How to Start a Small Business in the Philippines

Jul 29, 2020 10:46:00 PM

Many Filipinos dream of starting their own business someday. It’s certainly an appealing prospect to be one’s own boss, earn a decent sum, and contribute to economic growth. Indeed, MSMEs or micro, small, and medium business enterprises are the biggest driving forces behind the Philippine economy. With close to a million MSMEs generating more than 2.5 million jobs, their impact on the country’s development is truly undeniable.

Of course, starting a small business takes a lot of work (even if the name has “small” in it). It’s not an easy endeavor but it’s definitely a fulfilling one. If you’re interested in starting an MSME in the Philippines, here are some helpful tips to keep in mind to guide you through the process:


The first step of starting a small business in the Philippines is to figure out what type it will be. There are three to choose from: sole proprietorship, partnership, or corporation. In most cases, MSMEs are either a sole proprietorship or a partnership. (Do note that a small business can still be a corporation, as long as the requirements are fulfilled.) After you decide on the type of business, it’s time to conceptualize what it will actually be.

Think of the Products or Services You Want to Offer

The first thing you have to think about when starting is a business is what you’re going to venture in. Get a piece of paper and write down ideas for products and services. You could offer something totally new or only a few people are currently doing (think of the ube-cheese pandesal in its early days). Another good idea is to create a service that solves a common problem of your target consumers.

You can also take inspiration from successful businesses. Take note of the things they’re doing right, why their customers love them, and use them as a benchmark. Then, study the ways how you can differentiate yourself and create a better product or service.

Do Your Research

This part of conceptualization goes hand-in-hand with the previous point. Once you’ve listed your business ideas and determined which ones are the most viable, you have to do your research. Find out if your ideas are truly feasible and have the potential for longevity and success. Study your competition, especially those that are located in the same area. Check what they’re doing and identify areas for improvement. You should also look at their digital presence, including their SEO and social media.

Of course, don’t forget to research your target market. Find out what they like about the businesses they support. Look at how they engage with their favorite brands. If you can, discover their buying habits and their spending capacity. The key is to not make any assumptions. If you do and your assumptions are incorrect, then you won’t be able to successfully convert consumers.


After the conceptualization phase, it’s time to move on to your business planning. It comprises different elements, the most important of which are listed below.

Prepare a Business Plan

Your business plan is like a map, containing a detailed description of what your business will be like in the future. If you’re feeling lost or uncertain, you can go back to your business plan to remind yourself of your course. Some of the most critical things to include in your business plan are the following:

  • External analysis. This part is all about the industry you belong to, as well as the state of the economy.
  • Internal analysis. This should explore your business’s competencies and how viable it will be based on the external factors mentioned in the previous section. A SWOT analysis (strengths, weaknesses, opportunities, threats) should be included in this section, along with your research about your competitors.
  • Business model. Simply put, your business model is your mechanism or plan in order to make money.
  • Objectives. Identify what you want to achieve. These can include results that are both tangible (e.g., earnings) and intangible (e.g., reputation).
  • Action plan. This section should contain the strategies that you will use to achieve the goals and objectives you identified in the previous section.
  • Products and/or services. Include everything that your business offers to consumers.
  • Marketing and promotion. Here, you should indicate how your business plans to let the public know about the products and services indicated in the previous section.
  • Financial forecast. This should include the details on how you’re going to finance your business operations.

Figure Out the Logistics

Planning your business includes thinking about how you’re going to deliver your products and services to your customers. If you’re making the products yourself, you need to look for reliable suppliers of raw materials and packaging. You can handle this on your own at first, but you should also think ahead and have a plan for expanding your production capability.

If you aren’t manufacturing your own products, think about how you’re going to acquire them. You will usually have three options here: local production through a third party, local acquisition of finished products, and importation of finished products. All of these options have their pros and cons, so weigh them carefully before you make a decision.

For businesses that deal with products, you need to figure out order fulfillment. This doesn’t just involve delivery, but also the process of receipt, storage, and inventory control of your products. Finally, you have to think about your payment system. Cash payments remain the norm, but cashless methods are quickly gaining popularity. For this, you’ll need a system like PayMaya Enterprise to give your customers plenty of convenient and secure payment options both online and in-store. For online payments, you can use PayMaya Checkout to accept payments on your website or app. For in-store payments, there’s PayMaya ONE as a point-of-sale solution.

