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How to Launch a Startup in the Philippines

Last Updated – Aug 8, 2023 @ 3:19 pm

What do telecommunication service provider Converge ICT Solutions, Globe Fintech Innovations Inc. (the operator of mobile wallet GCash), and live streaming service Kumu have in common?

Well, they are all startups in the Philippines that have grown tremendously over the last few years.

According to the Global Startup Ecosystem Report 2020, the value of the startup ecosystem in Manila was at $1.6 billion1. This is despite the COVID-19 pandemic.

It appears that the country’s startup ecosystem will be growing some more, with the Innovative Startup Law having been approved by the Senate2.

The bill was drafted to support innovative startups by providing financial subsidies like tax breaks and grants, making business registration procedures easier, and offering training programs and technical assistance.

If you are thinking of getting a piece of that action and launching your own startup, we’re here to help. However, let’s look at a couple of things first before you start your startup journey.

Get Inspired: Top Tech Startups in the Philippines

What is a Startup?

A startup is a company that is set up to develop and bring a product or service that is unique to a market. Usually, a shoestring or bootstrap operation, the typical startup’s initial funding often comes from the founders themselves or their families and friends. 

During the early stages of a startup company, it has little to no revenue. The startup has to develop their idea, test it, and then market it. That takes considerable money, but there are several potential sources that startup owners could tap:

  • Traditional funding sources, such as small business loans that banks or credit unions offer, grants from nonprofit organizations, and government-sponsored loans from local banks
  • Incubators (often associated with nonprofits and business schools), which provide mentoring, seed funding, and even office space
  • Angel investors and venture capitalists, who bankroll promising startups in exchange for a share in the business when it takes off

It’s important to note, though, that startup owners need to make a convincing case for why they believe their idea is new.

Developing a product or service requires a considerable amount of money and prospective sources of funding need to see that the startup they would put their money into has the potential to succeed.

Need more online business Ideas: Check out our extensive guide on how to earn money online in the Philippines.

Difference between a Startup and a Small Business?

You may be wondering what makes a startup different from a small business. Well, there are quite a few differences.

A small business:

  • Does not claim to be unique.
  • Makes progress within the limits set by the business owner and focuses on serving a particular circle of customers.
  • Should grow fast but the top priority is making a profit.
  • Focuses on having earnings and if possible, making a profit from the first day.
  • Has the goal of being self-sufficient.
  • Can end up as a family business or getting sold.

A startup:

  • Is meant to develop something new or to make what already exists better. Innovation is essential to startups.
  • Focuses on winning over market share. Startups does not put limitations on their growth. 
  • Should always grow and be able to create a reproducible business model within the shortest possible time. 
  • Focuses on creating a product that consumers will like and take on a market. Profit is in the millions if this aim is achieved. It might take a startup months or years to gain the first cents.
  • Requires additional capital to reach the post-development stage, when the company starts making profits.  
  • Usually moves towards the next stage through a large deal, either on sale or initial public offering (IPO).

In terms of how long they run, 32% of small businesses shut down within the first three years1 compared to 92% of startups2.

A majority of startups may fail, but some of the most successful entrepreneurs in history actually created startups, such as McDonald’s (by Ray Kroc), Microsoft (by Bill Gates), and Ford Motors (by Henry Ford).

How to Launch a Startup in the Philippines: 8-Step Guide

So, you already have an idea of a unique product or service, and you’re thinking of creating your own startup, but you’re not quite sure how to go about it.

Well, there are general steps that you can follow in launching your startup.

Step 1: Ideation

The success of your startup starts with this step. Thinking about an idea may seem easy, but how do you exactly come up with awesome ideas like Elon Musk’s Tesla, or Henry Sy’s SM malls?

If your goal is to be unique, you’ll just be having a hard time. Countless businesses are already running and chances are, you won’t be the first person to come up with a specific startup idea.

However, that doesn’t mean your business won’t have a chance to grow in the real world.

Here are some methods that will inspire you to come up with the best startup idea. 

1.1 Identify the problem

The most successful businesses solve problems. While it’s not challenging to think of problems to solve, it’s hard to find one you are passionate about.

This step is not just about thinking about an issue, but finding the ultimate problem you want to solve. So how can you exactly do this?

Think of your problems

The easiest way to find a problem you will love to solve is to start within. What are your current problems? Are you willing to pay just to solve them?

For example, you are looking for a more efficient way to track your expenses but you don’t like using apps. Perhaps you can develop a notepad that is formatted in a way to easily list your expenses and keep track of your goals.

Be more observant

You may think you are already noticing your surroundings and the people around you but it helps to be a more conscious observer.

