Every business wants to earn a profit, but operating overseas adds complications. That’s why, although the beautiful islands of the Philippines are ripe with investment opportunities, as well as in possession of an ambitious, well-educated and English-fluent labour force, foreign businesses have been slow on the uptake. But this is good news, because it means that most markets still aren’t saturated and there are lots of opportunities to build profitable businesses left.
All it takes, in addition to a good business idea, is some preparation for the common challenges facing businesses in the Philippines. These are challenges like corporate taxes, different cultural expectations and more. This article explores these and offers actionable tips on how to handle them to give your Philippine business the best shot at profitability and success, whether you’re operating as a digital nomad or establishing market presence for a multinational.
1. Understand the Local Market Before Investing
The Philippines is made up of over 7,000 islands off the coast of Southeast Asia, but has been influenced by periods spent under both Spanish and American rule. This unique history shapes its culture even today, and for any business venture to succeed, you’ll need a firm grasp of exactly who you’re selling to and what value you’re providing them. Take the time to research your market thoroughly, not just at the national level.
2. Register Your Business Correctly
Every successful business venture in the Philippines begins by properly registering the business. This is crucial, as without a registered business, you’ll be unable to hire staff and scale. Even if you’re a sole proprietor, registering a business is important to offer protection against legal liability and to allow you to apply for any licences or permits you need. Don’t skip this step and think you can just start selling.
3. Remain Compliant
As a registered business, you’ll need to operate in compliance with local labour laws, health and safety guidelines, and tax code. Failure in any of these areas can result in penalties and possibly even suspension of your right to do business in severe cases. Continued compliance in some areas, like taxes, isn’t easy. Many business managers let local professionals handle the challenging aspects of corporate income tax in the Philippines: tax rates, incentives & deductions.
4. Build Strong Local Relationships
Business in the Philippines is heavily relationship-focused. That is to say, people do business with those they know well. In order to land contracts or supply agreements, you’ll need to build strong connections with other business owners. Joining trade associations, professional organisations, or chambers of commerce can help you meet them and bolster your professional reputation. A strong local network can also help you navigate government processes more effectively.
5. Hire and Retain Local Talent
Employers in the Philippines benefit from the country’s very low cost of living and its smart, tech-savvy and English-proficient workforce. This essentially means that businesses are able to hire skilled professionals at very low labour costs, even after mandatory benefits like health insurance and social security are accounted for. Many local employees are looking for job stability and career growth, and will stay if you are competitive in these areas.
6. Invest in Digital Marketing
Social media is big business in the Philippines, and the country has one of the highest engagement rates in the world. Millions of users there log in daily, giving you a great, low-cost way to reach out to potential customers. Local digital marketing agencies will help you create content and ad campaigns that connect with users, as well as handle other digital marketing tasks like streamlining your SEO efforts.
7. Display Strong Financial Management
Sound financial management is a necessary quality for every profitable business, no matter where it’s based. The Philippines is no exception. You’ll still need to prepare budgets and have the discipline to stick to them, as well as track all spending carefully, ensuring that accurate records are kept. Working with tax compliance experts or accountants may reveal opportunities to claim money back, receive grants or make cuts in order to reduce costs.
8. Enhance Efficiency with Technology
While labour costs are low, paying someone to do mundane, repetitive tasks is really unnecessary in this day and age. Every business has many which need doing, often related to accounting or inventory management, but these can now be largely automated. You may need to pay upfront or pay a monthly subscription for the technology, but in the long run, this frees up time and money that can be spent more productively within the business.
9. Price What You Offer Affordably
Although living costs in the Philippines are low, so are wages, and workers don’t always have much disposable income left after they’ve paid all their bills. This means that the market in the Philippines is very price sensitive, so you’ll need to work on finding a sweet spot between affordability and quality in order to attract the highest number of customers. Differentiate your business, and avoid getting into a race to the bottom with competitors.
10. Join Government Support Programmes
The government is keen to encourage entrepreneurs and investors to come to the Philippines to do business, offering a wide array of support programmes. These are usually found through agencies like the Department of Trade and Industry or the Board of Investments. These may be able to help you with funding, training, tax incentives or assistance with importing or exporting. You can also use them to help build your network.
Conclusion
Building a profitable business anywhere takes patience, commitment and a focus on long-term success rather than immediate gains. The Philippines is no different, and these 10 tips, combined with those qualities, will surely put your business on the path to profitability and success. It’s hard to go wrong when you’ve done your research, you do everything by the book, and you leverage local expertise to help you navigate the market.
With a good business model and effective marketing, it shouldn’t take long for your business to start thriving and contributing to the Philippines’ growing economy.
