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All About Starting a Small Business

Last updated: October 26, 2022

Written by: Sean Martin D. Plantado | Reviewed by: Rafael Hular

Key takeaways:

  • Opening a business in the Philippines is very easy.
  • In this article, we provide a list of the necessary documents.
  • You need to confirm your intentions and the type of business you want to start.
  • Make sure you have a well-developed business plan.
  • If you don’t have the capital for a start-up, you can apply for a loan from Digido.

Did you know that becoming rich is easier compared to becoming wealthy? You want to be a a business owner and can become rich because of your monthly salary. But to become wealthy it is a whole different game.
Which leads you to wonder what’s the difference between the two. Well, richness is equated to the amount of cash you spend, whereas wealth is all about savings and investments. That all being said, it is vital to note that your salary can’t create wealth for you. Therefore, you need to have a side gig to complement your salary.

For this reason, most Filipinos have moved towards establishing businesses. According to statistics, 99% of registered firms in the country are Micro, Small, & Medium enterprises (MSMEs). So, how to start a small business in the Philippines?
In this article, we are going to talk about how to establish the best online business in the Philippines.

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How to start a business in the Philippines with small capital

Thanks to social media and constant changes in demand and supply establishing your online business in the Philippines has become a walk in the park. A lot of consumers are seeking services and products online. This, in turn, has forced businesses to tap into the online market to meet the demand of their consumer. However, those present in the online market haven’t been able to meet demand completely. That’s because the consumers’ taste changes and businesses need to cope up with such dynamic change. Hence, you have a market for your products as long as you have online business idea for the Philippines.

Below is a guide on how to start an online business in the Philippines. Therefore, grab a pen and begin your journey towards turning your idea into the top online business in the Philippines. Wasting no time let’s jump right in.

a) Research the market and competitors

This should be the first thing to do before looking for funds. And that’s where most entrepreneurs go wrong when starting their business. All they think about is the capital injection and not studying the market to see what is being offered by their competitors.

Knowing what your competitors are offering in the market gives you a chance to carve a niche for yourself. Remember having a target market is a key towards sustaining your business and breaking even. Plus, you will have an added advantage against your competitors.

For example, if you are planning to start an online business such as freelancing you’ll need to check what is offered. If they’re providing video editing services, go for transcription services. This is what becomes your target audience instead of doing all of them.
Plus, you need to develop a passion for the craft and perfect it. Read books, watch videos, consult with those who are in this kind of business. That said, always remember: a master of all is a master of none.

→ Read How to pay bills at a 7-Eleven store

b) Prepare a business plan

Having a well-drawn business plan helps you meet your objectives and goals. Unless you are thinking of bringing in investors there is no need for a comprehensive plan. Considering you are starting a small business, you need a plan that fits your needs.
Let’s say you are thinking of how to start a small food business in the Philippines. The plan takes only a few hours to come up with. In the plan, you should state the objective of starting the food business. Additionally, the set goals and objectives need to be achievable and possible to attain.

Here’s a good example: you are aware that the food business is aimed at targeting 50 people. Then you set 100 individuals which is impossible since it’s a new business. Start a small one instead, which will keep you motivated to wake up every morning to open the hotel.

All in all, your business should include a mission and goals which are achievable. And that’s not all the visions and goals have to be clear and specific. That means you have strategies on how you will promote the food business. At the same time, the capital needed to run the business and the monthly expenditure expected. This should be in line with the income to ensure the food business can sustain itself. If losses are greater than profits, then the business is not viable.

c) Find financing for the business

The cost of starting a small business in the Philippines isn’t as high as you may think. However, the capital injection you make needs to sustain the business in question. This includes the ongoing cost and the one-time startup cost as well. Hence you need to think of where you’ll get the funds from. You could opt to:

✔Take from your savings

This involves using your life savings to start the business. While at your previous employment, you were earning, in which part of the income goes to your retirement and another to your savings. Now that you have decided to start a business you will need to use your savings. This makes it easier to begin the business.

