F R E E
Subscription to Living, Retiring, Traveling, Business In The Phils. Discussion List
16, 000+ members

Before anything else, one fact remains: the kind of business you get into and the degree of risk you are willing to take ultimately depends upon your character and the financial goals. It is essential therefore that from the start, you realize your risk taking capabilities, and determine how much you want to earn from your business, and how soon you plan to earn it.

After setting your business goals, the following tips on starting a business may prove useful. These are borrowed from Prof. Andy Ferreira, the Dean of the Asian Center for Entrepreneurship of the Asian Institute of Management.

Tip 1. Look at what you enjoy doing. There may be a business opportunity there.

Tip 2. Look at what irritates you. A product or service that alleviates it may make money.

Tip 3. Look at what people around you are looking for. There maybe enough volume to make money on.

Tip 4. Look for what gets out of stock often. There are unsatisfied demands that can be served.

Tip 5. Look at what people do not need and are Willing to give away. There may be someone willing to pay for it.

Tip 6. Look at what is making money now. Ask why There may be an opportunity to do better.

Tip 7. Look around in your neighborhood. The opportunities may be just outside your door.

Risk:

Risk is essentially a factor of your own perception. Your character, knowledge of the business opportunity, and level of financial literacy influences your perception of risk and risk-taking. This is precisely the reason why some entrepreneurs are having fun exploiting a business opportunity while others find the same very risky, and vow not to even entertain the idea.

If you are not a risk-taker type or have been traumatized by a bad business experience (personal or someone else’s) your perception of risk is likely to be higher than someone who is a risk-taker and didn't have that experience.

If the business opportunity is something you are less familiar with, the perceived risk is also bigger. The learning curve associated with running the enterprise is more evident. Naturally, you could commit mistakes and go through a good number of failures before you could master--and profit from--the business. The risk factor is further increased if you have a low level of financial literacy. If you are averse with numbers, any business you go into will in fact be very risky.

It might be very difficult to convince decidedly risk- averse persons to go into business. If you are not naturally risk-averse, increase your knowledge and familiarity with the business you are planning to go into and its industry; and increase your level of financial literacy. On the latter, you may read personal finance books, or join organizations that develop their members’ financial intelligence, and register in seminars on business planning and financial management.

Another advice is not to put out your hard-earned savings until you are comfortably familiar with the business opportunity and are able to write a business plan or feasibility study. Familiarity with and mastery of the business opportunity will enable you to see the potential pitfalls. When you do a business plan, you will be able to anticipate possible problem and consciously provide for contingencies. Doing business without a business plan is like tiptoeing on a bamboo footbridge with blinders on (that is, slippery and dangerous).

(Souce: Mind Your Own Business by Bronx Hebrona)

There are several types of business enterprises an investor can choose from in establishing operations in the Philippines.

Organized Under Philippine Laws

Sole Proprietorship

Sole Proprietorship is a business structure owned by an individual who has hill control authority of its own and owns all the assets, personally owes and answers all liabilities or suffers all losses but enjoys all the profits to the exclusion of others.

A Sole Proprietorship must apply for a Business Name and be registered with the Department of Trade and Industry - National Capital Region (DTI-NCR).

In the provinces, application may be ified with the extension offices of the DTI.

Parnertship

Under the Civil Code of the Philippines, a partnership is treated as juridical person, having a separate legal personality from that of its members. Partnerships may either be general partnerships, where the partners have unlimited liability for the debts and obligation of the partnership, or limited partnerships, where one or more general partners have unlimited liability and the limited partners have liability only up to the amount of theft capital contributions. It consists of two (2) or more partners.

A partnership with more than three thousand pesos (P3,000.00) capital must register with Securities and Exchange Commission
(SEC).

Corporation

Corporations are juridical persons established under the Corporation Code and regulated by the SEC with a personality separate and distinct from that of its stockholders. The liability of the shareholders of a corporation is limited to the amount of their share capital.

It consists of at least five (5) to fifteen (15) incorporators each of whom must hold at least one share and must be registered with the SEC. Minimum paid up capital: five thousand pesos (P5,000.00).

A corporation can either be stock or non-stock company regardless of nationality. Such company, if 60% Filipino- 40% foreign-owned, is considered a Filipino corporation; If more than 40% foreign-owned, it is considered a domestic foreign-owned corporation.

Stock Corporation

This is a corporation with capital stock divided into shares and authorized to distribute to the holders of such shares dividends or allotments of the surplus profits on the basis of the shares held.

Non-stock Corporation

It is a corporation organized principally for public purposes such as charitable, educational, cultural or similar purposes and does not issue shares of stock to its members.

Branch Office

A Branch Office is a foreign corporation organized and existing under foreign laws that carries out business activities of the head office and derives income from the host country. It is required to put up a minimum paid up capital of US$200,000.00, which can be reduced to US$100,000.000 if (a) activity involves advanced technology, (b) company employs at least 50 direct employees. Registration with the SEC is mandatory.

Representative Office

A Representative Office is foreign corporation organized and existing under foreign laws. It does not derive income from the host country and is fully subsidized by its head office, It deals directly with clients of the parent company as it undertakes such activities as information dissemination, acts as a communication center and promote company products, as well as quality control of products for export. It is required to have a minimum inward remittance in the amount of US$30,000.00 annually to cover its operating expenses and must be registered with SEC.

Under RA 8756, any multinational company may establish an RHQ or ROHQ as long as they are existing under laws other than the Philippines, with branches, affiliates and subsidiaries in the Asia Pacific Region and other foreign markets.

Source: Department of Trade & Industry Philippines