A Step-by-Step Guide on How to Start a Business in the Philippines

Starting a business is as exciting as traveling to your dream country but has several stages and essential considerations. Knowing the regulatory environment and going through the required business processes is essential whether you’re a foreign investor or a local budding entrepreneur/ business owner.

If you are enthusiastic about how to start a business in the Philippines, then dive further into this article.

Researching and Choosing the Right Business Idea

The first step in every successful business is researching and choosing the right business idea. Each year, more than 10,000 new businesses open in the Philippines, and according to research by Grit Ph, over 27% of Filipino adults choose to start a business as their form of investment preference. 

There are many competitors in the business ocean, so you must do your homework first: researching and choosing the best business ideas.

Brainstorming ideas

Put your hobbies, abilities, and competence into a creative mind map. List down any excellent business ideas, letting your imagination go wild. Also identify recurring issues, inefficiencies, or trends in daily life or, more precisely, in several sectors. Against popular thought, brainstorm ideas that could serve as the foundation of your business.

Imagine the organization you want to build by doing a mock organizational structure—SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats).

Building a business plan

You need to do extensive research on your intended market. You must subtly recognize threats, business goals, rivals, purchasing patterns, and demographics. 

Also, you should clearly define your company’s mission, vision, and goals. Outline your target market, growth plans, and goods and services offered.

Initial capital requirements

One of the most essential parts of starting a business, or many other small businesses, is estimating the initial capital required to create and sustain your business until it becomes profitable and has internal revenue.

Consider personal savings, loans, investors, or local government grants to acquire the necessary start-up capital.

Looking out for new trends

Using the power of social media platforms to do market research on trends these days is an advantage.

Many young entrepreneurs, especially millennials and Generation Z entrepreneurs, use social media platforms to help their research.

Conducting Market Analysis and Identifying Target Audience

Even if you are only starting a small business, conducting market analysis and identifying or finding your target market is essential.

Market analysis and understanding your target audience are pivotal steps in creating a successful business strategy.

Here’s how to conduct a practical market analysis and identify your relatively significant target audience:

• Define first your product or service. Do external analysis.

• Gather intel and primary pieces of information you need, such as quantitative insights (statistics and numbers about your target market) and qualitative insights (preferences, traits, purchase influence, attitudes, etc.)

• Create target audience profiles and market segments.

• Benchmark competitors.

• Do research (interviews, surveys, etc.)

• Take all the feedback and create a conclusion.

Understanding your customer’s needs is a pivotal point in any start-up business because they will be the ones who will provide you with your steady cash flow and passive income. Analyze market trends well and never behind the latest trends, technologies, and market shifts.

Understanding the Legal Requirements and Business Registration Process

After completing your internal requirements, such as a business idea, market research, and business name, you only need to face the business permit and other legal requirements, and the business registration process allows you to start a business in the Philippines.

There are many government agencies you must encounter along the way. Aside from opening a bank account for your business and hiring employees.

Here are some of the steps that you would encounter along the way:

• Register your Business name at the Securities and Exchange Commission (SEC)
• Open your Business Bank Account
• Register at the SEC
• Register at the Bureau of Internal Revenue (BIR)
• Register at the Social Security System (SSS)
• Register with PhilHealth
• Register at Pag-IBIG
• Get a Mayor’s Permit

These required steps are not done simultaneously and require time because it is a step-by-step process. Always ensure you have the proper documents and be on time if you have a scheduled process. You can also visit the websites of these government agencies to know the process ahead of time.

Choosing the Right Business Structure and Registering with Appropriate Government Agencies

Before starting your business, you must identify your business structure and know all the local government units or agencies you must comply with.

First, you need to identify the proper business structure by knowing the legal structures or entities present.

Learn more below:

• Sole Proprietorship: This is one of the most manageable business structures/entities. Sole Proprietorship means that only one person is responsible and reliable for the company’s profits and debts. If you want to be your own boss and run a business in the comforts of your own home without having a physical store, then this type of legal structure suits you. 