When you notice the little things about your family, friends, and even your work, you will gain valuable insight and this will help you identify a problem to solve.

Take a moment to understand the behaviors, trends, and the demands of those around you.

1.2 Industry research + interview experts

If you’re facing a creative block or you’re not satisfied with the problems you have discovered, the best thing you can do is to seek help from other people, especially experts.

By doing research and interviewing those who know more about the industry, your startup will start on the right foot. Talking to experts helps you validate and improve your current ideas, and you’ll also gain insights on how to implement it.

Aside from asking experts, you can also do research on your own. Try to see the different brands in the industry and see which problems they are solving.

Read different reviews and find out which aspects of the products consumers are not satisfied with. Maybe you can offer a more effective solution to their problems.

1.3 Develop product concept

Product concept refers to a detailed description of your product idea, presented from the customer’s perspective. Make sure that the concept can be designed and manufactured within your resources and timeline.

When making your product concept, put yourself in the shoes of your customer. Developing product concepts also involves finding out whether another company has patented the idea.

One of the key parts of this stage is to identify the features of the product. Aside from the features, you also need to list the benefits.

Define your concept well and do not rush into testing it. A lot of businesses fail because they skip this process.

Step 2: Research the market & validate your idea for a startup

Once you have finalized your idea, you should do some market research.

This way you can find out if your idea has potential and you can determine your target audience. However, market feasibility research will only evaluate your idea, not really validate it.

There are instances where customers like something but don’t use it when it’s available in the market. 

To validate your idea, you should have proof of concept (POC), which is evidence that your proposed product or service is not only doable but can also be successful.

Basically, the POC has four parts:

  • Proof of Market (demand for the product)
  • Proof of Utility (based on consumer psychology)
  • Proof of Product (whether a product can be built)
  • Interpretations & Assumptions (about the product’s utility and positioning). 

2.1 Conduct surveys and interviews

Try doing some generic surveys or talking to people personally so that you can get relevant information.

You should also do some research on possible competitors and those selling products or services related to your idea.

The research can help in analyzing what customers really want and the flaws in platforms or services that already exist.

2.2 Conceptualize what the actual product would look like based on initial data gathered

Before you start working on the product itself, you need to have a product concept.

It can be in the form of a paragraph text description or concept sketches or anything that paints a picture for your potential customers.

Your product concept should have a lot of detail even if the actual product has not been produced yet. 

Step 3: Create a Minimum Viable Product

The first version of your product that is saleable is called the minimum viable product (MVP)3. It has basic features but it can still get the consumers’ attention and can be used by early customers.

The feedback that the customers give can be used for product development. This means an MVP can help you avoid long and unnecessary work.

 3.1 Get beta testers

The beta version of your product is almost ready but it might still have bugs or flaws which can only be found if many people use the product.

These users are called beta testers and they help report faults back to you. In exchange, you can give the beta testers some benefits, such as special offers and early use of the final product. 

3.2 Collect feedback from testers & investors

The review of your beta testers sets your product’s base. With the testers and investors’ feedback, you can better understand what users actually expect of your product.

Their review will also help you think of ways to best market your product. 

3.3 Make adjustments based on feedback from the previous step

Once you have gathered the feedback, you can then start working on the actual product. You rectify the faults so that a much cleaner result can be launched.

If you release a product without beta testing, there could be catastrophic market responses since users expect a product without issues.

Step 4: Get your first customers

Most of the beta users you will find are already interested in your product, so it’s not that hard to get them to use it. It’s different when it comes to your first customers.

Basically, it will be strangers using your product. Therefore, early customer acquisition is very important.

There are basically three parts to it: refining the offer, adjusting your conversion, and optimizing the price.

You should have activities and take actions to gain new customers and retain loyal ones.

4.1 Set up a website

Aside from having an online presence, it’s important for any business to set up their own online platform (website or mobile app).

This is because more and more people are going online to do key daily activities such as their work, classes, or shopping. And they use Google to get more information about the products they need.

If you don’t have a website, you can miss out on all of that and you will basically limit your success. Having a website also allows you to reach customers in different parts of the world.

4.2 Launch a marketing campaign to get eyeballs on your product

Prepare relevant and worthwhile marketing strategies. Not working on marketing during the earlier stages of launching your startup can result in low business revenue or worse, the failure of your venture.

You can implement your marketing strategies even before your product or service is launched. This way, a customer base is already set up.

In today’s digital era, it is recommended that you use online marketing techniques, like SEO, social media marketing, blogging, and content marketing (such as videos, podcasts, or text-based guides).

4.3 Manage customer feedback

Many growing startups view customer service as an unfortunate necessity to continue selling more products. However, that approach is wrong.

