You left your 8-5, professional career in pursuit of a business. Good for you! Congratulations on embarking on your journey to become a full-fledged entrepreneur. While it is true that running a stable business may generate more income than a traditional corporate job, it does not come without its risks and requisites.
Remember, starting a business is not something that you can do on a whim. It takes careful preparation, planning, and capital. After all, you don’t want to waste your investments on a failed business venture. With that said, here are the top 6 things you need to consider before doing business in the Philippines.
1. Identify the Nature of the Business
The very first thing you need to think about is the kind of products or services you would like to offer. In business, you can choose to offer services (BPO, marketing, hospitality, etc.), manufacturing (production of goods: car manufacturing), or merchandising (retail, wholesale, distribution, and trading).
Knowledge of the nature of your business will enable you to establish your position in the market. After all, you will be encountering many competitors. Before you dive in, know who they are and study what they offer. What can you give that they don’t? Research is the key to ensure you can make educated decisions.
2. Learn the Complexities of Business Formation
Now that you know the nature of your business, identify your specific business formation. You may register your company as a sole proprietorship (you are the sole owner), partnership (you share the business with partners), corporation (business is a separate legal entity).
It is important to first understand each business formation as they all have their pros and cons. Knowledge of this will help you determine what option best suits your company. Noteworthy, each registration path comes with its own set of fees, forms, and requirements.
• You are the sole owner
• You earn 100% of profits
• Easiest and cheapest to set up
• Full and unlimited liability
• Difficulty acquiring additional capital
• In case of debts and arrears, it can be taken from your personal assets
• Easily acquire additional capital
• Better decision making
• Shared responsibility
• Unlimited liability for general partnerships
• Difficult to dissolve
• Disagreement with partners
• Considered a separate legal entity
• Stockholders have limited liability
• Easily acquire additional capital
• Virtually unlimited life
• Double taxation
• More difficult to implement and organize than sole proprietorship or partnership
• Requires steeper requirements and fees
3. Know Your Target Market
Your customers drive your sales and keep your business afloat. The market is vast, and there are many kinds of consumers whose habits are affected by income, demographics, geography, and social status, among others. It can be difficult to enter a broad market. When dealing with market entry, you must focus on a specific group of individuals, called the target market, whom you can cater your products or services to. To make your business profitable, you must have consumers who are willing to buy what you offer.
4. Figure out Capital
In order to operate and start your business, you need capital. This capital will be used to purchase the assets and cover expenses that you need to run your company. Assets include prepaid expenses, inventories, property, land, equipment, cash, and receivables. Expenses include payment for utilities, rent (if space is rented), salary expense, office expense, and Cost of Goods Sold.
5. Consider Hiring and Staffing
One of the most difficult parts of setting up your business is finding skilled, competent, and reliable individuals who may help you run and operate the company. This involves many months of long training processes so you can get your team ready and prepped to serve customers.
6. Registration and Compliance with the Government
When starting your business, in order to operate legally, you must secure a DTI or SEC Certificate, business permit and BIR Certificate of Registration (Form 2303).
Final Wrap Up
Starting a business, no matter the scale, is not for the faint of heart. It requires dedication, perseverance, and skill. It is important to realize that a business is a big responsibility as you have invested your time, money, and effort into it. Moreover, are also managing a team of employees who are dependent on you. Above all, you need to satisfy your clients and comply with tax regulations. With careful preparation, you can succeed! If you need help starting out your venture, don’t hesitate to give us a call. We offer free 30-minute consultations.