✔ Digido loan for startup

However, if you don’t have the savings to start your business, there is no need to worry. Digido offers you an affordable loan which makes your dream business come true. The online firm is known for providing startup loans at a lower interest rate of 11.9% monthly. The best thing about the lending firm is if you are a first applicant the loan is provided at 0% interest.

Plus, their loan tenure takes 6 months and if you are not able to repay it on time, an additional time is given. Though you will need to prove why you can’t repay the loan on time. You can request a minimum amount of PHP 10,500 and a maximum of PHP 25,000. Therefore, if you’re thinking of how to start a business in the Philippines with small capital, Digido is the answer.

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d) Get permits and licenses

So, how to register an online business in the Philippines?

Once you have an idea of the online business, the first step is registering it. This involves getting permits and licenses from these government offices.  If you want your business to operate smoothly legal requirements in starting a business in the Philippines need to be met. Failure to do so will end up rubbing shoulders with the local authorities since the business won’t be considered legit. Which begs the question: what permits are needed to start a business in the Philippines? To answer this, below are the needed licenses and permits.

✔Register your business with the BIR

The Bureau of Internal Revenue (BIR) requires your business to be registered under them. This particular business registration applies to both traditional and online businesses. Once your business has been registered under the BIR, a Business Tax Identification Number (TIN) shall be issued to you.

✔ Register with the Barangay and LGU

The next step would be registering with the Local Government Units. The government gives you a permit to operate your business either online or offline. The Barangay clearance is what is issued by the local government. However, it’s vital to note the registration may differ from one region to another. That’s because of the municipality or city in question. Though the permit is issued by the barangay hall.

✔ Register with DTI

The last permit to seek is a license from the Department of Trade and Industry (DTI). If you are a sole proprietor your firm needs to be registered at any of the DTI offices. Having a DTI certificate ensures your business name and products are attached to you alone. Hence there won’t be any other business using the same name. Thanks to their system which counter checks your firm’s name alongside others. Hence, your consumers can easily identify your products or your brand with your name.

e) Learn about tax for online business in the Philippines

At the moment the Philippine government doesn’t have a clear-cut law that defines how online business shall be taxed. That doesn’t mean you evade taxes since the BIR will eventually catch up with you. That’s because the laws available on taxations apply for both online and offline business. Hence what a physical business remits as taxes is also expected from an online business no exceptions.

→ Learn How to Choose a Payday Loans

f) Develop a promotion plan

Having a promotional strategy is crucial to your business. Let’s say you are thinking of how to start a small construction business in the Philippines. What are the things you need to do to promote traffic either online or offline?

✔ Developing a website

Since consumers have evolved and they can be found online, we suggest opening a website. Though social media footprint is good, having a website makes it easier for the consumers to sample your goods. Plus, the side comes with an e-commerce plug-in that allows you to sell your products online.
Additionally, a website makes it easier for your business to tap into the global market. That, in turn, increases sales and profits. Therefore, if you are relying on your offline shop, it’s time to create a website. The business site should be mobile, responsive, and fully optimized to enable the users to navigate it. If you can develop the website, you can purchase one and customize it to fit your needs.

✔ Promotion

Having a website is not enough, and here is where social media comes in. According to studies, over 45 million Filipinos are using Facebook. Now, what about Instagram, WhatsApp, YouTube, or Telegram?
Therefore, you need to ensure your business has a digital footprint on all social media sites. This helps you when running a discount promotion or a black Friday sale. Lastly, don’t forget about link building, email marketing, and SEO articles. This is what ensures your business reaches the masses at once.

g) Recruit employees

Starting a business in the Philippines sole proprietorship or a partnership, you need employees. They are a crucial organ of the business to ensure daily operations are carried out smoothly. The number of employees you hire depends on the business and the services needed. Therefore, identify all the positions which require personnel and the requirements which need to be met. The hard work begins in finding qualified personnel. But you could check for referrals from your family members, friends, colleges, and even freelancing sites.