A formative startup welcomes customer feedback, no matter how terrible it may sound. If you can maximize customer feedback, then you can have an excellent product roadmap for your startup.

Every customer interaction tells you where your product is supposed to go.

4.4 Re-assess your product based on feedback from initial customers

Reassessment is important because it tells you if it’s a good idea to continue or if you should pivot instead.

What are your customers telling you? Is your path forward clear? Or does it seem as if your initial idea is not good enough?

Continuing with a startup that isn’t working can lead to bankruptcy.

However, this doesn’t mean that you can’t restart. Maybe it will take some time, but you will finally have that perfect idea, product, and market fit. 

Step 5: Business Planning

Business plans are like navigation apps. While it is still possible to get to your destination without using one, it will increase your chances of getting lost.

So instead of putting your future startup in a position where you need to navigate difficult situations or start over, you need a business plan to guide you.

5.1 Create a business plan

A business plan is a document that details your startup. This includes your objectives and the steps you need to take to achieve your goals.

Business plans can be used not only to make sure you are on the right track but also to attract future investors. Whatever your industry is, you need to have a business plan. The elements of a business plan include:

  • Executive summary
  • Products and services
  • Market analysis
  • Marketing strategy
  • Financial planning
  • Budget

5.2 Business registration

After you’ve made a business plan, it’s time to register your business. If you want to run a single proprietorship startup, register a unique name with the Department of Trade and Industry.

If the startup is a corporation or partnership, your business should be registered with the Securities and Exchange Commission. When you register your startup with the SEC or DTI, your startup will be subject to laws.

Related: How to Register a Business in BIR

5.3 Choose a business model

Business models refer to the conceptual structure of your business. It will explain its viability, as well as who it will serve, what it offers, how it offers services or products, and how it can achieve its goals.

Your business model clearly defines what value your startup can add to your customer’s life. There are many types of business models. Here are the most common ones:

Distributor

This model refers to startups that buy products from manufacturers, then resell them to make a profit. One example of a business with a distributor model is an auto store.

Retailer

For this model, the startup sells services or products to the public after getting them from a wholesaler. Many shops on Lazada and Shopee follow this business model.

Advertising

A business model that mainly generates revenue through affiliate partnerships and/or ad placements on their platform (website, app, social media, or physical property).

Manufacturer

This model is for startups who make finished products from raw materials. It can sell the products to a middleman or another business before it can be sold to customers, or it can sell directly to customers. An example of a manufacturer is Apple.

Franchise

For this model, the startup can take the role of the retailer, manufacturer, or distributor. Instead of creating the product, they use the model of their parent business. One example of a franchise business is Jollibee.

eCommerce

This modern business model focuses on selling products or services on a web store. Shops that sell on Facebook Marketplace or Shopify use this model. 

Brick and mortar

This is a traditional business model where startups deal with customers face to face in a physical store or an office. Banks and restaurants follow this model.

Bricks and clicks

This model is for startups that want to have both an offline and online presence. Therefore, they can give their customers more flexibility. Some examples are brands like Uniqlo and H&M.

5.4 Secure Funding

It’s extremely rewarding to get a startup running, but before you can do this, you need money. The amount you need can quickly skyrocket considering necessary expenses like:

  • Business registration fees
  • Website development and fees
  • Office space or store rental
  • Branding and marketing collaterals
  • Taxes

While the number can fluctuate depending on what industry you want to be part of, it is not recommended to cut costs if you don’t want to suffer in the long run.

Unfortunately, letting go of a huge amount of money is not possible for many people. This is why they find external funding sources from:

  • Bank loans
  • Friends and family
  • Government grants
  • Crowdfunding
  • Venture capital investors
  • Angel investors

5.5 Goal setting

You can start a business for the sake of starting a business, but it will do better when you have a route in mind. This way, you will know exactly where you are going.

When it comes to goal setting, you have to think of your long-term and short-term vision and direction. These will ultimately judge the path you will take.

Aside from that, think of your motivation. Are you building a business to give more employment opportunities to people? Are you doing it because you want to build your own house?

When it comes to goals, be very specific, especially with timelines and sales.

Do not list something like “make a good revenue” because that is too vague. Instead, make it “make a million by our second anniversary.”

That will give you a clear timeline to follow.

5.6 Government-mandated employee benefits

Government-mandated employee benefits are crucial to follow because they will keep your employees satisfied. Be a leader that gives your employees a sense of purpose and value.

This is impossible to do without giving them benefits such as:

Step 6: Build your Team

Just because you started your business does not mean you have to work alone.

Ultimately, you need to build a great team that will help you grow your startup.