Consider Your Finances

You don’t need millions of pesos to start your very own small business. However, you will still need some capital so you can invest on your products, equipment, management tools, and other costs. Categorize these costs into two: one-time and ongoing. One-time expenses include costs for inventory and equipment, branding materials such as your logo, as well as fees for licenses and permits. Ongoing costs cover your rent (if you’re not operating from home), marketing expenses, taxes, and employee salaries, among others.

You should also have a fund that’s reserved for emergencies. This backup fund will help you sustain your business in case of loss. After all, you can’t truly be sure that your business is going to profit as soon as you launch it. Even multinational corporations suffer some losses! What will make the difference is whether or not you’re prepared for it.

Lastly, don’t be afraid to consider getting a loan to help kickstart your business. You can secure funding from banks and other lenders, or else look for venture capitalists and investors to fund your business. If and when you do secure a loan, make sure to develop a payment plan.


As a responsible business owner, you should register your business with the proper authorities. For sole proprietors, you should register with the Department of Trade and Industry (DTI), your barangay and LGU, and the Bureau of Internal Revenue (BIR). For partnerships and corporations, you’ll have to register with the Securities and Exchange Commission or SEC instead of DTI.

Register with DTI

For sole proprietors, DTI has a tool for checking if there’s an existing business with a name similar to the one you want. If your preferred business name is available, you can proceed with the registration by filling out the appropriate form. Once you receive the certificate of registration, proceed to your barangay and LGU.

Register with the Barangay and LGU

Go to the barangay where your business is located and submit an application form with other documentary requirements. These include the DTI Certificate of Business Registration you just received and two valid IDs. Once you receive the Barangay Certificate of Business Registration, proceed to the mayor’s office. Fill out the corresponding form and submit your requirements, including the DTI and the barangay certificate. You’ll also need two valid IDs. Do note that some barangays and LGUs need proof of residency before they process your application.

Register With the BIR

Registering with the BIR takes more steps than registering with your barangay or LGU. The effort will be worth it, however. You’ll be more “legit” in the eyes of consumers because you’ll be able to issue official receipts, and this can attract bigger, higher-paying clients.

The first thing you have to do is to find out to which BIR regional district office your business belongs. Visit that branch and then fill out a BIR form 1901. You need to submit this with the certificates you receive from the DTI, the barangay, and the LGU. You will also need two valid IDs. Along with these requirements, you also need to pay corresponding registration fees and also to register your book of accounts. If you already have invoices and other receipts for the business, BIR will ask for copies of these documents. Once the process is complete, you’ll be able to get your BIR certificate.

Marketing and Promotion

Now that your business is registered, it’s time to start your marketing and promotion activities. You may probably already have started a few marketing activities even before you were registered, but now you can go full-blast. Here are some things you should prioritize:

Create Your Website

You might be tempted to just maintain a social media page for your business, but having a website is still a definite advantage. Think of it as your digital office address. It will also come in handy once you’ve decided to integrate an e-commerce plug-in so you can sell online. Having a website also increases your coverage; indeed, you can sell to virtually everyone in the world as long as you have the right features and solutions.

If you don’t have a website yet, make sure that it’s mobile-responsive and optimized to shorten download times. It should also be easy to use and offer relevant content. Consider running a blog, too, so you can improve your search rankings. There are many free website makers that you can use, but it’s best to work with a professional to ensure great design and user experience.

Promote Your Business

As a new player, you have to advertise your business to promote awareness. Here is where social media will work to your advantage. In particular, there are more than 45 million Filipino Facebook users as of 2020. Use the platform to your advantage to introduce your products and services. Videos are also a good way to share helpful content while promoting your products and services. Of course, don’t forget the value of good SEO, link building, and email marketing. You don’t have to do these marketing methods all at once, but be sure to explore your options to find the most effective ones for your business.


This part of starting a small business can come a little earlier. For example, you can’t start a restaurant if you don’t have cooks, waiters, and other members of the staff. On the other hand, some SMEs can be a one- or two-man operation for a period until such a time that the business expands. At the very least, you should hire an accountant to help keep your books straight. That being said, it’s important to pick the right people to work with you to ensure business success.

To start recruiting employees, you first have to identify all the positions you need to fill and then outline the required competencies. You should also prepare a job description for each post. The tricky part is finding qualified candidates. Some great sources include referrals from friends or family. You can also check freelancing sites, especially for one-time jobs such as designing your logo. Social media is also a good platform to let people know that you’re looking for people who can work with you on your business.


It will be a long and sometimes bumpy road, but every effort you pour into your small business will definitely be worth it. Put in the hard work and you’ll soon reap the rewards. Good luck!



You May Also Like

These Stories on Business Solutions