• Corporation: A law regards the separation of the corporation from its owner; it is with legal rights independent of its owner. It can be owned and sold ownership rights in the form of stocks. The business operations of a corporation differ from those of a sole proprietorship.

• Limited Liability Company (LLC): LLC  provides business owners with liability protection that corporations indulge while just allowing losses and earnings to just come through to the business owners as income on their tax returns. 

• Partnership: A partnership is a legal structure that two or more individuals own. 

• Cooperative: A co-op is owned by the people it gives service to, or it serves. It is also called user-owners.

Choosing your business entity must be done on the first step of starting a business, and it should be done while creating/brainstorming your business idea. In that way, you can also determine your start-up capital and your market research and marketing strategy. Your business entity will determine your tax burden.

Securing Necessary Permits and Licenses for Your Business

Registering your business is essential; it is also necessary to establish a business address, business branding, and any other business-related things to accomplish your business venture.

After registering with DTI or SEC, the following permits are a must-have:

• SEC or DTI registration;
• Community Tax Certificate (Cedula);
• Barangay Clearance;
• Building permit;
• Least contract;
• Sanitary permit;
• Police clearance;
• Department of Environment and Natural Resources (DENR) clearance/environmental compliance certificate;
• Mechanical permit;
• Other licenses and approvals from important government agencies;
• Zoning clearance;
• Fire Permit;
• Others.

These licenses and permits will enable you to operate your business seamlessly without the risk of getting fines and warnings. It is very important to obtain, so always remember to research your business idea well and its compliances if you have ever decided which entity you would be registering with. 

Creating a Business Plan and Defining Your Value Proposition

A business overview is essential in crafting the best business plan to define your value proposition.

Here are some tips on how to make some unique and compelling value propositions:

• Identify your target market.
• Elaborate clearly why the customers should buy from you and not from the competitors.
• Define your product and service using SWOT analysis.
• Create a unique company mission and permanently connect it to your value.
• Create a tagline for your product or service.

When creating a unique business plan, you also need to remember these three: feasibility study, unique value proposition, and the distribution strategy. Your business’s mission and vision are important, too, especially since you are in for the long run. Don’t forget your aspirational or premium values.

Setting Up Financial Systems and Securing Funding for Your Business

This is where the business branding starts. Having a solid market study can enable you to estimate your start-up funds and will also allow you to figure out where you will secure those funds.

Below are some steps you need to ensure you secure your business funds:

• Estimate how much funding you’ll need.
• Review your business plan and brand identity.
• Determine if self-funding is reachable.
• Make friends with investors and secure some funding.
• Consider business loans.
• Research if there are government loans or grants.
• Hire a business expert/business coach.

If you are considering registering as a corporation or a sole proprietor with employees, you must include employee salaries in your business funds. You also need to be prepared to register your employees for government benefits, as it is mandatory if you are starting a corporation.

Establishing a Physical or Virtual Presence for Your Business

An internal economic analysis can help you establish your business’s physical or virtual presence. You must strengthen brand associations of your business or service by promoting it well through digital marketing.

Digital marketing strategies can help your business be seen. Most customers/consumers love products or services with an online presence since e-commerce in the Philippines is booming. 

You need to use social media platforms because they are the trendiest platforms, where customers get the drive to purchase.

Hiring and Building Your Team

The first thing that you need to consider before building your team is whether you can afford employees. That is the question you must ask yourself before developing and hiring your team. 

In hiring employees, you would also need to navigate the hiring process and create a solid one; you also need to determine the roles that they will be playing in your business. For example, you will need extra hands if you’re in the food business and have a brick-and-mortar store.

Marketing and Promoting Your Business

Taking advantage of the digital age is the best way to spread the word about your business. Marketing and promoting your business can be challenging, especially if you are just starting.

Every business becomes successful with a solid marketing strategy. If you are just a starting business and have no social media presence yet, then that is where you need to start: go to social media platforms and engage with users interested in your business niche.

Create engaging content and have consistency. Consistency is among the most important driving factors in a successful online business.