6.1 Hire the right people

When it comes to assembling a team, you first need to determine which roles you need to fill. Hiring the right people is easy once you have a clear idea of the qualities you want your employees to have.

Create detailed job descriptions for the positions. This should reflect the level of skill needed to do that work, and the experience required.

The most important phase in hiring the ultimate team is the interview process.

Do not hesitate to ask applicants how they will handle challenges. This will help you look beyond their resumé.

6.2 Develop team culture

If you want your employees to feel passionate about their job, you need to set clear dynamics. Team culture can differ depending on your preferences, but make sure you still give your employees a sense of autonomy.

When you trust your team, you can cultivate a stronger relationship. You’ll also set up more opportunities for them to learn and develop their skills. When your employees have more flexibility to be creative, they will be more motivated to speak up.

Autonomy is not the only thing you need to give your employees. You also need to foster a culture of openness and transparency to form a team identity.

A collective sense of team identity will develop once you let your employees understand that each job position has meaning, and all work they are doing is important.

6.3 Manage your team

If you want your startup to be successful, you have to develop your leadership skills. When managing your team, set clear expectations for everyone.

You also need to build trust among yourself and the different team members to avoid issues. If trust is not present, the team won’t be able to function properly since they would always be in a defensive mode.

As a leader, you must not be afraid to show your vulnerabilities and communicate the purpose of your actions. More than that, follow through on every commitment you make.

Step 7: Develop a Marketing Plan

The marketing plan is an important operational document that discusses your marketing & advertising strategy, and how you will implement strategies to appeal to your target market.

Before you make this, you need to fully understand your buyer personas.

7.1 Build a customer base

The long-term success of your business will greatly rely on your customer base.

Loyal customers can help you generate more income because they will gladly share their experience with your brand with their peers, and send out a message that your startup is trustworthy.

However, building a loyal customer base is easier said than done. This process takes time and effort.

To help you retain more customers and make them develop a positive attachment towards your brand, you need to prioritize your customer service and ask them for feedback.

You can also launch loyalty programs and unique offers.

7.2 Startup Branding

When starting your own brand, you need to consider its image that consumers can connect with. This includes:

  • Logo
  • Slogan
  • Brand message
  • Design

Your branding strategy involves how you want to develop your startup’s image in a way that will attract more people and make you seem trustworthy.

As much as possible, be consistent across all platforms, especially with your website and social media pages. By speaking using a consistent voice, customers can immediately distinguish your brand. 

Step 8: Re-examine and Refine Processes

Before launching your startup, take some time to reassess all that you have decided and try to determine whether or not it’s worth keeping.

You can also get feedback from your employees and investors on which policies and processes to apply.  

If you start seeing problems, change it. Nailing the perfect processes for your startup may take a little bit of trial and error and there is no shame in failing on your first time4.

Tips for Building a Successful Startup

One of the major parts of getting a startup running is to learn along the way. But if you make better choices early on, your startup will enjoy a higher chance of success.

Try these tips to ensure you build a great startup.

Know your strengths, and be honest about your weaknesses

Every person has a set of skills, knowledge, and experience that will make them become a good startup owner. During the early stages of your business, you need to be prepared to wear a lot of hats.

However, do not put too much pressure on yourself to do complicated tasks without any training or experience. When you know your strengths and weaknesses, you will find out where to focus your efforts.

Make no room for excuses

Millions of people want to become entrepreneurs, but not a lot of people take the leap to start a business because they are burdened with fear of failure.

There are thousands of excuses not to start a business, but they always have solutions.

Never let excuses slow you down. Instead, be proactive and find a way to get rid of them.

Follow your passion

Having passion does not mean you have to make your favorite hobby into a business so you will never get bored. It just means finding something you love doing.

This way, you can use your existing skills and knowledge to your advantage.

Push your limits…

Once you start your business, expect your stress level to climb up.

Pushing yourself can mean being the last one to leave your office, or learning a new skill, among many others. Instead of letting this consume you, think of it as a motivation.

You should see challenges as an avenue to grow and learn. Remember that you are stronger than you think. 

…But do not forget yourself

Your business would be a failure if you destroy yourself in the process.

Even if you are already earning millions but your well-being is being compromised, that’s not a good thing. This is why it’s important to seek out alternatives for problems you cannot solve.

Hiring experts and people you trust will let you ease your burden.

Related: How to Improve your Business

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Sources

  1. Entrepreneur
  2. Investopedia
  3. Startups.com
  4. Feedough

About Phoebe Jade Tabar

Phoebe is a business & finance writer at Grit PH. She also teaches English and review classes online. She has been to several countries in Southeast Asia and hopes to visit more in other parts of the world.

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