  • What business can I start with 10k pesos?
    You can buy and sell fruits, create some homemade snacks and sell it to your neighborhood, start a food cart business, and many other thing.
  • What is the best business in Philippines 2021?
    Here are three of the most popular sectors: Street Food, Digital Marketing Services and Vending Machine.
  • Is it hard to run a small business?
    Running a business can be challenging, but it's also one of the most rewarding experiences you'll ever have.

What if you have Digido unpaid loan?

Top 5 online businesses in the Philippines

There are various online business ideas in the Philippines you could try out. Considering the online market has grown due to the pandemic, you have a huge percentage of consumers. That’s because you can sell your products locally and internationally.
But the first thing is understanding the dynamics of running an online business.

1. 3D printing and designing

It’s an e-commerce model in which you work with suppliers to come up with a customized label. The white labels are to be used in shirts, caps, mugs among others. At the same time, you could opt to start an international branding business. You can display your designs on platforms such as RedBubble and Esty, in which clients can purchase the brands at a cost.

2. E-commerce store

An e-commerce store is a business that came to the limelight due to the pandemic. Since clients couldn’t travel to the physical shops, e-commerce stores came in handy. Some of the well-known stores include Lazada and Shopee.
That said, you can develop your website to serve as an e-commerce store. And if you can’t you could use Facebook Marketplace. It offers a platform to sell your product or services. All you will need to do is to organize its shipping to reach the client.
Establishing the business requires a capital injection of PHP 1,000 to 5,000, though it might cost more. Plus, the business requires one to research and put in a lot of effort for the business to break even.

3. Dropshipping

Dropshipping is all about reselling from a supplier who does so in bulk. The best thing about the business is you sell the product for more than the market price. Plus, you won’t need to keep an inventory of the goods sold.
However, you’ll need to find a brand that sells among Filipinos. This is one aspect that makes the business hard. You will need to test different products over time to get one that sells. To find out products that sell the most, visit Shopee and Lazada stores. Though you need to be dynamic as the product demands change over time. Hence, it’s vital to note that the business requires you to have deep pockets.

4. Freelancing services

Freelancing services are another online business you could try out. The best thing about freelancing there is no capital injection need, just your services. For example, if you want to specialize in article and blog writing, you can open an account with Upwork, Fiverr, among others. These platforms are free to open and once signed in you can gain access to multiple clients who require your services. Though there is no capital injection needed, you require a laptop and a stable internet connection.

5. IT & network consulting and training services

IT & network consulting and training services have become a basic need for different businesses. For the Philippine physical business to venture into the online market they require these services. While doing so, regular management and maintenance shall be needed for their services to run smoothly.
This makes it a lucrative business for you to venture into since most clients are willing to pay for retainers. The capital injection needed for this particular job is between PHP 5,000 and PHP 20,000.

→ Also learn more about Student loan online application

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Starting a business in the Philippines for foreigners or locals is simple since the required documents are the same. Though foreigners need to have extra documents to prove their intentions and the kind of business they want to start.
That said, you need to have a passive income and this can be obtained from having a side business. Hence, take time and research the kind of business you want to start. Ensure you have a well-drawn business plan that caters your needs. And if you have a problem with finding capital to inject you can opt for a loan from Digido.

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Written by: Sean Martin D. Plantado

Author pages:
Sean Martin Plantado is the head of Customer Care Dept. and Online Sales Dept. of Digido Finance Corp. creating articles, blogs, and other learning mediums that helps Filipinos struggling on their financial literacy. Sean also loves Cycling, Photography, Cinematography, Online gaming, Fine Arts, and dreams of becoming a Doctor of Veterinary Medicine.

Reviewed by: Rafael Hular

Author pages:
Rafael “Raffy” L. Hular is, the Finance and Accounting Manager. of Digido Finance Corp., monitoring and controlling the flow of cash that comes in and out of the company to meet the company’s business needs, preparing the financial reports and analysis of income and expenses, and monitoring tax compliance.  Raffy loves reading Japanese comics called manga and watching Japanese animated cartoon series. He dreams of establishing his own Accounting and Auditing Firm and teaching in a University.