Manage your small business with passion, dedication, and commitment, and it will take care of you.


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